DECA SCDC Finance Cluster Exam Questions

Which type of business is known for often being the most innovative? A. Old businesses B. Small businesses C. New businesses D. Large businesses

B Small businesses. Although many people assume that large businesses are more innovative, innovations often come from small businesses. In fact, some studies show that small entrepreneurial companies create twice as many innovations as large companies. The age of a business does not necessarily affect its innovative abilities.

Stock market returns are a(n) ______ economic indicator. A) coincident B) Lagging C) leading D) acyclic

C

Which of the following is a well-regarded source of information about stocks: A) Mediaweek B) Security Dealer C) Value Line D) Financial Executive

C

Chartered Financial Analysts (CFAs) possess extensive knowledge of A. insurance. C. securities and investments. B. banking services. D. entrepreneurship.

C Securities and investments. Chartered Financial Analysts (CFAs) are highly qualified investment professionals. The CFA designation, which is recognized internationally, is offered by the CFA Institute. To earn the CFA designation, individuals must have at least four years of professional investment work experience, follow a strict code of ethics, join the CFA Institute, and pass a series of exams that test their knowledge of portfolio management, types of investments, financial reporting and analysis, and economics.

Which of the following statements about hedge funds is true: A. Investment options for hedge funds are limited in score. B. Hedge funds are designed to generate conservative financial returns C. Government agencies usually manage hedge funds. D. Hedge funds involve private investment partnerships

D

The foundation of the principle of least authority is that computer data are more secure when access to specific types of data are only available to A. the customers who request it. B. mid-level managers. C. personnel during set time periods. D. the people who need it.

D The people who need it. By limiting access to those who use or need it, confidential data are more secure and are less likely to be seen or modified by unauthorized people. Computer passwords are common methods of limiting access to certain computer data. Top-level management usually develops or approves the policies that determine who can access certain data. Mid-level managers usually need access to certain types of business data, but not all of it. Customers are often able to access some data about their personal accounts online.

63. What function allows users to customize and automate tasks when developing a database? A. Macro B. Split C. Break D. Consolidate

63. A Macro. A macro is a customized keystroke or shortcut that commands the database program to perform certain tasks automatically, such as inserting a specific table or bolding specific text. Using macros can increase efficiency when working with complex databases. The split function can divide text or cells. The break function inserts page breaks. The consolidate function combines data.

71. Businesses should keep promises to customers in both personal interactions with employees and A. advertising. C. coworker interactions. B. newspaper articles. C. coworker interactions. D. future products.

71. A Advertising. Keeping promises to customers involves both personal interactions and advertising. Companies must make good on their promises, no matter what method they use to make them to their customers. These promises don't usually come from newspaper articles, coworker interactions, or future products.

One of the reasons that has caused government's role in business to expand is that A. products have become very technical B. people's attitudes have changed C. costs of production have continued to increase D. competition in the marketplace has increased

B

Businesses usually invest in A. bonds. B. themselves. C. stocks. D. real estate.

B Themselves. Businesses invest money just as individuals do, with the hope for a healthy return. Often, businesses invest back into themselves by researching and developing new products, purchasing the latest and most efficient technologies, expanding into new markets, etc. They may also invest in stocks, bonds, or real estate, but putting money back into the company is the most common form of business investment.

What do bond yields typically do during an economic expansion? A. Drop to near zero B. Gradually decrease C. Increase D. Remain unchanged

C

What type of economic indicator are nominal interest rates? A) Procyclic and lagging B) Countercyclic and lagging C) Procyclic and coincident D) Countercyclic and coincident

C

Which of the following is not a reason to participate in a discussion: A. To organize your thoughts B. To gain confidence C. To declare your opinion D. To think critically

C

A business protects itself from loss by taking out an insurance policy on an employee who handles expensive products. This loss-prevention technique is called A. monitoring. B. covering. C. restricting. D. bonding.

D Bonding. Bonding means that the employer buys insurance coverage to protect the business against possible employee theft. Should the bonded employee lose or steal anything of value, the insurance company will reimburse the business for the loss. The employee is covered, in insurance terms, by the bond. The business may also monitor or restrict the employee's activities on the job, but those terms do not refer to bonding.

Financial planning can be described as a way to A. retire with a substantial amount of money in the bank. B. stop all impulsive purchases. C. achieve your professional goals. D. realize what it takes to get the things you really want.

Realize what it takes to get the things you really want. Financial planning is a good way to realize what it takes to get the things you really want. It is not a method for stopping all impulsive purchases nor is it a way to achieve your professional goals. And, even the best financial planning can't guarantee you'll retire with a substantial amount of money in the bank.

Which of the following is an example of arbitrage: A A business places a percentage of its income into a retirement account for employees B. an individual earns interest on his/her money by agreeing to leave it in a financial institution for a certain time frame C.An individual buys 10 shares of stock for $150 per share on one market, and immediately sells each share for $200 on another market D. A business sells corporate bonds to obtain funds to finance major expansion efforts.

C

Which of the following titles belongs to a financial manager: A. Procurement clerk B. Bill and account collector C. Treasurer D. Billing Clerk

C

How does self-control help you to think clearly? A. By helping you to deal with criticism B. By helping you to be defensive C. By helping you to be objective D. By helping you to deal with coworkers

C By helping you to be objective. Self-control helps you to think clearly by enabling you to keep your emotions under control. This helps you to be open-minded and objective. Self-control helps you to deal with criticism without becoming defensive, but that is not part of clear thinking. Self-control helps you to deal with coworkers by helping you to think before you speak.

Businesses often maintain records about vendors' pricing, delivery terms, and credit policies and use the information in the records to A. follow safe shipping procedures. B. negotiate higher discounts. C. monitor inventory levels. D. award purchasing contracts.

A

Calculate a business's total cash receipts for one month if it had cash sales of $6,500, credit sales of $2,450, cost of goods sold of $2,725, and total expenses of $1,980. A. $6,500 B. $8,900 C. $6,225 D. $4,245

A $6,500. Total cash receipts is the total of all of the sources of income that the business lists under cash receipts. Total cash receipts includes cash sales. Only collected money, not monies owed to the business from credit sales, is recorded under cash receipts. In this example, only cash sales of $6,500 is part of total cash receipts. Total cash paid out includes cost of goods sold and all other business

Before a business and a customer can enter into a valid contract, the offer to do something in return for payment must be A. accepted. B. in writing. C. implied. D. expressed.

A Accepted. Contracts are agreements between two or more parties stating that one party is to do something in return for something provided by another party. Several elements must be present for a contract to be valid. First, one party must make an offer to do something, such as sell a product for a certain price and deliver it on a certain date. Then, the other party must accept that offer. A valid contract cannot be formed unless the offer is accepted. The offer may be made verbally or in writing. Express and implied are types of contracts that may be formed once the offer is accepted.

A company purchases an expensive new software system and divides the cost of it between the two departments that will use the system. This is an example of cost A. allocation. B. accumulation. C. dividing. D. precision.

A Allocation. Cost allocation is the assignment of costs to cost objects, such as a project, a department, a customer, etc. The company in this example allocates the cost of its new software system to two departments. This is not considered cost accumulation, dividing, or precision.

A business owner is concerned that some of his employees may be using their company credit cards to make personal purchases. Which data-mining technique should the owner use to review the employees' credit card transactions each month to identify questionable transactions? A. Artificial neural networks B. Decision trees C. Nearest-neighbor method D. Dashboards

A Artificial neural networks. Three common data mining techniques are artificial neural networks, decision trees, and the nearest-neighbor method. An artificial neural network is a data-mining technique often used to review financial records to identify possible errors and questionable entries. Decision trees, on the other hand, are commonly used to classify data and build models. The nearest-neighbor method classifies data records according to similar historical data. A dashboard is a data-mining tool that summarizes a business's financial data and presents that information in easy-to-read charts and/or tables.

TO BE most effective, continuous-inspection compliance technology should have access to transactional information A. at its source. B. biweekly. C. samples. D. liquidity ratios.

A At its source. To prevent an intermediary from tampering with transactional data, continuous-inspection compliance technology such as a virtual auditor must have access to the information at its source. Because continuous-inspection technology works continually to identify errors and violations, it needs access to transactional information as the transactions actually occur, not biweekly. Rather than reviewing samples of transactional information to verify compliance, the technology must have access to all transactional data. Liquidity ratios are not relevant to a conversation about continuous-inspection compliance technology.

Which of the following is a true statement about risk management and ethical behavior in business: A. Businesses often reduce the risk of financial loss by providing ethics training for their employees. B. Because employees understand right from wrong, they tend to reduce risk levels rather than increase them. C. Risk primarily involves the ways in which a firm invests in the stock market, so ethics are not an issue. D. If employees always behave in an ethical manner, the business will virtually eliminate its risk factors.

