Business Exam
A financial plan determines how a business will keep track of its money (true or false)
True
An effective financial plan involves all the following processes EXCEPT
developing advertising
When demand for a product is affected by price, it is said to have
elastic demand
Spell E-person
entrepreneur
An owner's claim to the assets of a business is called owner's
equity
A board of trustees oversees the general affairs of a corporation (true or false)
false
If you are 16, you are allowed to drive a car as part of your job on public streets (true or false)
false
Financial forecasting is the process of predicting your business's profits (true or false)
false financial forecasting is predicting your business's future conditions that affect the company
money set aside for unexpected costs or opportunities
reserve capital
The principle that states people must decide which goods and services to use due to limited resources and unlimited wants is known as
scarcity
The first step in writing a strategic plan is
setting goals
The strategic part of a business plan includes
short-term and long-term goals
Which term refers to an application to operate as a corporation?
the articles of incorporation
Tax benefits are an incentive sometimes offered by
the government
"Cash crunch" is another term for negative cash flow (true or false)
true
A balance sheet is a primary financial statement (true or false)
true
A closely held corporation may decide to expand by going public and selling stock on the open market (true or false)
true
A document that shows where a business's cash has gone is a statement of cash flows (true or false)
true
A financial plan generally includes multiple projected income statements (true or false)
true
A financial plan includes a projected 12-month balance sheet (true or false)
true
A limited liability company is a business that operates and pays taxes as a partnership (True or false)
true
A transaction is any activity that has an effect on the financial situation of a business (true or false)
true
Agency power legally obligates a partnership to a contract signed by one of the parties (true or false)
true
Business owners use reserve capital to grow their businesses (true or false)
true
If you are injured on the job, your employer must pay for medical expenses (true or false)
true
Inventory is the goods retailers buy to resell (true or false)
true
Limited life is a disadvantage of a partnership (true or false)
true
Price competition means buyers will choose the lowest priced products available (True or False)
true
Start-up costs include permit fees (true or false)
true
Supplies, office equipment, and products to sell are assets (true or false)
true
The equation Assets - Liabilities = Owner's Equity is the basis for keeping all accounting records in balance (True or false)
true
The law sets limits on how late you can work if you are under 16 (true or false)
true
Unidentified costs are a problem for new businesses (true or false)
true
You should estimate your business's projected revenues on the low side and its expenses on the high side (true or false)
true
the money required to start a business
start-up capital
The final step in calculating how much money is needed to start a business is to prepare a
statement of required start-up capital
business expenses that may vary or can be adjusted depending on sales
variable expenses
A general partner has no decision-making authority (True or False)
False a limited partner has no say
Fixed expenses change with business conditions and other situations (true or false)
False fixed expenses don't fluctuate w. changes in production level or sales
An individual who starts a new business is an example of labor as a factor of production (True or False)
True
Everything we make requires the four factors of production (True or False)
True
Government policies can affect financial markets (True or False)
True
The government offers incentives to citizens to help increase consumer spending (True or False)
True
China is an example of a nation with a command economy (True or False)
True a command economy is when the government has control over production, investment, and wages
Incentives can be either positive or negative (True or False)
True a incentive is payment to stimulate investment
One result of negative cash flow is
a shortage of merchandise
A marketing plan for a new store should include all the following EXCEPT
a similar store close by
The location for a new store should have all the following attributes EXCEPT
a similar store close by
lists all the general ledger accounts that a business will use
chart of accounts
A business that is owned and operated by its members is a
cooperative
An example of a variable expense is
advertising costs
A market situation in which a few large businesses provide products for many consumers is known as
an oligopoly
An example of an incentive a business might offer to consumers is a
"children eat free" promotion
Describe 2 regulatory agencies that help protect people. What is the agency and how does it protect people?
Consumer Product Safety Commission- enforces federal safety and Environmental Protection Agency- enforces pollution standards
Opportunity cost is the cost of obtaining one more of an item (True or False)
False In opportunity cost you only obtain one item
If you are under 18, you can operate a meat slicer as part of your job (true or false)
False
What are the different types of competition?
Perfect competition monopolistic competition oligopoly
The regulatory agency that oversees non-depository institutions is the
Securities and Exchange Commission
A disadvantage of a sole proprietorship is unlimited liability for business debts (True or False)
True
Projected financial statements estimate a business's operating capital (true or false)
false projected financial statements predict the financial position of a business in the months and years to come
the process of estimating the operating capital for a business
financial forecasting
the expenses that remain the same regardless of business activity
fixed expenses
Generally accepted accounting principles set guidelines for
how to prepare financial statements
An example of an asset unique to a particular business is
hydraulic lifts
One of the most common reasons that new businesses fail is
insufficient start-up capital
Each of the following represents an area that a business might invest in to improve productivity EXCEPT
inventory
The factors of production include
land, labor, capital, entreprenuership
If a corporation goes out of business owing millions of dollars to its creditors, its stockholders
lose the money they invested
An advantage of organizing a business as a partnership is
more skills and knowledge
Which term refers to the amount of revenue that remains after expenses for the period are subtracted from profits?
net income
amount of capital needed to operate a business for the first few months or years
operating capital
An example of a one-time start-up cost is
permits
A main measurement of the success of a business is its
profits
estimate of the future assets, liabilities, and net worth of a business
projected balance sheet
Which formula represents the projected profit for a business?
projected earnings - projected expenses
statements that predict the financial position of a business in the months and years to come
projected financial statements
analysis of the amount of cash that an owner anticipates will be available for his or her business in the future
projected statement of cash flows
What is not an example of a type of economic system?
pure economy
A business transaction occurs each time a business
records a purchase
Cash reserves in a business are often used to
repair equipment
An example of a variable expense that is unaffected by sales is
repairs