INTRODUCTION TO BUSINESS & MANAGEMENT

With regard to taxation of partnerships, which of the following statements is correct? A. Partnership income is exempt from taxes. B. The partnership is taxed as a separate entity. C. Each partner is taxed on his / her share of the partnerships profits. D. Profits are taxed twice. E. Taxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of the profits.

C. Each partner is taxed on his / her share of the partnerships profits.

Which term best describes when the team's goals and the organization's goals are in alignment? A. Group Motivation-Hygiene Theory B. Groupthink C. Group Cohesiveness D. Group Charter E. Vroom's Expectancy Theory

C. Group Cohesiveness

The idea that satisfaction and dissatisfaction are distinct dimensions is referred to as A. Dr. Phil's Personal Critical Choices. B. Vroom's Expectancy Theory. C. Herzberg's Motivation-Hygiene Theory. D. Maslow's Hierarchy of Needs. E. Theory X and Theory Y.

C. Herzberg's Motivation-Hygiene Theory.

Articles of organization are filed with the Secretary of State to form a(n) A. C-corporation. B. S-corporation. C. LLC. D. General Partnership. E. Sole Proprietorship.

C. LLC.

Which of the following is necessary for starting a sole proprietorship? A. Articles of proprietorship B. A contract C. No specific legal documents required D. A written agreement E. An application to the secretary of state

C. No specific legal documents required

Because it controls the world's diamond deposits, the DeBeers Consolidated Mines, Ltd. has a(n) A. comparative advantage. B. advantage based on efficient production. C. absolute advantage. D. trade deficit. E. trade surplus.

C. absolute advantage.

Title VII of the Civil Rights Act of 1964 addresses the issue of workplace discrimination based on all of the following EXCEPT: A. color. B. religion. C. age. D. sex. E. race.

C. age.

"Double Entry" accounting requires that A. credits equal how much you owe. B. debits equal how much revenue you received. C. all debit entries equal all credit entries. D. debits are entries made on the right side of the ledger. E. you use only 'accrual' accounting.

C. all debit entries equal all credit entries.

High risk, high yield corporate bonds: A. usually carry an 'A' bond rating by Moudy's. B. have yields the same as bank CD's of the same maturity. C. are also known as 'junk' bonds. D. are more risky than the same company's stock. E. are good investments for risk-averse conservative investors.

C. are also known as 'junk' bonds.

The United Kingdom sells industrial supplies and materials to many nations around the world. The United Kingdom thus engages in A. deficit trading. B. importing. C. exporting. D. tariffing. E. dumping.

C. exporting.

The simplest form of business owned and operated by more than one person is called a A. C-corporation. B. limited liability company. C. general partnership. D. S-corporation. E. sole proprietorship.

C. general partnership.

Market segments are typically based on A. primarily demographics. B. product characteristics. C. important characteristics of customer groups. D. the marketing mix. E. the promotion mix.

C. important characteristics of customer groups.

The United States buys automobiles from Japan and Germany and petroleum products from many OPEC nations. The United States thus engages in A. tariffing. B. dumping. C. importing. D. deficit trading. E. exporting.

C. importing.

The levels of brand loyalty: A. include the name, term, symbol, and design. B. is the same as brand equity. C. include awareness, recognition, preference, and loyalty. D. are registered and protected by the U.S. Patent and Trademark Office. E. include introduction, maturity, growth, and decline.

C. include awareness, recognition, preference, and loyalty.

A(n) _____________ is a summary of a firm's revenues and expenses during a specified accounting period, such as a year. A. capital statement B. statement of financial position C. income statement D. statement of owners' equity E. balance sheet

C. income statement

A Corvette, a dinner at the Olive Garden, and an overnight stay at a Hilton Hotel all satisfy human needs. Therefore, each A. is a convenience product. B. is a service. C. possesses utility. D. is unique. E. is the market mix.

C. possesses utility.

"Monopolistic competition" differs from pure competition because it can be characterized by A. many buyers and few sellers. B. few buyers and many sellers. C. product differentiation. D. a few companies that control the market. E. few buyers and few sellers.