A Businesses often reduce the risk of financial loss by providing ethics training for their employees. Because employees' personal ethics often differ from their employers' ethics policies, it is important for businesses to provide ongoing ethics training for all employees. If an employee does something unethical (intentionally or unintentionally), the business may be liable for the employee's actions, which may involve financial losses. Effective risk management involves monitoring many business activities including investments, product quality, sales processes, etc. Risk can be controlled and reduced, but it cannot be eliminated.

Businesses often save excess money because it has a positive effect on the business's A. cash flow. C. accounts receivable. B. interest rate. D. debt equity.

A Cash flow. When businesses save excess money, they have more cash available to cover unexpected expenses or to invest. Saving money has a positive effect on a business's cash flow which determines the amount of cash the business has to work with at any given time. The more money that is saved, the more cash is available. Interest rate is the percentage figure used in calculating interest charges. Accounts receivable are all monies owed to a firm by its customers. Debt is the amount of money a business owes while equity is net worth.

Insecure people are often afraid to become assertive because they think they will A. damage their relationships. B. have to please others. C. be considered childish. D. lose their independence.

A Damage their relationships. Insecure people are often anxious about their interpersonal relationships. They are afraid if they become assertive, they may ruin a friendship or end a relationship. Assertiveness is a risk they are unwilling to take. These people are dependent rather than independent and may already be considered childish because of their passive behavior that focuses on pleasing others.

After defining the research question, a financial business establishes a set of rules for placing the data in certain segments or groupings during the data-mining process. What data-mining approach is the financial business using? A. Decision tree C. Neural networking B. Rule induction D. Fuzzy logic

A Decision tree. Data mining is the process of searching computer databases to look for patterns and relationships among information. To begin the data-mining process, the business must first define the research question. Then, the business must identify the types of data available and how they are stored in the database. After identifying this information, the business decides which approach to use to mine the data. A decision tree is an approach in which the data are categorized or segmented into meaningful, related groups based on certain characteristics that are defined by the set of rules (criteria) that the business establishes. Using the tree analogy, the trunk represents all of the data, each branch contains certain characteristics, and each leaf contains subcategories of related branch characteristics. The rule induction approach involves the use of "if...then..." rules or scenarios to mine or obtain data. The neural networking approach uses computer applications that mimic the ways in which the human brain processes data, which often involve sequencing data patterns. The fuzzy logic approach uses broad or vague concepts to set rules, such as "high" or "low."

What do some investors use to hedge the risk of investing in the foreign exchange market? A. Derivatives C. Venture capital B. Emerging markets D. No-load funds

A Derivatives. Derivatives are financial instruments whose value depends upon the value of other financial instruments or market indices. Investors frequently use derivatives to hedge or reduce the risk of investing in the foreign exchange market, which is sometimes volatile. The derivatives help to reduce the impact of significant fluctuations in foreign exchange markets. Emerging markets are financial markets in countries with developing economies. Emerging markets are usually receptive to foreign investment, but they are also more volatile and risky than financial markets in developed countries. Venture capital is invested money that is used for new business opportunities. No-load mutual funds have no up-front sales charges.

The first step in maintaining an inventory of supplies for the business is to A. develop a list of supplies that the business needs. B. conduct research to find vendors that sell the supplies. C. compare prices among vendors. D. organize a space to store the supplies.

A Develop a list of supplies that the business needs. Businesses need to keep supplies on hand for their employees to perform their jobs. The types and quantities of supplies vary by business. A business should keep some supplies on hand so that employees can obtain them when needed. To maintain an inventory of supplies, a business should first determine which supplies the employees need to perform their jobs, such as pencils, printer paper, calculators, etc. After developing a list of necessary supplies, the business can locate vendors, compare prices, order the supplies, and organize a space to store the supplies.

In what stage of the data-mining process would you clean data in a database? A. Exploration C. Prediction B. Model building and validation D. Deployment

A Exploration. The exploration stage of data mining generally starts with preparation of the data. This includes such activities as data cleaning, data transformation, selecting subsets of records for analysis, selecting the variables of interest, and choosing the analytic method to apply. The second phase of the data-mining process is model building and validation in which various models appropriate for the study are identified, and the best one is selected. Deployment is use of the selected model. Prediction is not a stage in the data-mining process; however, data miners want to make predictions from their data-mining activities.

Financial globalization tends to cause an increase in A. herd behavior among investors. B. investors' exposure to business cycle risks. C. taxes on international transactions. D. limits on foreigners' access to domestic markets.

A Herd behavior among investors. Although financial globalization tends to increase investors' access to many different financial markets, financial globalization also seems to increase the risks of speculative bubbles and herd behavior among investors. Herd behavior involves individuals who act together as a group without any planned direction. It is usually irrational and driven by emotions. In good times, investors hurry to join others in a buying frenzy. But, in bad financial times, fearful investors join others in a rush to get out of risky markets. By diversifying their funds in many different countries, investors are able to diversify their risk and reduce their exposure to business cycle risks. To enable capital to flow more freely across their national borders, many countries have lowered their taxes on international financial transactions.

Which of the following questions should be answered by the purchasing function: A. How much merchandise should we buy? B. How can we inform customers of available merchandise? C. How will merchandise be shipped to us? D. How can we protect merchandise from pilferage?

A How much merchandise should we buy? Effective purchasing provides the goods, services, or materials that businesses need in order to continue to exist. It does this by determining what to purchase, when to purchase, how much to purchase, where to purchase, how to purchase, and when to pay for the purchase. Distribution will determine shipment of merchandise. Promotion will determine how customers should be informed of merchandise availability. Risk management will determine how to protect products from pilferage.

In order to manage your time effectively, all of the things that you want to accomplish should first be A. identified. B. classified. C. scheduled. D. prioritized.

A Identified. An essential step in effective time management is to identify all of your required activities. These activities can then be classified according to type, prioritized according to importance, scheduled to be done at an appropriate time, and finally performed.

Which of the following statements regarding internal control systems is true: A. Internal controls are a component of enterprise risk management. B. The purpose of an internal control system is to eliminate risk. C. Many companies use internal control systems instead of risk management. D. If a company has an internal control system, monitoring and reporting are unnecessary.

A Internal controls are a component of enterprise risk management. An internal control system consists of procedures and practices designed to ensure compliance, protect resources, and increase reliability of company data. Risk management and internal control systems are both key components of enterprise risk management (ERM). Company management uses ERM to assess, manage, and limit risks throughout business operations and across all business departments, divisions, etc. By assessing, managing, and limiting the company's risks, the enterprise risk management system (including internal controls and risk management) helps the business to reach its objectives and goals. Although an internal control system can reduce risk, it cannot eliminate all risk. Internal control systems and risk management work together in an organization; a business cannot have one without the other. Even if a company has an internal control system, periodic monitoring and reporting of business processes and data are still necessary.

Which of the following describes the matrix organizational structure: A. It is a combination of two other organizational structures. B. It includes only traditional departments, such as sales and marketing. C. It is separated by product lines. D. It is the oldest organizational structure being used.

A It is a combination of two other organizational structures. The matrix organizational structure is a combination of the functional structure and the divisional structure. It includes traditional departments, but it is also broken down by division (including, but not limited to, product lines). As organizational design goes, it is a newer, rather than older, structure.

One way all employees can demonstrate initiative is to: A. learn all they can about the company. B. find out the company's future plans. C. take part in community activities. D. make sure they receive appropriate benefits.

A Learn all they can about the company. Learning about the company on your own initiative demonstrates your sincere interest in the business. This might include, but is not limited to, learning about the company's future plans. Taking part in community activities is a personal choice, not initiative. Making sure they receive appropriate benefits is part of the employment process.

The general economic growth of a country is supported by its A. level of productivity. B. standard of living. C. gross domestic product. D. wealth of goods and services.

A Level of productivity. The general economic growth of a country depends upon its level of productivity. For example, the level of productivity in the United States has given the country a wealth of goods and services which allows its citizens to reach a certain standard of living. Gross domestic product is the final, total value of all goods and services produced within a country's geographic boundaries during a year's time. GDP serves as a measure of economic growth.

