Business 101 Spring Final Exam (MC)

What legislation requires creditors to resolve billing errors within a specified period of time? a) Fair Credit Reporting Act b) Equal Credit Opportunity Act c) Fair Credit Billing Act d) Fair Debt Collection Practices Act

Fair Credit Billing Act

If a balance sheet shows cash as $118,000, liabilities as $115,000, and capital as $125,000, how much would the non cash assets be worth? a) $122,000 b) $233,000 c) $240,000 d) $243,000

$122,000

A corporation with a taxable earnings of $74,000 has a tax rate of 15% on the first $50,000 and a 25% tax rate on the next $25,000. The federal income taxes will amount to a) $13,500 b) $17,100 c) $18,500 d) $29,600

$13,500

It is not wise to charge anything under a) $25 b) $35 c) $50 d) $60

$25

Under the Consumer Credit Protection Act, if you report your credit card lost or stolen, your liability is limited to a) $25 b) $50 c) $100 d) $200

$50

Which of these statements is true about common stock? a) There is no risk b) Dividends are assured c) Each share has voting privileges d) There are no dividends on common stock

Each share has voting privileges

Which of the following is not an advantage of using credit? a) it allows you to shop only at one store b) it is convenient c) it is safer than carrying large sums of cash d) it is useful in emergency situations

It allows you to shop only at one store

What is the marketplace for OTC stocks? a) the New York Stock Exchange b) the American Stock Exchange c) the NASDAQ d) all of the above

NASDAQ

Which of the following is not a stock index? a) Dow Jones b) NASDAQ Composite Index c) P/E Ratio d) Standard & Poor's 500

P/E Ratio

A market characterized by pessimism is a(n) a) bull market b) bear market c) securities exchange d) auction market

bear market

The Treasury security that is available in denominations of $100 and that matures in one year or less is the Treasury a) note b) bond c) bill d) stock

bill

How are stocks of well-known companies classified? a) growth b) blue chip c) cyclical d) defensive

blue chip

The form of ownership selected depends upon a) the capital needed and the financial responsibility the owner is willing to assume b) the nature and size of the business and the tax laws c) neither a nor b d) both a and b

both a and b

The financial ability to repay a loan with the present income is a) capital b) character c) capacity d) collateral

capacity

Preferred stock a) carries more risk than common stock b) carries less risk than common stock c) pays dividends after common stock d) is less expensive than common stock

carries less risk than common stock

Net proceeds refer to the a) cash received from the sale of all assets b) accumulation of capital c) payment of all debts d) cash received from the sale of all assets minus the payments of all debts

cash received from the sale of all assets minus the payments of all debts

An official document giving power to run a corporations is a a) stock certificate b) charter c) proxy d) shareholder certificate

charter

Property you possess that is worth more than your debts is called a) collateral b) capital c) principal d) interest

collateral

Initial investments are a) conservative, high risk b) conservative, low risk c) permanent, high risk d) temporary, low risk

conservative, low risk

Which statement is true about obtaining money in corporations? a) corporations have a more difficult time than proprietorships in raising capital b) partnerships have an easier time raising money than do corporations c) corporations can borrow money more easily than can partnerships d) proprietorships and partnerships have an easier time raising money than do corporations

corporations can borrow money more easily than partnerships

The difference between cash price and total price when installment payments are made is called a) full disclosure b) cost of credit c) add-on interest d) discount interest

cost of credit

Which of the following types of debts would be discharged by bankruptcy? a) income taxes and penalties b) credit card bills c) child support d) alimony

credit card bills

Which of the following statements is true? a) you can get loans from a credit counseling service b) credit plans set up by credit counselors are voluntary c) all credit counseling services are for-profit businesses d) all of these statements are true

credit plans setup by credit counselors are voluntary

At which of the following will you probably get the lowest rate of interest for a consumer loan? a) commercial bank b) finance company c) credit union d) pawnbroker

credit union

The trade name of a business a) does not reduce the owners liability to creditors b) cannot be an artificial name c) cannot be listed as the Dixie Service Company d) does not have to be registered

does not reduce the owners liability to creditors

When a couple files bankruptcy jointly, the exempted item amounts may be a) one half b) the same c) double d) triple

double

A "quasi-public corporation" is operated only by state governments a) true b) false

false

Corporations tend to be a) many in number and small in size b) many in number and large in size c) few in number and large in size d) few in number and small in size

few in number and large in size

The interest or money that is charged a borrower for the use of credit is the a) finance charge b) collateral c) corproration d) all of these