C. product differentiation.

Consumer markets consist of A. intermediaries such as wholesalers and retailers who buy finished products and sell them at a profit. B. governmental units that buy goods and services to maintain internal operations and to provide their consumers with certain services. C. purchasers and household members who intend to consume or benefit from the purchased products but do not intend to make a profit on the products. D. churches, private schools and hospitals, civic clubs, charitable organizations, and foundations. E. individuals and business organizations that intend to make a profit by buying certain products to use for manufacturing other products.

C. purchasers and household members who intend to consume or benefit from the purchased products but do not intend to make a profit on the products.

A large restaurant with locations throughout the United States has a long-term partnership with Tyson for its poultry and a produce distributor for its fruits and vegetables. These relationships reduce inefficiencies and costs and result in higher customer satisfaction. This restaurant is successfully using A. exclusive distribution. B. vertical channel integration. C. supply chain management. D. intensive distribution. E. wholesale intermediaries.

C. supply chain management.

If you purchased a DVD (Digital Video Disc) player, which of the following would NOT be a part of that new product? A. the operating instructions B. the status of ownership C. the DVD movie discs D. the protective package E. the warranty

C. the DVD movie discs

Wiseman Bookstores has an accounts receivable turnover of 6. This means that A. one-sixth of the company's assets are financed by creditors. B. the company sells and replaces its merchandise inventory six times each year. C. the company collects its accounts receivable about every sixty days. D. the company's sales figure is six times its accounts receivable figure. E. the company had $6 in assets for every $1 of current liabilities.

C. the company collects its accounts receivable about every sixty days.

Some pharmaceutical companies market their over the counter drugs to the doctors and hospitals as well as to their end consumers who have different product and information needs. This means that A. they would use a 'concentrated' approach. B. they would use an 'undifferentiated' approach. C. they would use a 'differentiated' approach. D. they would use the same market mix for all target markets. E. they would use a common promotional mix for all target markets.

C. they would use a 'differentiated' approach.

With regard to the ongoing expense of long-term corporate financing, which of the following would be the LEAST expensive? A. Long-term loans B. Corporate bonds C. Debenture bonds D. Common stock E. Trade credit

D. Common stock

The firm's use of debt to increase the return on owner's equity: A. Increases the number of shares outstanding B. Reduces the return on owner's equity C. Reduces the firm's riskiness to shareholders D. Increases the firm's riskiness to shareholders E. Increases the firm's operating profit

D. Increases the firm's riskiness to shareholders

Your grandfather has just given you 100 shares of Spirent plc, an English company. Which exchange would you go to in order to find the current value of your stock? A. The Chicago Board of Trade (CBOT) B. Merril Lynch C. New York Stock Exchange (NYSE) D. The London Stock Exchange E. The New York Mercantile Exchange

D. The London Stock Exchange

Peter Piper approached Jane B. Nimble about becoming a partner or active owner in a firm that destroys environmental waste. While Peter would like to become an active owner in the firm, he is concerned about his liability because he has recently inherited a lot of money. In this situation, Peter should: A. become a general partner with a majority ownership interest in a partnership. B. become a sole proprietor. C. become a general partner with a minority ownership interest in the business. D. become a member in an LLC. E. become a limited partner in a limited partnership.

D. become a member in an LLC.

When authority is spread to lower-level management, a business is said to be A. progressive. B. centralized. C. upwardly mobile. D. decentralized. E. tall.

D. decentralized.

In accounting, the process of spreading the cost of a long life fixed asset over the asset's useful life to the periods benefited is called A. distributing. B. apportioning. C. crediting. D. depreciation. E. expensing.

D. depreciation.

Which industry is concerned with the movement of goods from producers to consumers A. agriculture. B. service. C. production. D. distribution. E. construction.

D. distribution.

A firm can raise ___________ through the sale of ownership in the firm. A. debt capital B. venture capital C. speculative capital D. equity capital E. liquidity

D. equity capital

Money received from the sale of shares of ownership in a business is called: A. sales revenue. B. dividends. C. cash flow. D. equity capital. E. debt capital.

D. equity capital.

A limit on the amount of a particular good that may be brought into a country during a given period of time is called a(n) A. trade embargo. B. import deficit. C. import tariff. D. import quota. E. import duty.