Which of the following is a common financial-information management problem: A. Multiple financial data sources and systems within an organization B. Overreliance on a master source and system for financial data C. Strict organizational data governance policies and processes D. Insufficient financial information due to compliance regulations

A Multiple financial data sources and systems within an organization. One of the most common problems faced by financial-information management is multiple financial data sources and systems within an organization. Because of the different, sometimes incompatible data sources and systems, it is often difficult for managers to get a single view of their companies' financials. Therefore, organizational overreliance on a master source and system for financial data is not typically a financial-information management problem. Few companies have a single master source of data nor a single system for recording and reporting the data. Rather than strict organizational data governance policies and processes, most companies suffer from inadequate data governance. Due to increased compliance regulations, most companies have much more financial information than ever before. SOURCE: FM:002

When preparing a statement of changes in an owner's equity document, which of the following are specifically represented on the statement: A. New investments by the owner B. Property taxes paid by the owner C. Depreciation of company assets D. Lost revenue due to discharged debt

A New investments by the owner. New investments or withdrawals by the owner are specifically represented on a statement of changes in an owner's equity document, as well as the business's net income or loss. Property taxes, depreciation of company assets, and lost revenue are considered when determining net income or loss, but they are not specifically listed on the statement of changes in an owner's equity document.

There are two kinds of workers that cause reports of national unemployment to be understated. They are _________ and ___________ workers. A. part-time; discouraged B. seasonal; part-time C. discouraged; efficient D. efficient; seasonal

A Part-time; discouraged. Part-time workers could also be counted as partially unemployed. Some work part-time through choice, while others cannot find full-time employment. Discouraged workers are often placed within the category of "not in the labor force," though they might have been actively seeking employment for sometime. Discouraged, they often give up the search and choose to not rejoin the labor force. Seasonal unemployment is common and does not cause understatement in reports of national unemployment. Efficient workers have no effect on the reports of national unemployment.

Which of the following is the most likely action that the government takes when a person misses the deadline for filing his/her income tax return? A. Penalty B. Refund C. Extension D. Allowance

A Penalty. A penalty is a punishment. The government depends on income tax to support public programs. When people do not provide income tax information when it is needed, the government often imposes a penalty, usually a fine or fee. Ongoing failure to report income can result in imprisonment. The government does not offer a refund or allowance for missing an important deadline. However, a person can file for an extension to avoid being penalized for missing a filing deadline.

The migration of people from one location to another that affects the types of products that businesses sell is an example of a: A. population trend. B. geography issue. C. transportation route. D. social lifestyle.

A Population trend. Migration is a population trend that indicates the movement of people throughout the country as well as into and out of the country. Migration trends are important to businesses because businesses need to know where their customers are located. For example, many people are leaving colder climates and migrating to what is considered the Sunbelt. This movement affects businesses because the types of products they sell and the way they sell them will change. Also, the increased migration of ethnic groups into the country creates a need for new goods and services that meet the needs of a multicultural population. The migration of people from one location to another is not a geography issue, a transportation route, or a social lifestyle.

What does an income statement show about a company over a period of time? A. Profitability B. Reliability C. Equity D. Liabilities

A Profitability. The income statement shows a company's profitability over a period of time. Reliability, equity, and liabilities are not part of the income statement.

How does forming a captive insurance company typically impact a corporation's federal tax liability? A. Reduces tax due on the captive's premiums B. Increases tax due on the captive's loss reserves C. Increases the corporation's sales tax liabilities D. Eliminates the corporation's state tax liabilities

A Reduces tax due on the captive's premiums. Even if it is not associated with an insurance company, an individual company, industry, or association may create a captive insurance company to specifically protect its parent group(s). The captive insurer aids its parent group(s) by reducing premium expenses, freeing up capital, and covering risks not commonly addressed by the greater insurance company. In addition, forming a captive insurance company can reduce, eliminate, or defer federal taxes due on the corporation's insurance premiums. A captive insurer typically decreases the tax due on a company's loss reserves. Forming a captive insurance company does not typically increase the corporation's sales tax liabilities, nor does it eliminate the corporation's state tax liabilities.

What is one factor that determines a manager's credibility with employees A. Reputation B. Creativity C. Patience D. Aptitude

A Reputation. A manager who has the reputation of being knowledgeable and experienced usually has credibility with employees. Credibility is believability, and employees are more likely to believe a manager who has the appropriate background and ability. Managers who have a reputation of being unethical or poorly informed often have difficulty persuading employees because the managers lack credibility. Aptitudes are natural talents for learning specific skills. Creativity is the ability to generate unique ideas, approaches, or solutions. Patience is the ability to endure life's aggravations and difficulties calmly.

Falling interest rates typically cause A. stock prices to increase. B. stock prices to decrease. C. a stock market to crash. D. no change in stock prices.

A Stock prices to increase. Falling interest rates typically cause stock prices to increase. When interest rates fall, it becomes less expensive for companies to acquire funds needed to finance projects and operations. Because their borrowing costs decrease, the companies' earnings often increase. As a result of higher earnings, the companies' stock prices increase as well. Falling interest rates usually cause a positive change in stock prices, not a decrease in stock prices. A stock market crash is a sudden, dramatic decline in stock prices.

Seeing the big picture instead of smaller, individual parts is an organizational learning concept known as A. systems thinking. B. team learning. C. shared organizational vision. D. personal mastery.

A Systems thinking. Systems thinking is an organizational learning concept that focuses on the big picture rather than seeing smaller, individual parts. Team learning means thinking and working together as a group. Shared organizational vision refers to sharing a mutual commitment to the future the firm seeks to create. Personal mastery is striving for individual learning as a means of advancing the organization.

Jana Rockford works at Main Street Savings and Loan. As a teller, what is one of Jana's job responsibilities? A. Telling her customers about banking products B. Managing her customers' retirement funds C. Making commodities trades on behalf of her clients D. Processing payroll for business clients

A Telling her customers about banking products. As a bank teller, Jana processes the customers' bank transactions and often tells them about the bank's products, such as credit cards, club accounts, and savings bonds. Certified finance professionals (financial planners) manage business retirement funds, and authorized stockbrokers trade commodities on behalf of their clients. Processing payroll for other businesses is beyond the scope of a teller's responsibilities.

Business customers differ from final consumers in that A. there is a greater emphasis on personal selling in business-to-business marketing. B. business customers don't care about service as much as consumers do. C. consumers tend to buy in bulk more often than businesses do. D. consumer products tend to be more technical in nature.

A There is a greater emphasis on personal selling in business-to-business marketing. In consumer marketing, the emphasis is on promotion and advertising; in B2B marketing, however, there is a greater emphasis on personal selling. Businesses tend to buy products that are more technical in nature than consumer products. Businesses also tend to buy in bulk more than individual consumers do. Both business customers

What is one of the main reasons that employees behave unethically? A. To do what everyone else does B. To create positive customer relations C. To become managers D. To obtain publicity

A To do what everyone else does. Employees who behave unethically often justify their actions by believing that everyone else does it. Some employees may see their coworkers use company equipment for personal projects and then do the same themselves. Most employees realize that such behavior is unethical and use "Everyone else does it" as an excuse. Unethical behavior would not result in long-term, positive customer relations. Most people would not want their unethical behavior to be publicized. Although some people may behave unethically to become managers, it is not a main reason for unethical behavior.

Which of the following has proven to be an effective way to initiate a professional relationship with a vendor: A. Treating the person to a round of golf C. Having salespeople talk to the vendor B. Giving the vendor an expensive gift D. Offering jobs to people on the vendor's staff

A Treating the person to a round of golf. Something as simple as four hours of golf gives you the opportunity to get to know a vendor better. It gives you an opportunity to learn the person's interests and to talk business in a casual environment. Giving the vendor an expensive gift might be construed as a bribe. Although having salespeople talk to the vendor is helpful, it doesn't foster a professional relationship with you. Offering jobs to people on the vendor's staff would create conflict rather than helping to build a positive, professional relationship.

To manage potential risks resulting from unethical conduct, many companies build internal infrastructures that promote and enforce ethical practices. This internal infrastructure is likely to include appropriate audit procedures, a code of conduct, and a __________ policy. A. whistleblower C. monetary B. credit D. constituent

A Whistleblower. One way to manage potential risks resulting from unethical conduct is to build an internal infrastructure that promotes and enforces ethical practices and offers incentives to behave ethically. This internal infrastructure typically includes appropriate audit procedures, a code of conduct, a committee to develop the code, training for employees about the code, and a whistleblower policy. A whistleblower policy encourages and enables employees to report unethical behavior or actions without fear of negative repercussions such as demotion or firing. A credit policy is a guideline for a business to follow in controlling the use of payment plans that allow customers to purchase now and pay later. Monetary policy is the government policy that determines the amount of money that will be in circulation and the level of interest rates. Constituent policies are public policies that apply to the government or nation as a whole. Constituent policies include national security, foreign affairs, diplomacy, etc.

Which of the following accounting systems provides businesses with a better picture of their net profits for each accounting period by matching income earned in a period against the expenses of the period: A. Cash B. Accrual C. Managerial D. Perpetual

B Accrual. The accrual accounting system records transactions at the time they occur even if no money changes hands at the time, such as a purchase made with credit. Most businesses use this method because it more accurately reflects the business's overall financial position. The cash accounting method records income and expenditures at the time the money changes hands; this can result in income and expenses not appearing in the same time period. Managerial accounting provides financial information internally to managers, which helps them make appropriate business decisions. Perpetual is a type of inventory system that updates inventory information on a continuous basis as transactions occur.

