Business 101
In the context of business behavior, producing products that you know will break before their time is illegal and unethical.
false
In top-down budgeting, top management prepares the budget with the involvement of the middle and supervisory managers.
false
The U.S. Small Business Administration (SBA) gives free money to start-up businesses.
false
Financial managers use _____ to assess the financial strengths and weaknesses of their firm.
financial ratio analysis
Which of the following is true of stock exchanges?
Each exchange establishes its own requirements for the securities it lists.
Which of the following statements is true of service utility?
It adds value by providing fast, friendly, personalized assistance.
Which of the following statements is true of a limited liability partnership (LLP)?
It does not need to distinguish between limited and general partners.
Which of the following is a feature of capitalism?
Private-sector businesses are free to make their own choices regarding what they will produce.
In which of the following ways do public accountants differ from management accountants?
Public accountants conduct external audits, whereas management accountants analyze the financial statements of their own organization.
Which of the following is the last step of a complete human resource (HR) plan?
Separation
Which of the following statements is true of nonprofit organizations?
They employ people and take in revenue.
In the context of the U.S. economy, which of the following statements is true of small businesses?
They often display a refreshing lack of bureaucracy
Which of the following is true of government accountants in the United States?
They help ensure that a nation's banks and other financial institutions comply with the rules and regulations controlling their behavior.
In the context of supply chain, which of the following statements is true of modes of transportation?
Transportation by planes is the fastest mode but has low flexibility in handling.
In the context of business ethics, in an ethical dilemma, every potential course of action has some significant negative consequences.
True
Which of the following is a difference between the millennial generation and Generation Z?
Unlike the millennial generation, Generation Z approaches adulthood planning to work for success.
Identify a true statement about the debt ceiling.
Voting on the debt ceiling happens separately from voting on taxes and spending
Which of the following statements is true of bonds?
When a bond's market price is below par value, it is selling at a discount.
A high inventory turnover ratio is good because it indicates that:
a firm can continue its daily operations with a small amount of inventory on hand
In the context of marketing research data, an example of primary data is _____.
a focus group
When the Fed sells securities, _____.
banks cut back on the loans
The economic system of the United States is called _____.
capitalism
One of the ways by which companies can show their responsibility toward the environment is by reducing their _____.
carbon footprint
In financial management, risk is referred to as the:
degree of uncertainty about the actual outcome of a decision.
Odd pricing refers to the practice of:
ending prices in numbers below even dollars and cents
Accounts receivable represents what customers who buy on credit owe the firm.
false
Capitalism is an example of a planned economy.
false
Codes of conduct work best when people are given the freedom to choose whether they wish to follow them or not.
false
In the accounting equation, assets are equal to liabilities minus the owners' equity.
false
In the context of accounting for the time value of money, discount rate remains constant in a specified number of time periods.
false
In the context of the legal and ethical dimensions of business conduct, practicing collusion with competitors is legal but unethical.
false
The gross domestic product (GDP) includes output produced within households.
false
People with an external locus of control:
feel buffeted by forces such as random luck.
Socially responsible firms support consumer choice by:
following laws that prevent anticompetitive behavior such as collusion.
While performing a financial analysis for his organization, Morris discovers that there has been mismanagement of employee funds over the past three months. He immediately reports this to his supervisors. In this scenario, Morris is most likely a(n) _____.
internal auditor
In the accounting equation, assets are equal to:
liabilities plus owners' equity.
The Internet has opened the door for _____, which is creating products tailored for individual consumers on a large scale.
mass customization
The Fed:
performs banking services for commercial banks in districts where it operates.
In the context of the various pricing strategies, loss-leader pricing means:
pricing a handful of items temporarily below cost to drive traffic.
In the context of the marketing mix, the _____ of a product includes all of the ways that marketers communicate about the product.
promotion strategy
In the context of monetary policy, the Fed is most likely to reduce the discount rate during:
recessions
To bring inflation under control, the Fed:
reduces the money supply.
Internal recruitment boosts employee morale by:
reinforcing the value of experience within the firm.
An owner of a C corporation is called a _____.
stockholder
The repayment of the debt by the U.S. federal government is likely to result in an increase in:
taxes
According to the U.S. Small Business Administration (SBA), to officially count as "small," _____.
the average revenue of a business should range from $0.75 million to $28.5 million
One of the reasons why C corporations have an edge over sole proprietorships is:
the permanence of the business.