D. import quota.

The partner who can lose only what he or she has invested in a business is the A. employee. B. manager. C. sole proprietor. D. limited partner. E. general partner.

D. limited partner.

A high debt to owner's equity ratio A. reduces the risk for lenders. B. will increase as debts are paid off. C. will increase the owner's investment. D. makes borrowing money from lenders difficult. E. All of the above are true.

D. makes borrowing money from lenders difficult.

An economic system in which individuals and businesses make the decisions about what to produce and what to buy, and the market determines how much is sold and at what prices is called a _________ economy. A. product B. producer's C. command D. market E. planned

D. market

A firm using the marketing concept would ask its customers about how they liked the product, its price, where it was available, and so forth, and would then A. increase the price if possible. B. change only the product. C. simply file the information away because the customer will never know the difference. D. modify any or all of the firm's marketing mix activities on the basis of information about its customers and competitors. E. go ahead with its current marketing program whether the feedback contained feasible suggestions or not.

D. modify any or all of the firm's marketing mix activities on the basis of information about its customers and competitors.

When a business has plants located in several foreign countries, it is called a A. countertrade. B. joint venture. C. trading company. D. multinational company. E. licensing firm.

D. multinational company.

All entries to 'trigger' an accounting system must first begin with a(n) A. balance sheet. B. debit. C. credit. D. transaction. E. annual report.

D. transaction.

The ultimate factor that determines the price at which a product will sell is A. the cost of production. B. the total of all production and marketing costs. C. what other firms are charging in the industry. D. what buyers will pay in the marketplace. E. the markup percentage divided by the price floor times the economic order quantity (EOQ).

D. what buyers will pay in the marketplace.

Which of the following is characteristic of the term 'Groupthink'? A. It is when members of a group more accurately assess information when making decisions. B. It is a major benefit of employee decision making. C. It leads to superior decision making. D. It is a group decision-making process. E. It is a decision bias caused by members of the group striving for agreement among themselves.

E. It is a decision bias caused by members of the group striving for agreement among themselves.

Which one of the following is an example of Herzberg's motivation factors? A. Working conditions B. Job security C. Pay D. Supervision E. Responsibility

E. Responsibility

Which of the following is NOT a characteristic of entrepreneurship: A. Creativity and innovation B. Risk taking C. Vision and self confidence D. Optimism and high energy level E. Success and financial certainty

E. Success and financial certainty

Which of the following is NOT a characteristic of marketing intermediaries? A. They provide buyer access. B. They can provide efficiencies in the value chain. C. They reduce the number of exchanges with buyers for producers. D. They can be eliminated, but the functions must still be performed. E. They always increase the cost to the buyer.

E. They always increase the cost to the buyer.

The process of systematically collecting, analyzing, and reporting financial information is called A. bookkeeping. B. journalizing. C. auditing. D. decision making. E. accounting.

E. accounting.

When Joan Newport attended the orientation for new employees in the accounting department at Madison Oil and Energy Exporation, she was told that the users for financial accounting information are A. government agencies. B. suppliers. C. investors. D. managers. E. all of these are users for financial accounting information.

E. all of these are users for financial accounting information.

Public-relations activities might include A. sponsorship of programs on public radio and television. B. sponsorship of sporting events. C. informational rather than product-oriented advertisements. D. any communication activity used by companies to create favorable relations between the organization and society. E. all of these.

E. all of these.

MasterCard sends a customer a memo that discloses the true cost of borrowing with each billing statement. It does this because it realizes that the customer has the right to A. safety. B. be heard. C. obtain credit. D. choose. E. be informed.

E. be informed.

Bread, chewing gum, soft drinks, newspapers, and gasoline are all usually considered to be A. specialty products. B. component products. C. shopping products. D. supplies. E. convenience products.

E. convenience products.

Services are usually distributed through A. wholesalers. B. agent middlemen. C. merchant middlemen. D. traditional channels. E. direct channels.

E. direct channels.

The forces that make up the external, uncontrollable environment affecting marketing include: A. the product price, place, and promotion. B. promotion and physical distribution. C. exchange, physical distribution, and facilitating functions. D. form, place, possession, and time. E. economic, legal, sociocultural, competitive, political, and technological forces.