The private enterprise economic system is often described as a A. controlled system. B. price-directed system. C. laissez-faire system. D. pure system.

B Price-directed. The U.S. private enterprise economy is often called a price-directed system because price determines what consumers buy, which jobs they will take, the success or failure of businesses, and the types of products that will be produced. Prices are important in making the system work correctly. The U.S. economic system is not pure or controlled. Instead, it is considered a mixed economy because there is limited government control. Laissez-faire is not a type of economic system but a management style in which employees work with very little direct supervision.

What helps to create possession utility? A. Distribution B. Promotion C. Production D. Competition

B Promotion. Promotion is a marketing function that communicates information about goods, services, images, or ideas to customers or clients. Possession utility is usefulness created when ownership of a product is transferred from the seller to the user. Businesses promote their goods and services in order to increase the demand for them. Distribution is the process of shipping, handling, and storing items on the way from the producer to the consumer. Production is the process or activity of producing goods and services. Competition is the rivalry between two or more businesses to attract scarce customer dollars.

How does analysis of standard costs differ from analysis of a budget? A. A budget analysis shows forecasted amounts, while standard cost analysis shows actual costs. B. A budget analysis provides an overview, while standard cost analysis shows the details of variances. C. A budget analysis deals with quality and quantity considerations, while standard cost analysis deals with quantity considerations. D. A budget analysis is conducted by all staff involved in setting the budget, while standard cost analysis is conducted by a departmental manager.

B A budget analysis provides an overview, while standard cost analysis shows the details of variances. When employees analyze a budget, they can determine overall variances in their projections; however, they cannot determine the causes (or the details) of the variances in projections. That information is provided by analyzing standard costs to determine whether too much money was paid for materials, too much time was spent on labor, materials were wasted, or the amount of inputs required differed from projections. This helps businesses pinpoint problems. Both budgets and standard costs deal with projected or forecasted amounts, quality and quantity considerations, and all staff involved in setting the projections.

Supervised by the Federal Reserve Board, The DAB Company provides investment advisory services, insurance underwriting, securities underwriting, and merchant banking services. What does the DAB Company exemplify? A. An accounting firm B. A financial holding company C. A central bank D. A commodities investor

B A financial holding company. Because financial holding companies provide a wide variety of financial services and related products, the Federal Reserve Board supervises their activities. The primary services that an accounting firm provides include accounting, tax preparation, auditing, and bookkeeping services. Some financial holding companies may offer accounting services. Commodities investors invest their funds in goods (futures) such as grains, livestock, raw materials, etc. A central bank is often responsible for determining interest rates, controlling the nation's money supply, and regulating the banking industry. The Federal Reserve is an example of a central bank.

When a nation can produce a product for less than other nations, it is said to have a(n) A. comparative advantage. B. absolute advantage. C. trade quota. D. trade surplus.

B Absolute advantage. Countries should specialize in and trade those products in which they have an absolute advantage. Comparative advantage is achieved by a nation from specializing in and producing goods and services at which it is relatively most efficient. Trade surplus occurs when a nation's exports are greater than its imports. A quota is a trade restriction that limits the quantity of goods which can move in and out of a country.

Which of the following statements regarding joins is true: A. A self join combines rows that have equivalent values for specified columns. B. An inner join returns only the rows of data that satisfy the join condition. C. An outer join returns results from two or more tables where no exact joins of any sort are possible. D. An equijoin returns rows satisfying the join condition, along with rows from one table that can't be joined with rows from the other table.

B An inner join returns only the rows of data that satisfy the join condition. A join is a type of database query that combines rows from multiple tables. There are many different types of joins, and each one returns different results. For instance, an inner join (also known as a simple join) returns only the rows of data that satisfy the join condition. Outer joins, on the other hand, return the rows of data that satisfy the join condition, along with additional rows from one table that cannot be joined with any rows in the other table. A self join joins a table to itself. An equijoin combines rows that have equivalent values for specified columns, while a non-equijoin returns results from multiple tables where no exact joins are possible.

Environmental scanning is sometimes called environmental A. management. C. planning. B. analysis. D. protection.

B Analysis. Environmental scanning is sometimes called environmental analysis or environmental monitoring. This is because the process includes the activities of gathering information (monitoring) and determining its future impact (analyzing). Environmental protection refers to the earth's environment. Businesses can neither manage nor plan the environment—it is beyond their control. They can only control internal resources to respond to environmental changes appropriately.

When filing a tort against a business, the plaintiff must establish that the defendant A. damaged property intentionally. B. breached the duty of care. C. conspired with a competitor. D. violated the doctrine of sovereign immunity.

B Breached the duty of care. The duty of care is the basic principle that expects all individuals and businesses to exhibit socially responsible behavior by using caution to prevent harm and by watching out for one another. A tort is a private wrongdoing that potentially harms another person or entity. If a business or one of its employees breaches the duty of care, the business may be held liable for the tort. However, the plaintiff must have grounds or proof that establishes that the business or its employee (defendant) has committed a wrongful act, thereby breaching the duty of care. Intentional damage and conspiring with a competitor (collusion) are types of torts. The doctrine of sovereign immunity is the universally accepted principle that each nation has the right to manage its own government and develop its own laws.

How could financial analysis applications be used to identify possible conflicts of interest? A. By isolating entries against authorization records for new or terminated employees B. By comparing employee phone numbers and addresses to vendor information for payables C. By comparing vendor payables posted to purchase orders D. By comparing yearly volume with on-hand quantity for stock item

B By comparing employee phone numbers and addresses to vendor information for payables. A conflict of interest is any relationship that is, or appears to be, not in the business's best interest. It would prevent someone from performing her/his duties and responsibilities objectively. To spot probable conflicts of interest, businesses can use their financial analysis applications to cross check employee data with that of vendors. The other examples can be used to analyze financial data for other purposes.

A characteristic of managerial accounting is that it focuses on A. reporting the business's long-term investment goals. B. capturing the business's day-to-day financial activities. C. developing the business's annual report. D. preparing and submitting the business's tax forms.

B Capturing the business's day-to-day financial activities. Accounting is the process of keeping and interpreting financial records. Managerial accounting primarily focuses on capturing, maintaining, and interpreting the business's accounting information for internal use and decision making. Managerial accounting often summarizes information about the business's day-to-day financial activities, such as sales transactions (accounts receivable) and the monies the business owes others (accounts payable). Financial accounting focuses on capturing, maintaining, preparing, and reporting financial information to external audiences. Examples of financial accounting activities include preparing tax data for the government and developing the annual report for the business's stakeholders. The annual report usually contains information about the business's long-term investment goals.

Which of the following is an example of persuasive messages that businesses write: A. Electronic mail B. Collection letter C. Handwritten note D. Interoffice memo

B Collection letter. A collection letter is a type of persuasive message that many businesses write to customers who are delinquent in making payments on their accounts. The purpose of the collection letter is to persuade customers to send payment or to contact the business to make some type of arrangement. Collection letters should not offend customers but should convince them to respond immediately. Many businesses write electronic mail, handwritten notes, and interoffice memos, but these types of messages are not necessarily persuasive.

CopyIt Printing Company employs several delivery drivers. Last year, the local police cited two of the company's new drivers for causing accidents that resulted in passenger injuries and vehicular damage. The printing company later discovered that the drivers were cited for numerous traffic violations while employed for other companies. To avoid hiring unsafe drivers in the future, the company should A. mandate drug testing for all employees on a monthly basis. B. conduct background checks on job applicants. C. require delivery drivers to take a driving exam every six months. D. ask job applicants about their former employers during the interview process.

B Conduct background checks on job applicants. Because hiring and training employees is an expense for businesses, they should ensure that the applicants' previous work experiences do not present business risks for them. Because applicants are unlikely to discuss unfavorable past work experiences during an interview, businesses need to take action to verify the information on their employment applications. Employers should confirm the applicants' previous employment, verify their references, and conduct background checks on applicants if needed. CopyIt may have reduced its liability by checking the drivers' previous driving records and employment history before extending job offers to them. There is not enough information provided to determine if the accidents involve substance abuse, so mandating monthly drug testing for all employees may not prevent future driving accidents. Requiring current drivers to take a driving exam every six months will not prevent the business from hiring unsafe drivers.

The essence of time management is to A. eliminate the need to prioritize activities. B. control events in order to accomplish priorities. C. focus on spreading work over a period of time. D. set a fixed schedule and follow it.