Exchange-traded funds (ETFs) allow investors to buy ownership in a market basket of many different sec
true
Inventory is an example of a current asset.
true
Par value is the value of a bond at its maturity; what the issuer promises to pay the bondholder when the bond matures.
true
Value is the relationship between the price of a good or a service and the benefits that it offers its customers.
true
Determine the variable cost of a pen manufacturing company per pen if its breakeven point is 250,000 pens, selling price of each pen is $5, and the fixed cost per year is $750,000.
$2
Which of the following is a difference between dividends on stock and interest on bonds?
A firm has a legal obligation to pay interest on bonds, whereas it has no legal obligation to pay dividends on stock.
Which of the following is a similarity between a general partner and a limited partner in a limited partnership?
Both contribute financially to the company.
Which of the following is a similarity between a sole proprietorship and a partnership?
Both their earnings are untouched by the Internal Revenue Service.
Which of the following is a difference between demographic segmentation and geographic segmentation?
Demographic segmentation refers to dividing the market based on measurable characteristics about people, whereas geographic segmentation refers to dividing the market based on where consumers live.
Telecommuting increases costs of office space, equipment, and upkeep for an organization.
False
Which of the following is a criterion that needs to be fulfilled by an individual to be recognized as a certified public accountant?
He or she must complete the equivalent of 150 semester hours of college education with a heavy emphasis in accounting and other business-related courses.
Which of the following explains the preemptive right of common stockholders?
If a corporation issues new stock, existing stockholders can purchase new shares in proportion to their existing holdings before the stock is offered to the other investors.
Which of the following is a difference between limited partnerships and limited liability partnerships?
In limited liability partnerships, all the partners actively participate in the management of the company, whereas in limited partnerships, only the general partners actively manage the company.
Which of the following statements is true of a limited liability company (LLC)?
It is a relatively new form of business ownership in the United States.
Which of the following statements is true of loss-leader pricing?
It is closely related to high/low pricing.
Which of the following is true of accumulated depreciation?
It is the decrease in the value of assets such as machinery, equipment, and property over time
In the context of human resource management challenges, which of the following statements is true of older workers?
Many companies have started offering flexible schedules, training opportunities, and creative pay schedules to retain their best older employees.
Which of the following is an example of survey research?
Online questionnaires
In the context of limited partnerships, which of the following is an aspect that differentiates limited partners from general partners?
Participation in the management of a company
Which of the following statements is true of the formation of a partnership?
Partnerships can be established based on a simple verbal agreement.
Identify a true statement about loss-leader pricing.
Retailers place a handful of items that are priced temporarily below cost at the back of their store.
_____ demands that marketers actively contribute to the needs of the broader community.
Social responsibility
Which of the following statements is true of the members of a distribution channel?
Some distributors act as both wholesalers and retailers.
Which of the following statements is true about socialist economy?
Tax revenues fund services that citizens in free enterprise systems would have to pay for themselves.
Which of the following is an appealing benefit that entrepreneurs enjoy?
The ability to set their own hours
In the context of the history of American business, which of the following statements is true of the marketing era?
The balance of power shifted away from producers and toward customers.
Which of the following is a drawback of mutual funds?
The professional management touted by many funds does not come cheap.
In the context of the history of American business, which of the following statements is true of the industrial revolution?
There was a loss of individual ownership in the production process.
Which of the following is true of securities brokers?
They act as agents for investors who want to buy or sell financial securities.
Which of the following is a difference between a job description and job specifications?
A job description defines the jobholder's responsibilities, whereas job specifications define the qualifications necessary to do a job.
_____ measure how effectively an organization uses its resources to generate net income.
Asset management ratios
Which of the following is a major challenge faced by most human resources departments?
Being considered irrelevant by many employees
Which of the following is a difference between common stockholders and preferred stockholders?
Common stockholders are assured a greater capital gain than preferred stockholders when a company experiences strong earnings.
An ethical dilemma involves clear misconduct at the workplace.
False
Which of the following statements is true of a breakeven analysis?
It helps marketers get a sense of the hurdles they need to clear before actually introducing a product.
Which of the following is true of the Securities Act of 1933?