E. economic, legal, sociocultural, competitive, political, and technological forces.

The use of all available outlets for a product to obtain the widest market exposure is called ____________ distribution. A. exclusive B. intentional C. selective D. patterned E. intensive

E. intensive

Unless specified in the charter, a sole proprietorship has a A. perpetual life. B. life of 50 years. C. life of 17 years, which is renewable. D. legally recognized life, which varies from state to state. E. legal life limited to the life of its owner

E. legal life limited to the life of its owner

Debts that are to be repaid in two years are referred to as A. expenses. B. current assets. C. fixed assets. D. current liabilities. E. long-term liabilities

E. long-term liabilities

Product differentiation does NOT A. develop differences between your product and all similar products. B. create a specific demand for the firm's product. C. essentially take the product out of competition with all similar products. D. promote differences between your product and all similar products. E. make your product appear to be exactly like your competitor's.

E. make your product appear to be exactly like your competitor's.

The fact that insulin and xerography both originated with small companies and individual investors in the U.S. is testimony to the power of small businesses as providers of: A. competition. B. quality products. C. employment. D. capital. E. technical innovation.

E. technical innovation.

Despite trade restrictions, international business is A. growing. B. slowing down. C. moving slowly. D. decreasing E. struggling for survival

a. growing.

Petula Petite has been employed by Barb's Boutique as an 'At-Will' Employee. This means that: A. Petula must give Barb's Boutique at least two weeks notice when she quits. B. Barb's Boutique must have good reason for firing Petula. C. Petula's employment is covered by a union contract. D. Barb's Boutique must give Petula at least two weeks notice before she can be fired. E. none of these ansers are correct.

e. none of these ansers are correct.

The most basic form of ownership in a corporation is A. common stock. B. preferred stock. C. dividends. D. debentures. E. bonds.

A. common stock.

The ratio obtained by dividing net income after taxes by net sales is the ________________. A. return on sales ratio. B. acid-test ratio. C. return on equity ratio. D. earnings per share. E. working capital.

A. return on sales ratio.

A plan for combining and using the four promotional methods in a particular promotional mix to achieve one or more marketing goals is called A. publicity. B. a promotional campaign. C. the marketing mix. D. sampling. E. advertising.

B. a promotional campaign.

Influences in a society and its culture that result in changes in attitudes, beliefs, norms, customs, and lifestyles are called A. technological forces. B. competitive forces. C. sociocultural forces. D. legal forces. E. economic forces.

C. sociocultural forces.

Burlington Coats manufactures its winter jackets in April but does not display them in its stores until early September. Burlington recognizes the importance of _________ utility. A. space B. form C. time D. possession E. production

C. time

Investing in long-term corporate bonds of a Japanese company incurs which of the following financial risks? A. Credit risk B. Inflation risk C. Exchange rate risk D. All of these are risks E. No financial risk

D. All of these are risks

_____________ is the stage of new product development that involves promoting the product to distributors and developing advertising and sales campaigns to generate and maintain consumer interest in the product. A. Commercialization B. Brand identification C. Product differentiation D. Merchandising E. Concept testing

A. Commercialization

Which of the following is not a characteristic of an international direct investment in a "totally owned" facility? A. Low financial risk. B. High degree of control. C. Requires direct international investment. D. Utilizes subsidiaries. E. All of the above are characteristics.

A. Low financial risk.

Which of the following statements is correct? A. The more intelligent information a manager has, the less risk there is when making a decision. B. Most managers make decisions without any information. C. The more information a manager has, the more risk there is when making a decision. D. Risk improves decision making. E. When the amount of information is low, there is less risk.

A. The more intelligent information a manager has, the less risk there is when making a decision.

If you wanted to evaluate Target Stores' (a leading discount chain) financial condition, you would MOST LIKELY compare its financial ratios to __________ ratios. A. Wal-Mart's B. JC Penney's C. General Electric's D. Small retailer industry's average E. Target in future years

A. Wal-Mart's

An important measure of a firm's ability to pay its current liabilities quickly is the A. acid-test ratio. B. calculation of cost of goods sold. C. earnings per share. D. return on sales ratio. E. debt-to-equity ratio.