B Control events in order to accomplish priorities. All people need to learn how to manage their time. They need to maintain control over the events in their lives so that there is a balance among those events. This involves planning and organizing their personal and professional activities. Time management involves prioritizing activities, but it does not mean setting a fixed schedule and never deviating. Schedules should have some flexibility built in to take care of unexpected events. Time management focuses on making the best use of time rather than on spreading work over a period of time.

The Money for You Bank recently merged with the Keeping You Safe Insurance Company. The merger is an example of __________ in the finance industry. A. consolidation B. convergence C. tactical planning D. licensing

B Convergence. Convergence occurs when financial providers from different financial sectors (e.g., banking services and insurance) merge. Consolidation takes place when financial providers within the same institutional category merge. For example, if two banks were to merge, they would be consolidating their companies. Tactical planning is short-range planning (one year) of specific actions the business will take. Two businesses should look much further ahead than just one year before making the decision to merge. Licensing is a business structure that requires the authorization or permission from an owner of another entity to use trademarked, copyrighted, or patented material for a specific activity, during a specific time period, for the profit of both parties. Businesses that enter into licensing agreements do not merge.

Jonas is a data scientist at a research firm. Part of his responsibilities include looking through his firm's databases and eliminating redundant data. Jonas is performing A. digital analysis. B. data normalization. C. data filtering. D. information scanning.

B Data normalization. Normalization is the process of efficiently organizing data in a database. There are two goals of the normalization process: eliminating redundant data and ensuring that data is stored in ways that make sense. By eliminating redundant data, Jonas is performing data normalization. Digital analysis involves analyzing and interpreting data for patterns, consistencies, or discrepancies. Data filtering involves refining data sets so that they can be more easily understood. Information scanning is not a term not typically used in the business world.

Yvonne is running a query to create, delete, or modify other database objects. What type of query is Yvonne running? A. Select B. Data-definition C. Crosstab D. Pass-through

B Data-definition. Running a query in a database is the equivalent of giving the database instructions for working with specific data. Data-definition queries tell the database to create, delete, or modify other database objects. Select and crosstab queries are used to retrieve specific data and present them in reports. A pass-through query tells the database engine to pass the query to a remote database server for processing.

After defining the research question, a financial business establishes a set of rules for placing the data in certain segments or groupings during the data-mining process. What data-mining approach is the financial business using? A. Rule induction B. Decision tree C. Neural networking D. Fuzzy logic

B Decision tree. Data mining is the process of searching computer databases to look for patterns and relationships among information. To begin the data-mining process, the business must first define the research question. Then, the business must identify the types of data available and how they are stored in the database. After identifying this information, the business decides which approach to use to mine the data. A decision tree is an approach in which the data are categorized or segmented into meaningful, related groups based on certain characteristics that are defined by the set of rules (criteria) that the business establishes. Using the tree analogy, the trunk represents all of the data, each branch contains certain characteristics, and each leaf contains subcategories of related branch characteristics. The rule induction approach involves the use of "if...then..." rules or scenarios to mine or obtain data. The neural networking approach uses computer applications that mimic the ways in which the human brain processes data, which often involve sequencing data patterns. The fuzzy logic approach uses broad or vague concepts to set rules, such as "high" or "low."

Why are there no specific rules for workers to follow in treating others fairly? A. Businesses object to having rules. B. Every workplace is different. C. Workers know how to be fair. D. Rules are difficult to remember.

B Every workplace is different. There are no hard-and-fast rules for treating coworkers with fairness and respect because every workplace is different, and each group of workers is different. Businesses would not object to having fairness rules, but since this is not feasible, they often set policies for employees to follow. Fairness rules would not necessarily be difficult to remember. Workers need training or policies to follow since most people do not automatically know how to be fair.

Which of the following is an example of making a decision by consensus: A. One person rules. C. The majority rules. B. Everyone has equal power. D. Everyone votes.

B Everyone has equal power. Consensus is a decision-making outcome that requires the substantial agreement of each group member. Making a decision by consensus means that each group member has equal power to say "Yes" or "No." Consensus cannot be reached if even one group member disagrees. Consensus does not mean that one person rules, the majority rules, or everyone votes.

"Big Q" focuses on A. improving factory conditions. B. exceeding customer expectations. C. conforming to specifications. D. designing and developing products.

B Exceeding customer expectations. "Big Q" focuses on ingraining quality into every aspect of the organization to meet and exceed customer expectations. "Little Q" focuses on conforming to specifications. Neither approach to quality management specifically focuses on improving factory conditions or designing and developing products, although those may certainly be important goals of a quality-management system.

Group orientation sessions for new employees are very important because they A. explain the duties of each job. B. help to motivate employees. C. encourage organizational input. D. provide in-depth training.

B Help to motivate employees. A good orientation program makes new employees feel welcome, gives them an overview of the business, and helps to motivate them to do their best. Orientation often includes giving the new workers a handbook so that they have a copy of the information being presented. The primary purpose of an orientation session is to provide general information; it is not used to discuss specific job duties, provide in-depth training, or solicit input about organizational processes.

54. Axis Manufacturing produces high-quality locomotive engines. Traditionally, the company has produced its own parts for its engines, but now it is considering purchasing parts from a specialized dealer. To determine how this change will influence company costs and revenues, Axis Manufacturing should conduct a(n) __________ analysis. A. trade-off B. incremental C. fishbone D. SWOT

B Incremental. Incremental analysis, sometimes called marginal or differential analysis, is used to analyze the financial information needed for decision making. Businesses use incremental analysis to study the revenues and costs of different alternatives, such as making a part in-house or buying it from an outside source. A trade-off analysis is conducted after a company has identified a range of options for addressing operations issues. A fishbone analysis is a graphic tool used to explore effects and the causes that create or contribute to those effects. A SWOT analysis involves analyzing the strengths, weaknesses, opportunities, and threats of the organization or project. In this situation, an incremental analysis makes the most sense for the company's goals.

Which of the following involves obtaining and evaluating data for the purpose of helping businesses make long-term decisions: A. Communications network C. Organizational development B. Information management D. Applied research

B Information management. This is the process of accessing, processing, maintaining, evaluating, and disseminating knowledge, facts, or data for the purpose of assisting business decision making. Businesses need a lot of information to operate successfully and make decisions that will help the business grow and prosper. Managing the information allows businesses to obtain the data they need to remain competitive and survive. Communications network, organizational development, and applied research do not involve obtaining and evaluating data for the purpose of helping businesses make long- term decisions.

Which of the following statements is true about determining your personal vision for the future: A. It involves following a step-by-step plan. B. It depends more on emotion than logic. C. It requires facts and concrete goals. D. It is risk free and time bound.

B It depends more on emotion than logic. A vision is the future you wish to create. Often, a vision begins with an abstract idea that is based on emotion rather than logic. Because a vision is abstract (indefinite), you must have or develop the tolerance for dealing with abstract terms and ideas rather than facts. For this reason, a step-by-step plan does not always work when a person is working toward a vision for the future. Working toward and achieving a vision requires the willingness to take risks over a long period of time.

A creditor carefully examines a business's financial information to determine whether the business has sufficient money to meet its short-term obligations when they come due. In this situation, the creditor is concerned about the business's A. profitability. B. liquidity. C. efficiency. D. investment return.

B Liquidity. The creditor wants to know that the business has sufficient cash on hand to meet its obligations. If the creditor determines that the business is unable to meet its current short-term obligations, the creditor most likely will deny the credit request. Profitability is concerned with whether the business is making a profit and whether it's sufficient to maintain business operations. Efficiency focuses on whether the business is making the best use of its resources. Investment return lets investors and creditors know what return they can expect to get from a business.

What internal factors do businesses need to evaluate so they can take steps to effectively control their risks? A. Exchange rates C. Regulatory issues B. Loss exposures D. Industry trends

B Loss exposures. Circumstances that create risk factors are loss exposures. Loss exposures within the business include situations such as safety and health hazards, information security, and property theft. Businesses can lower and control these types of risks by implementing policies and by requiring employees to follow procedures that minimize safety, illness, computer breaches, and theft. Changes in exchange rates, regulations, and industry trends are external factors that can affect a business's level of risk.

What is one way that employees who routinely deal with customers can demonstrate a customer-service mindset? A. Speak in a monotone C. Stand at attention B. Make eye contact D. Keep a straight face

B Make eye contact. Looking customers in the eye is one way of demonstrating a customer-service mindset. It shows that employees are focused on customers and their needs. Failing to make eye contact indicates indifference and could cause customers to believe employees don't care about them or their needs. Other ways of demonstrating a customer-service mindset include varying the tone of voice, rather than speaking in a monotone, and smiling at customers, rather than keeping a straight face. It is important to maintain good posture, although that doesn't mean employees should stand at attention.