finance charge

People who invest in a corporation are a) legally liable for the debts of the corporation beyond their investment in the shares purchased b) not taxed on dividends received c) provided one vote regardless of the number of shares held d) financially liable up to the amount originally invested

financially liable up to the amount originally invested

The length of time a borrower takes to repay a loan is always expressed as a a) percentage b) rounded number c) decimal d) fraction

fraction

Which of the following statements is false? a) bankruptcy offers a fresh start b) the costs of attorneys' fees and court costs in bankruptcy are relatively small c) bankruptcy will not affect certain types of income a debtor may have d) future credit will be easy to obtain for persons who have filed bankruptcy

future credit will be easy to obtain for persons who have filed bankruptcy

Your FICO score is based on all but which of the following categories? a) payment history b) amounts owed c) gender and marital status d) amount of current debt

gender and marital status

Which of these strategies is not a wise investment practice? a) go fast b) define goals c) keep good records d) get good advice

go fast

Paying your bills on the day due or a few days late will earn you what type of credit rating? a) excellent b) good or fair c) poor d) there's no way to tell

good or fair

Which of the following is not an example of service credit? a) office visits to a doctor b) dry cleaning services c) hairdresser services d) repair services

hairdresser services

Which of the following is not a major cause of bankruptcy? a) insufficient income b) catastrophic injury or illness c) business failure d) emotional spending

insufficient income

The terms capital, net worth, and equity are a) interchangeable and defined as assets less liabilities b) not interchangeable but defined as assets less liabilities c) interchangeable and defined as assets plus liabilities d) interchangeable and defined as assets plus capital

interchangeable and defined as assets less liabilities

The type of bankruptcy wherein creditors ask the court to declare a debtor bankrupt is a) voluntary b) involuntary c) Chapter 7 d) Chapter 13

involuntary

The prime rate charged by banks will be ___ the rate for consumer loans a) lower than b) higher than c) the same as d) no way of telling

lower than

It is illegal to discriminate on the basis of which of the following in granting or denying credit? a) bank affiliations b) occupation c) type of residence d) marital status

marital status

Which of the following is not info that can be obtained through public records? a) marriage license applications b) bankruptcies c) lawsuits d) medical records

medical records

Which statement is true about successful entrepreneurs? a) most successful entrepreneurs experienced early successful startups b) most successful entrepreneurs do not enjoy working on their own c) most successful entrepreneurs feel that it is not necessary to obtain work experience in the types of businesses they launch d) most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over

most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over

A large, professionally managed group of diversified investments is the a) REIT b) mutual fund c) IRA d) discount bond

mutual fund

Which of the following is not a retirement plan? a) mutual fund b) IRA c) annuity d) Keogh

mutual fund

The Treasury security that is available for a minimum purchase of $100 and matures in 2, 5, or 10 years is the Treasury a) note b) bond c) bill d) stock

note

Credit that can be used again and again is called a) installment b) open-end c) closed-end d) contract

open-end

Shareholders of a corporation are often called a) boards b) officers c) owners d) buyers

owners

New businesses mainly fail because a) owners work short hours b) owners are too young c) owners lack financial resources d) owners would rather work for others

owners lack financial resources

The owner of a small grocery store wants to expand but does not have the capital a) proprietorship b) partnership

partnership

A common source of cash loans when property is pledged is a) private lender b) pawnbrokers c) life insurance policies d) loan sharks

pawnbrokers

The most expensive way to figure the finance charge for the credit user is the a) average daily balance method b) precious balance method c) adjusted balance method d) APR

precious balance method

The amount borrowed is known as the a) credit b) interest c) capital d) principal

principal

An accountant is opening an office in a small town a) proprietorship b) partnership

proprietorship

Assigning your voting right to someone else is known as a a) dividend b) cumulative right c) proxy d) participating right

proxy

Unissued shares are the a) shares bought by the organizers b) shares bought by the shareholders c) shares that might be sold and used to expand the business at a later date d) shares bought by the board of directors

shares that might be sold and used to expand the business at a later date

Which of the following is not an example of a long-term investing technique? a) buy and hold b) dollar-cost averaging c) direct investment d) short selling

short selling

In case of error or inquiries about a bill, you a) should write a note on the bill b) should not write on the bill c) do not have to pay any part of the bill d) must pay finance charges on any disputed amount that is discovered to be the store's error

should not write on the bill

When you multiply principal times rate of interest times length of repayment time, the result is a) principal b) simple interest c) refund d) unearned interest

simple interest

In a recent year, corporate sales of goods and services were about a) four times more b) eight times more c) twelve times more d) sixteen times more

sixteen times more than sales from partnerships

In order to form a Subchapter S corporation, what is the maximum number of stockholders that the firm can have? a) 5 b) 15 c) 25 d) 100