A. acid-test ratio.

Dave, an entrepreneur, intends to open a chain of very large retail stores that specialize solely in men's pants. He wants to stock pants for every occasion and from every country on the planet. Dave believes he can sell the enormous variety of pants at 10 to 30 percent below his competitors' prices and still make a profit. His store, Just Pants, would be classified as a A. category killer. B. discount store. C. superstore. D. traditional specialty store. E. department store.

A. category killer.

Brand _________ refers to the value created by loyalty, perceived quality, and other factors people associate with a given brand name. A. equity B. identification C. assignment D. capitalization E. mark

A. equity

The markets for detergent, beer, and cigarettes all are dominated sellers who differentiate their products. These markets are best described as: A. monopolistic competition. B. perfect competition. C. an oligopoly. D. a legal monopoly. E. a natural monopoly.

A. monopolistic competition.

Victor Vroom's expectancy theory is based on the very simple assumption that A. motivation depends on how much people want something and how likely they are to get it. B. people will do whatever it takes to achieve their goals. C. people won't bother to try to achieve a goal if they don't think they are likely to achieve it. D. motivation is based on the expectation of equitable treatment. E. motivation is based on an employee's understanding of what management expects him/her to accomplish.

A. motivation depends on how much people want something and how likely they are to get it.

A marketing mix is a particular combination of A. product, price, place, and promotion that is created to reach a particular target market. B. product attributes that are useful to the target market. C. advertising, pricing, and product considerations. D. target markets that together form the firm's marketing mix. E. product and pricing solutions that are designed to meet the needs of the target market.

A. product, price, place, and promotion that is created to reach a particular target market.

The decline in the market demand for typewriters in favor of personal computers was caused most directly by A. technological forces. B. regulatory forces. C. sociocultural forces. D. competitive forces. E. economic forces.

A. technological forces.

A manager with many subordinates is said to have a A. wide span of control. B. tall organizational structure. C. narrow span of control. D. managerial hierarchy. E. matrix structure.

A. wide span of control.

As the accountant for Marston Retail Stores, you must calculate the current ratio for the firm's last accounting period. The firm's current assets were $120,000, its fixed assets were $240,000, its current liabilities were $80,000, and its long-term liabilities were $60,000. Given these facts, what is the firm's current ratio? A. 4 B. 1.5 C. 3 D. 2 E. 1

B. 1.5

Mallard Decoy Manufacturing has total liabilities of $40,000 and total assets of $120,000. The owners' equity for the firm is $100,000. What is the firm's debt-to-owners' equity ratio? A. 83% B. 40% C. 33% D. 3% E. 1.2%

B. 40%

A large manufacturing company has found that younger employess tend to have fewer medical problems than workers over 40. Therefore, management decided to hire only workers under 40 to reduce company health insurance costs. This is illegal under the: A. Title VII of the Civil Rights Act of 1964. B. ADEA. C. Equal Pay Act. D. ERISA. E. OSHA.

B. ADEA.

If the liabilities of a business are $85,000, and the owners' equity is $110,000 which of the following is a correct statement? A. Assets equal $25,000. B. Assets equal $195,000. C. It is impossible to determine the value of the assets. D. Assets equal $110,000. E. Assets equal $85,000.

B. Assets equal $195,000.

Which of the following will increase an investor's risk? A. Purchasing a T-bill from the sale of common stock. B. Buying a 'BB' rated bond with cash from a bank savings account. C. Buying a bank's certificate of deposit with the proceeds from the sale of Conseco's junk bonds. D. Purchasing a bank CD from the sale of soy bean futures. E. None of the responses will increase an investor's risk.

B. Buying a 'BB' rated bond with cash from a bank savings account.

Which of the following steps is the first step in the accounting cycle? A. Analyze financial statements. B. Collect and analyze transactions including receipts, invoices, sales slips, and similar documents. C. Prepare the firm's financial statements. D. Post transactions to ledger accounts. E. Record transactions in a general journal.