One factor that has stimulated financial globalization is A. more foreign regulation. B. more domestic competition. C. domestic investment preferences. D. a movement toward fixed exchange rates.

B More domestic competition. Globalization is the rapid and unimpeded flow of capital, labor, and ideas across national borders, which includes the integration of financial markets, especially capital markets. Due to increased domestic competition, financial companies have been seeking new markets in foreign countries. Other factors that have encouraged financial globalization include reduced regulation and a movement from fixed exchange rates to floating exchange rates.

If an accounting firm deliberately conceals information about a client's financial status, the government may charge the business with A. expropriation. B. obstruction of justice. C. breach of contract. D. substantiation.

B Obstruction of justice. Obstruction of justice is a legal penalty that applies to individuals or businesses that hide important information from law enforcement agencies, such as concealing a client's questionable financial data. If evidence indicates that unethical or illegal business practices have obstructed a criminal investigation, the business could be fined, and the employees concealing the information could face imprisonment. A public scandal could severely tarnish a business's reputation, as in the case of the Arthur Andersen accounting firm and its affiliation with Enron. Expropriation is the act of government taking over private property. Breach of contract involves breaking the terms of a legal agreement. Substantiate means to provide proof or evidence of something.

Qualified employees who behave unethically on the job may harm themselves by being A. sent to a training program. B. passed over for promotions. C. held legally responsible. D. rotated to similar positions.

B Passed over for promotions. Most businesses try to act in an ethical manner, and they expect their employees to also behave ethically. Employees who behave unethically on the job may harm themselves by being passed over for promotions even if they are well qualified. Coworkers and supervisors often notice other employees' unethical behavior and may lose respect for them because of it. These employees may be passed over for promotions because their supervisors do not trust them to do the right thing, particularly in higher level positions that give them more authority. Employees are not harmed by attending training programs or being rotated to similar positions. Unethical behavior is not necessarily illegal.

Which of the following is a common challenge for project managers: A. Laws and regulations B. Poorly defined goals C. A surplus of resources D. A lack of risk

B Poorly defined goals. Poorly defined project goals are one of the many challenges that project managers routinely face. A surplus of resources would be a good thing, as would a lack of risk! Laws and regulations may affect business projects, but they typically don't pose a challenge.

When the U.S. federal government owes money to a contracted employee or business, the government must pay the employee or business according to the A. Early Bird Act. B. Prompt Payment Act. C. Secure Contracting Act. D. Government Guidelines Act.

B Prompt Payment Act. When the U.S. federal government owes money to a contracted employee or business, the government must pay the employee or business according to the Prompt Payment Act. There are no U.S. legal requirements for financial exchange called "Early Bird," "Secure Contracting," or "Government Guidelines."

What type of variance analysis involves determining the difference between the standard costs and the actual costs of raw materials used for production? A. Selling price B. Purchase price C. Material yield D. Fixed overhead

B Purchase price. A variance is the difference between an established standard and the actual outcome. It is important for a business to monitor variances in the price of raw materials because they affect its bottom line. When a vendor increases the prices that it charges for raw materials, it costs the business (manufacturer) more money to produce an item. The business may need to find a vendor that charges less for the materials or parts, or it may need to increase its selling price—the amount that the business charges its customers for the finished good. Fixed overhead costs are expenses that do not change in relation to changes in sales volume and include things such as rent and employee salaries. Material yield analysis involves analyzing variances in the number of materials/products that are supposed to be used/sold with the actual number of materials/products that have been used/sold in a certain timeframe.

Employees from different departments participate in a group to solve problems related to the company's production processes. This is an example of a A. short-term committee. B. quality circle. C. standing committee. D. product team.

B Quality circle. A quality circle is a problem-solving group of coworkers who are given work situations or problems to study and discuss in order to recommend solutions to management. A standing committee works together for a common purpose over a long period of time (e.g., three years). A short-term committee has an immediate goal, such as planning a social event for employees. A product team consists of individuals who work together to develop, improve, and/or market a product.

To ensure compliance, virtual-auditor technology provides businesses with the ability to monitor their financial processes by conducting A. just-in-time delivery activities. B. real-time transaction inspections. C. electronic data interchange appraisals. D. continuous quality control reviews.

B Real-time transaction inspections. A virtual auditor is a type of compliance technology that uses multiple reasoning processes to help businesses identify errors and compliance violations. Because virtual- auditor technology continuously inspects financial transactions and processes in real time, businesses can identify and resolve problems quickly, which helps them comply with government regulations. Just-in- time is an inventory method in which goods are ordered so that they arrive when they are needed, rather than being stockpiled. An electronic data interchange (EDI) allows the exchange of purchasing and inventory information between businesses and their suppliers. Continuous quality control involves monitoring products to ensure that inputs, construction, and quality are consistent.

Which of the following is usually the quickest way that businesses can obtain information about unknown potential new vendors that are located in other parts of the country: A. Send an e-mail C. Fax a request B. Search the Web D. Phone an agent

B Search the Web. The World Wide Web (WWW) links millions of computers throughout the world by way of the Internet. Obtaining information is one of the most common ways that businesses use the Web. For example, a business in one state that wanted to locate a potential vendor in another state can search the Web to find out if that vendor has posted information on its web page. Searching the Web is fast and allows business employees to obtain vital information without leaving the office. In order to send an e- mail or fax a request, a business first needs to obtain an e-mail address or a fax number, which often are listed on a web page. Phoning an agent would not necessarily provide a business with information about new vendors.

George has decided to purchase a dishwasher. He is checking the newspaper ads for the best place to get quality goods and services at a reasonable price. What type of product is the dishwasher? A. Convenience B. Shopping C. Capital D. Specialty

B Shopping. Shopping goods are consumer products that are purchased by consumers after comparing products and stores to get the best quality, price, and/or service. Capital goods are manufactured or constructed items used in the production of goods and services. Convenience goods and services are purchased quickly and without much thought or effort by ultimate consumers. Specialty goods are consumer products with special or unique characteristics that consumers are willing to exert special efforts to obtain.

Why is it important for marketers to have efficient distribution systems? A. To purchase supplies B. To control expenses C. To sell benefits D. To regulate prices

B To control expenses. By selecting the most appropriate methods of distribution, marketers are able to control expenses, thereby improving a business's chances of making a profit. An effective distribution system also keeps marketers from tying up capital unnecessarily in inventory. Distribution systems enable marketers to have adequate supplies of goods in the right place at the right time. Purchasing supplies is an operations activity that relates to the business function. Selling benefits is part of the selling function of marketing. Regulating prices is part of the pricing function of marketing

Writing a letter to your grandmother is an example of A. nonverbal communication. B. verbal communication. C. speech. D. body language.

B Verbal communication. Writing a letter to your grandmother is an example of verbal communication. Verbal communication is the exchange of information through the use of words, including writing and speech. Writing a letter to your grandmother is different from speaking to her. Nonverbal communication is the exchange of information without the use of words, including body language, eye contact, and gestures. Writing a letter is not nonverbal communication because it involves the use of words.

Ethan is developing common-size financial statements so that he can compare financial performance across several different companies. Ethan is conducting __________ analysis. A. horizontal B. vertical C. ratio D. trend

B Vertical. Three common types of financial statement analysis are vertical analysis, horizontal analysis, and ratio analysis. When conducting vertical analysis, an individual calculates each individual item on a financial statement as a percentage of the total. After doing so, the analyst can develop common-size financial statements that allow him/her to compare performance across several years for a single company or across several different companies. Horizontal analysis, which is sometimes known as trend analysis, involves analyzing dollar amounts on financial statements for a single company across several years. Horizontal analysis does not involve the development of common-size financial statements. Ratio analysis involves the calculation of ratios based on a company's financial data. It allows analysts to compare numbers within a financial statement and determine the relationships among numbers on different financial statements. It can also be used to compare the performance of multiple companies.

Which of the following is a good source of detailed information about specific career opportunities in business: A. Classified ads in urban newspaper C. Community-college student centers B. Web sites of professional organizations D. Corporate human-resource departments

B Web sites of professional organizations. Most business specialties have a professional organization, such as the National Association of Business Economics. Today, many professional organizations also have a web site that includes information about the type of jobs in the profession. Many web sites also provide information about the training necessary for jobs in the profession and a listing of members who may have positions available. Classified ads in urban newspapers and community-college student centers are not good sources of detailed information about specific careers. Corporate human-resource departments only provide information about careers in their businesses.

The most common headings on a stock table include the 52-week high and low, the stock symbol, the estimated dividend per share, the yield percentage/rate of return, the volume/sales for the day, the closing price for the day, the net change and the A. net income. B. earnings per share. C. price-earnings ratio. D. stockholder's equity.