100

Most billing cycles are of what length? a) 10 days b) 25 to 30 days c) 60 days d) 90 days

25 to 30 days

The wage earner's plan of bankruptcy is a compulsory, court-enforced plan to repay a portion of debts, over a period of a) 6 months b) 1 year c) 3 years d) 7 years

3 years

The fee a debt collector charges to creditors is often what percentage of the disputed amount? a) 10 b) 25 c) 50 d) 100

50

Which is a form of open-end credit a) American Express b) car loan c) installment loan d) bank loan

American Express

Which type of bankruptcy is commonly called a straight bankruptcy proceeding? a) Chapter 7 b) Chapter 13 c) voluntary d) involuntary

Chapter 7

Which of the following is not a characteristic of common stockholders? a) They are owners of the company b) They vote in the affairs of the company c) They elect the board of directors d) They are paid dividends before holders of any other types of stocks or bonds

They are paid dividends before holders of any other types of stocks or bonds

Credit above what you owe, but not up to the maximum, is called a) Unearned credit b) Unused credit c) Excess credit d) Risky credit

Unused credit

Which of the following is a false statement? a) There are ways to safeguard your credit when shopping online b) Using credit allows for saving c) Using credit wisely will not help you beat inflation d) The type of loan makes a difference in its cost

Using credit wisely will not hep you beat inflation

Taxes that are unique to a corporation are a) a filing fee for a charter and an organization tax b) a filing fee and an annual state tax c) a filing fee, an organization tax, and an annual state tax d) a filing fee, an organization tax, an annual state tax, and a federal income tax

a filing fee, an organization tax, an annual state tax, and a federal income tax

An agreement that involves two or more businesses to provide a good or service is called a) a corporation b) a joint venture c) a nonprofit organization d) an LLC

a joint venture

A loan for which the borrower pledges property to ensure repayment is a) an installment purchase agreement b) a secured loan c) a prorated loan d) a contract

a secured loan

To start your own businesses, you need a) adequate funds b) adequate funds and a general knowledge about business c) adequate funds, a general knowledge about business, and some work experience d) adequate funds, a general knowledge about business, some work experience, and a business opportunity

adequate funds, a general knowledge about business, some work experience, and a business opportunity

Subtracting payments made before computing the charge describes the a) previous balance method b) average daily balance method c) adjusted balance method d) annual percentage rate method

adjusted balance method

What has an effect on stock value? a) the company b) interest rates c) the market d) all of the above

all of the above

It is lawful for creditors to ask you for a) your name b) a list of assets c) your employment history d) all of these

all of these

Which of the following is not a risky investment? a) options b) futures c) penny stocks d) all of these are risky

all of these are risky

If one partner creates a contract that the others do not like a) only the partner

all partners are bound by it

A contract that offers a series of regular payments is call a(n) a) I-bond b) annuity c) mutual fund d) stock option

annuity

Which of the following statements is true? a) sometimes, debts incurred by catastrophic illness can never be paid b) most people who go bankrupt have goals and plans c) owning and operating a small business is rarely risky d) consumers often get into trouble by making purchases based on reason rather than emotion

sometimes, debts incurred by catastrophic illness can never be paid

When you take bigger risks, this stage of investing is called a) initial b) beginning c) systematic d) speculation

speculation

Carefully managing your investments in order to maximize your portfolio is called a) initial investing b) speculative investing c) systematic investing d) strategic investing

strategic investing

A virtual corporation a) is not a form of a joint venture b) does not include business partners who are competitors c) takes advantage of fast-changing market conditions d) operates solely on its own to take advantage of special opportunities

takes advantage of fast changing market conditions

Which of the following is the most serious step in dealing with credit problems? a) debt adjustment b) bankruptcy c) credit counseling d) the 20/10 rule

the 20/10 rule

When an owner of a corporation dies, a) the business automatically ends b) the corporation must be changed to either a partnership or a sole proprietorship c) the life of the corporation is not affected d) the corporation must be changed to a closely held corporation

the life of the corporation is not affected

Which statement is true about proprietorships? a) the owner must consult with others before making decisions b) the owner pays less income tax than corporations c) the owner shares all losses d) the owner shares all profits

the owner pays less income tax than corporations

Approximately how many businesses are formed as proprietorships? a) one out of two b) two out of three c) three out of four d) four out of five

three out of four