It prohibited misrepresentation in the sale of newly issued stocks and bonds.
Which of the following is a drawback of primary data?
It tends to be expensive.
Which of the following is a key benefit of penetration pricing?
It tends to discourage competitors
Candidates who have a degree in performing arts, theater design, fashion, or costume design are eligible to apply for the position of the costume designer in Relony, a movie production company. In the context of human resource (HR) planning, which of the following concepts does this scenario best illustrate?
Job specifications
In the context of factors of production, which of the following is a natural resource?
Land
Which of the following statements is true of credit unions?
They are open to individuals who belong to a specific field of membership.
Which of the following is true of current assets?
They are resources that a firm expects to use up within a year.
In the context of today's business environment, which of the following statements is true of millennials?
They can be trained and developed to fill the leadership gap that is being created by the retirement of baby boomers.
Which of the following statements is true of loyal customers
They forgive marketers' mistakes.
Dividends of a company are:
a distribution of earnings that are paid to a corporation's stockholders.
The benefits of a general partnership include its _____.
ability to pool financial resources
Federal Trade Commission
actively promotes fair competitive practices.
Institutional investors:
amass huge pools of financial capital from various sources.
In the context of the U.S. economy, small businesses:
are often the first to contract when times are tough
In the context of balance sheets, resources owned by a firm are known as _____.
assets
The three kinds of basic financial statements that are prepared in financial accounting are:
balance sheet, income statement, and statement of cash flows.
The United States goes through a period of recession because of the continuous decrease in the nation's gross domestic product. The Fed intervenes and improves the situation by reducing the discount rate. This move by the Fed will result in:
banks obtaining funds at a lower cost.
A firm's _____ include cash and other assets expected to be converted into cash in the following year.
current assets
In the context of balance sheets, accounts receivable is an example of _____.
current assets
When Congress agreed to raise the debt ceiling during the economic meltdown in the United States in 2011, it temporarily averted a shutdown crisis, but the deal they reached to do so created the _____.
fiscal cliff
In the context of breakeven analysis, _____ remain constant regardless of how many products are sold.
fixed costs
Financial capital refers to the:
funds a firm uses to acquire its assets and finance its operations.
In the context of consumer pricing perceptions, odd pricing creates a perception of:
greater value
A downside of placing market orders is that investors may end up buying at a higher price than he or she expected to pay.
true
Cash budgets normally cover a one-year period and show projected cash inflows and outflows for each month.
true
Which of the following elements is a personal influence on the consumer decision-making process?
Demographics
The Fair Labor Standards Act of 1938 mandated that men and women doing equal jobs receive equal pay.
False
Which of the following is a characteristic of entrepreneurs?
They risk their time, money, and other resources to start and manage their business.
In the context of factors of production, which of the following statements is true of entrepreneurs?
They thrive in an environment that supports economic freedom.
Which of the following statements is true of codes of conduct?
They work best with monitoring
Which of the following is a characteristic of successful entrepreneurs?
Tolerance of uncertainty
Classroom training can be on-site or off-site.
True
For performance appraisals to be effective, managers must focus on fairness, relevance, objectivity, and balance.
True
In the context of financial accounting, the external stakeholders of a firm:
are seldom interested in analyzing detailed accounting information about the individual departments within the firm
Financial managers should focus solely on meeting the financial needs of their firms in the short run, leaving the long-term financial issues to the top management.
false
Small business start-ups are likely to find that getting commercial loans are:
difficult because lenders are reluctant to give loans to firms that do not have a track record.
A capitalist system depends on fair competition among businesses to:
drive higher quality and lower prices
The primary reason people choose to become entrepreneurs is to:
earn more money.
according to small business experts, while raising start-up funds from friends and relatives, it is:
essential to keep the relationship as professional as possible.
Businesses adopt and identify target markets for their products to:
maximize the impact of the cost of marketing.
The difference between the prices at which securities dealers buy and sell a security is called _____.
the spread
In the context of ethical behavior, encouraging fraudulent accounting is illegal and unethical
true
Public accountants provide services such as tax preparation, external auditing, or management consulting to clients on a fee basis.
true
Social security taxes are a source of revenue for the U.S. federal government.
true
The personal needs, the culture, and the family of an individual influence his or her ethical choices.
true