C Price-earnings ratio. Most stock tables include the price-earnings ratio, or PE ratio for short. The price- earnings ratio is determined by dividing the last closing price of the stock by the earnings per share. Investors often study the PE ratio to get an idea of whether the stock is overvalued or undervalued, compared to competitors. The earnings per share (EPS), net income, and stockholder's equity are not typically found on the stock table. The earnings per share tells investors how much profit goes to each share of common stock. The net income is the money remaining after operating expenses are subtracted from gross profit. The stockholders' equity is equal to the assets minus liabilities.

When organizing an oral presentation, you use cause-and-effect order to A. arrange material into related subcategories. C. emphasize the relationship between events. B. describe a problem and a plan for solving it. D. put items in time sequence.

C Emphasize the relationship between events. Cause-and-effect order explains how one action or event causes another. The order that describes a problem and a plan for solving it is problem/solution order. The order that arranges material into related subcategories is topical order. The order that puts items in time sequence is chronological order.``

In the past, customer relationship management was used mainly as a way to A. assist business decision making. C. track customer information. B. increase customer loyalty. D. help employees perform more efficiently.

C Track customer information. In the past, customer relationship management was used mainly as a way to track and organize information about customers so a business could identify its most valuable clients and tailor its marketing strategies to generate more revenue. Over the years, the meaning of CRM has expanded quite a bit. Today, it's also viewed as a way for employees to perform their jobs more efficiently and for businesses to increase one of their most important assets—customer loyalty. In addition, it's an important tool for use in business decision making and product development.

Which of the following is an example of bancassurance: A. The Cover Yourself Insurance Company manages a pension fund for XYZ Corporation. B. A Good Cents Bank of Piqua employee sells certificates of deposit to a customer. C. A Dollars R Us Bank employee sells an auto-insurance policy to a customer. D. The BBB Insurance Agency processes a small-business loan for a sole proprietor.

C A Dollars R Us Bank employee sells an auto-insurance policy to a customer. The trends of convergence and consolidation in the finance industry have led to a "one-stop shopping" environment for consumers. Bancassurance is the sale of insurance products by a retail business/bank. Because the Dollars R US Bank sells an auto-insurance policy to a bank customer, it is an example of bancassurance. Certificates of deposit are a type of bank product. Assurfinance or assurbanque occurs when an insurance company sells banking products.

What is it important to do when giving verbal directions to make sure the audience understands? A. Use gestures B. Maintain eye contact C. Ask questions D. Explain information

C Ask questions. When giving verbal directions, it is important to regularly ask questions to make sure the audience understands the directions. Asking if listeners understand a certain word or phrase will provide feedback that indicates understanding. Many times, listeners will not admit that they do not understand, and the only way to find out is to ask questions. Maintaining eye contact, using gestures, and explaining information are techniques for giving verbal directions. However, they will not indicate if the audience understands the directions.

Which of the following employees are in a better position than others to help a business control expenses: A. Stockers C. Buyers B. Designers D. Trainers

C Buyers. Since employees with buying responsibilities are spending the company's money for resale items or items to be used in the business, they are in a good position to help the business control expenses. Buyers should take advantage of discounts, negotiate favorable shipping terms, and choose vendors who fill orders accurately and deliver on time. Effective buyers often are able to save a business a significant amount of money. Stockers, designers, and trainers are not in as good a position as buyers to help a business control expenses because they do not have direct responsibility for spending the company's money.

An organization with a quality culture would have executive-level managers who are A. flexible, indifferent, and not responsible for quality. B. good at delegating all commitments for quality assurance. C. committed and involved and take responsibility for quality. D. able to enlist the expertise of outside contractors for quality.

C Committed and involved and take responsibility for quality. Executive-level managers are both committed and involved. They take responsibility for quality and do not delegate that responsibility. This is a characteristic shared by organizations with a quality culture. The alternatives remove the responsibility for quality from the executive-level manager and delegate it to others.

Beverly, the new office manager, just completed a review of the last two years of accounts receivable data. In doing so, she discovered that there are erroneous duplicate entries totaling $25,628 in the system. Unfortunately, due to these duplicate entries, collection letters were sent to many customers who had already paid in full—customers who are angry with the company for sending them the letters. What should Beverly do to try to save these customer relationships and ensure that these customers are not bothered in the future? A. Contact each customer by phone and apologize B. Complete an accounting software update C. Complete a data cleansing of the erroneous entries D. Use funds from the accounts payable account to pay the debt

C Complete a data cleansing of the erroneous entries. One of the quickest ways for a business to upset its customers is to accuse them of failing to pay their bills—especially when the business has already received payment from them. To ensure that these customers do not receive more erroneous collection letters in the future, Beverly should complete a data cleansing of the erroneous entries, removing them from the system. Completing an accounting software update isn't likely to have an effect on the erroneous entries. While it might be helpful to contact each customer by phone and apologize, Beverly needs to do more than that to ensure that the customers are not bothered in the future. The $25,628 is not a debt. It is the sum total of all the erroneous duplicate entries in the accounts receivable account.

One of the major functions of business maintenance is to A. prevent fraudulent behavior. B. motivate employees. C. create a favorable impression. D. guarantee the business's success.

C Create a favorable impression. The overall impression customers receive as a result of a business's appearance influences their buying behavior. Therefore, performing routine housekeeping duties (e.g., dusting and vacuuming) and maintaining the condition of the equipment, furniture, displays, and fixtures help a business create a good impression. The primary reason for conducting maintenance activities is not to motivate employees or prevent fraudulent behavior. Performing maintenance activities cannot guarantee the success of the business.

What type of financial information might a business use to identify sales trends? A. Liquidity ratios C. Customers' invoices B. Cash outflows D. Break-even analyses

C Customers' invoices. By reviewing invoices on an ongoing basis, a business is often able to identify sales trends. For example, lower invoice totals over a period of time indicate that the business is not generating the same levels of revenue and profit as it did during previous periods. Lower revenues and profits may require the business to revise its budget. The business will need to determine why it is experiencing lower sales, which may include an economic downturn, customer-service issues, product quality, etc., so it can take corrective action. Cash outflows are the monies that flow out of the business (expenses). Liquidity ratios are formulas that help a business determine how quickly it can pay off its short-term debts. A break-even analysis is a financial analysis that is used to identify the level of sales needed to reach the break-even point at various prices.

When a business wants to access data from a variety of sources to monitor customer trends over time, what form of computer technology should a business use? A. Electronic data interchange C. Data warehousing B. Project management D. Systematic laddering

C Data warehousing. Data warehousing involves combining data from a variety of internal and external sources into one large database. A business can access current and historic data from a data warehouse to identify and monitor customer buying behavior, trends, etc. Businesses use project management computer applications to track resources and activities for short- and long-term projects. Electronic data interchange systems transmit sales and ordering information among a business and its suppliers. Data acquired from an electronic data interchange can be stored in a data warehouse. Systematic laddering is a fictitious term.

Which of the following is an example of how a business or industry has a unique relationship with its environment: A. Social and cultural attitudes change over time. B. An economy in prosperity will eventually experience recession. C. Demand for skilled nursing care rises as the population ages. D. New technology causes new laws to be enacted.

C Demand for skilled nursing care rises as the population ages. The impact of demographics (the age of the population) on a specific industry (health care) shows that businesses have unique relationships with their environments. The aging of the population affects other industries, but perhaps not as directly as it does health care. An economy phasing through the business cycle and a shift in social/cultural attitudes are examples of how environmental factors are dynamic. New technology causing new laws to be enacted is an example of how environmental factors are interrelated.

The first task in the HR management activity of staffing is A. determining job descriptions. B. screening and selecting applicants. C. determining need. D. recruiting.

C Determining need. The first task in the HR management activity of staffing is determining need. A company cannot fill job positions with appropriate employees until it knows exactly where human resources are lacking. Determining job descriptions, recruiting, and screening and selecting applicants are all staffing activities that occur after need has been determined.

The Davis Company requires customers to provide their banking information each time they pay by phone to eliminate the financial and legal risks associated with storing banking information. However, customers strongly desire the ability to quickly pay by phone and often do not have their banking information available. The current situation is causing late and missed payments, resulting in lost revenue for the company. Dissatisfied customers experiencing late fees, who often rant about the company's poor service online, are creating a poor brand image for the company. Which of the following actions should the company take to best manage its legal, financial, IT, and brand risks: A. Eliminate the pay-by-phone option and require customers to mail their payments to a P.O. Box. B. Send letters explaining how the current payment policy protects customers' personal information. C. Develop a way to encrypt and store customers' bank information in the company database for future use. D. Encourage customers to set up automatic electronic payments, eliminating the need to store the information.