B. Collect and analyze transactions including receipts, invoices, sales slips, and similar documents.

Mirror Emporium's sole owner, Fred Martin, is happy about his $100,000 profit. However, while he knows that the firm is profitable, he wants to know how effectively his investment is being used when compared to its other investments. What computation would you recommend? A. Current ratio B. Return on owners' equity C. Return on sales D. Dividends E. Activity ratios

B. Return on owners' equity

The process of evaluating and regulating ongoing activities to ensure that goals are achieved is known as A. planning. B. controlling. C. motivating. D. organizing. E. leading.

B. controlling.

Money obtained through various types of loans is called: A. equity capital. B. debt capital. C. cash flow. D. dividends. E. factor proceeds.

B. debt capital.

An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies is called a(n) A. international alliance. B. economic community. C. free-trade association. D. common market. E. None of these answers is correct.

B. economic community.

The preparation of financial statements for people outside of the firm (creditors, unions, suppliers, and others) is one of the important goals of: A. external auditors B. financial accounting C. managerial accounting D. cost accounting E. tax accounting

B. financial accounting

Butchers at Bigs Butcher Shop hand cut steaks to the preference of their customers and trim off excess fat. The extra services provide ______________ utility. A. possession B. form C. place D. time E. production

B. form

The goal of __________ is to combine all the promotional tools used by a firm into one comprehensive and unified promotional strategy. A. a unified market identification plan B. integrated marketing communication C. a multi-segment marketing strategy D. the targeted media relations philosophy E. market segmentation

B. integrated marketing communication

A seller using nonprice competition would A. not expect to increase sales without lowering the price. B. make the product stand out from the competition by emphasizing distinctive product quality, customer service, and packaging. C. lower the price of the product to equal or beat competitive prices. D. know that customer loyalty lasts only as long as the seller has the lowest price. E. probably be less concerned about product quality and packaging than about the selling price.

B. make the product stand out from the competition by emphasizing distinctive product quality, customer service, and packaging.

By law, the minimum capital requirements for beginning a sole proprietorship are A. established by the laws of each state. B. nonexistant generally. C. at least $1,000. D. at least $5,000. E. at least $10,000.

B. nonexistant generally.

For any product, the breakeven quantity is the A. number sold over fifty units. B. number sold such that costs equal revenues. C. total number produced to equal the total resources available to the producer. D. number of products needed to be sold in order to make a reasonable profit. E. dollar volume of total sales.

B. number sold such that costs equal revenues.

Two or more people working together in a predetermined way to achieve common goals is known as a(n) A. chain of command. B. organization. C. functional arrangement. D. structure. E. bureaucracy.

B. organization.

A voluntary association of two or more people acting as co-owners of a business is known as a A. sole proprietorship. B. partnership. C. corporation. D. syndicate. E. conglomerate.

B. partnership.

The market price of peaches is currently falling. In a free-market economy, the most likely explanation of this price change is that: A. the government has decided to set a lower price because sellers have been price gouging. B. there is a surplus in the market for peaches. C. the supply of money has increased. D. the equilibrium price is higher than the market price. E. there is a shortage of peaches in the market.

B. there is a surplus in the market for peaches.

Soy bean growers in Indiana use a single marketing mix strategy. They have only one product with no variation, one price, and one distribution system to reach all of their customers. This single marketing mix is an example of a A. target market approach. B. undifferentiated approach. C. marketing mix approach. D. market segmentation approach. E. market strategy approach.

B. undifferentiated approach.

Entreprenuerial LLC is a small private consulting company that uses accrual accounting. For 2003, Entrepreneurial LLC has billed clients $100,000 but has only received $90,000 in cash payments. Entrepreneurial LLC has incurred expenses of $50,000 but only paid $45,000 at the end of the year. What is Entrepreneurial LLC's net income on an accrual basis? A. $100,000 B. $55,000 C. $50,000 D. $45,000 E. $40,000

C. $50,000

Which of the following would most likely be considered the safest investment? A. A BB rated corporate bond B. Debentures of Conseco C. A U.S. Treasury Bill D. Common stock of Marsh Supermarkets E. Preferred stock of Eli Lilly

C. A U.S. Treasury Bill