C Develop a way to encrypt and store customers' bank information in the company database for future use. By encrypting the information, the company can eliminate some of the risk of storing customers' banking information while making the payment process easier, leading to less lost revenue and more satisfied customers. Letters explaining the policy may help customers understand the need for security, but they do nothing to help with the loss of revenue or to satisfy customers. Eliminating the pay-by-phone option would upset the customers who pay in that manner, and requiring payments by mail would probably lead to more lost revenue. Asking customers to set up automatic payments doesn't mean they will, and it doesn't address what they want—an easy way to pay by phone; it would not eliminate the need to store the banking information.

A labor strike against a major employer is an example of a(n) __________risk. A. human B. natural C. economic D. internal

C Economic. Economic risks are risks caused by changes in the market that force a lowering of prices, a change of product, or failure of businesses. Business conditions, such as a labor strike, can create economic risks for businesses. Labor strikes affect other businesses since many of their customers will be out of work and unable to buy goods and services. The other businesses affected by a labor strike may experience decreases in sales and profit, or even be forced to close. Human risks are chances of loss caused by human weakness and unpredictability. Natural risks are chances of loss which result from natural phenomena. Internal is not a type of risk.

Employees who are involved in production scheduling are responsible for A. establishing the path inputs take through production. B. issuing orders for production activities to begin. C. estimating how long each step in production will take. D. obtaining the resources needed in production.

C Estimating how long each step in production will take. Scheduling establishes the timetable to be followed in production. Employees responsible for scheduling look at the number of steps in the production process and estimate how long each step will take. Purchasing is the production activity that obtains the needed resources. Routing is the production activity that establishes the path inputs take from the time they are received by the business until they become outputs. Dispatching is issuing orders for production to start.

At work, Bob is assigned to be on a team of five people that will create a new product. Which action can Bob take to participate in the team in a useful way? A. Keep the group on track by stopping others from offering unusual ideas B. Encourage the team to avoid setting ground rules C. Find out what other people in the group know about the product D. Walk around the room during discussions to keep energy in the group

C Find out what other people in the group know about the product. Starting a meeting by learning about others' knowledge of the subject identifies what your team knows—as well as areas where more work will be needed. Some ground rules are needed to let everyone know how the group operates. Otherwise, unacceptable behavior may occur. Unusual ideas should not be avoided. Often these are the breakthroughs that lead to success. Bob should use good listening skills, including making eye contact and using other nonverbal cues, to let others in the group know he is listening.

Which of the following is not a reason for faster-than-average employment growth of financial analysts and personal financial advisors: A. Globalization of the securities markets makes investing more complicated. B. Generally speaking, the U.S. population is better educated. C. Generally speaking, the U.S. population is worse off financially than before. D. A large segment of the population, namely Baby Boomers, is facing retirement.

C Generally speaking, the U.S. population is worse off financially than before. One of the reasons there will be increased demand for financial analysts and personal financial advisors is that, generally speaking, the U.S. population is better, not worse, off than before. Other reasons for increased demand include a large segment of the population, namely Baby Boomers, is facing retirement; generally speaking, the U.S. population is better educated; and globalization of securities markets makes investing more complicated.

What is a type of informal communication that coworkers often use to communicate with each other? A. Network B. Feedback C. Grapevine D. Structured

C Grapevine. Grapevine is an oral communication method in which information is passed around the company but not formally announced or verified. Coworkers frequently discuss company issues and pass on information from one department to another through the grapevine. Employees often obtain information and communicate it to others through the grapevine before management makes an official announcement. Feedback is evaluative information given by supervisors to employees. Network is a system of contacts within and outside the organization. Structured is formal communication.

What do bond yields typically do during an economic expansion? A. Drop to near zero B. Gradually decrease C. Increase D. Remain unchanged

C Increase. During an economic expansion, production, employment, income, sales, the demand for money, and interest rates rapidly increase. As a result, businesses borrow more money (at higher rates) to expand their operations. And, when businesses borrow more at higher interest rates, bond yields go up.

How do finance companies commonly raise capital? A. Investing deposits from savers B. Investing funds from premium payments C. Issuing notes, bonds, and other obligations D. Establishing mutual funds and investment banks

C Issuing notes, bonds, and other obligations. Finance companies, also known as credit companies, are a type of financial institution. Finance companies raise capital by issuing notes, bonds, and other obligations. They use this capital to provide loans to businesses and consumers. Insurance companies raise capital by investing funds from premiums and offering loans to clients. Deposit-taking institutions accept funds from savers and use those funds to offer loans to borrowers. Investment institutions, not finance companies, establish mutual funds and investment banks.

People with a positive attitude are open-minded, which helps them to A. develop patience. C. learn new skills. B. remain cheerful. D. be intolerant.

C Learn new skills. People with a positive attitude are open-minded and receptive to new ideas and new ways of doing things. This makes it easier for them to learn new skills, techniques, and methods. Being open-minded does not help individuals to remain cheerful or to develop patience. Being intolerant is the result of a negative attitude.

When a person has a transferable skill that an employer finds valuable, the skill is considered A. dynamic. C. marketable. B. labor-intensive. D. unusual.

C Marketable. Transferable skills are abilities that people have and can use in a variety of situations or jobs. When employers want to hire people with the transferable skills to fill job openings, the skills are valuable to the employers and provide job seekers with potential employment opportunities, which makes the skills marketable. Valuable, transferable skills are not always labor-intensive, dynamic, or unusual.

Which of the following is a formatting characteristic of a full-block business letter: A. Indented first paragraph B. Double-spacing within the paragraph C. No paragraph indents D. All paragraphs use right justification.

C No paragraph indents. Many businesses use the full-block method to format business letters. All components of the letter (date, address, greeting, body, closing, signature block) use left justification, which means all text is aligned on the left side of the margin. Writers using the full-block format do not indent the first sentence of each paragraph. Other formatting characteristics of full-block letters are the use of single-spacing within the paragraphs and the use of double-spacing between the paragraphs.

Which of the following demonstrates the interrelationship among primary business activities: A. A new product is introduced, so business advertisements must adjust in response. B. A business changes its goals, so its strategies and tactics change, too. C. One business activity changes, so the others must adjust in response. D. A business manager becomes vice president, so his/her department must adjust to the change.

C One business activity changes, so the others must adjust in response. Since the primary business activities are interrelated, when one business activity changes, the others must adjust in response. Changes in the products introduced, changes in specific employee roles, and changes in business strategies/tactics do not represent the interrelationship of business activities overall. They represent smaller changes that take place within specific business activities.

Individuals often are able to obtain power within an organization by developing A. positive attitudes. B. occupational skills. C. political relationships. D. operational goals.

C Political relationships. Individuals who develop effective political relationships within an organization usually are able to obtain power because others respect them and believe in them. Individuals who have power often have the ability to influence others to do what they want them to do. Individuals who work well with others, make friends within the organization, and project competence are building relationships that will give them power. Individuals will not necessarily be able to obtain power within an organization by developing occupational skills, positive attitudes, or operational goals. However, this might help them to perform better on the job.

When an emerging market suffers an economic decline, foreign investors usually A. help the emerging market to recover economically. B. use the opportunity to invest more in the emerging market. C. quickly withdraw their money from the emerging market. D. pay less for each transaction in the emerging market.

C Quickly withdraw their money from the emerging market. When an emerging market suffers an economic decline, market prices are likely to decline as well. Rather than investing more in the emerging market at the lowered prices and helping the emerging market to recover, foreign investors are typically self- interested. Therefore, they are likely to withdraw their money from the emerging market and invest the funds in more stable markets elsewhere in the world. The loss of foreign investors' funds often wreaks even more havoc on the emerging market. An economic decline is not likely to reduce transaction costs in the emerging market.

Employees who serve customers efficiently help to control expenses by A. improving morale. B. increasing returns. C. reducing complaints. D. decreasing volume.

C Reducing complaints. Treating customers in a professional manner often helps to control business expenses. When employees serve customers efficiently, the customers are not likely to have complaints. Since handling complaints is an expense to the business, this effort saves money. Serving customers efficiently may increase volume rather than decrease it. Improved morale may result from serving customers efficiently, but it will not control expenses. Hopefully, efficient service will reduce returns; however, its impact cannot be specified.

A disadvantage of financial globalization is that A. transaction costs have increased. B. investors have limited options. C. reporting requirements vary greatly by country. D. financial markets have become less liquid.

C Reporting requirements vary greatly by country. Globalization is the rapid and unimpeded flow of capital, labor, and ideas across national borders, including the integration of financial markets. A disadvantage or risk associated with financial globalization is that each country has different financial reporting requirements, which often make it difficult to obtain and disseminate needed information. Advantages to financial globalization include more options for investors, lower transaction costs, and more liquid financial markets due to increased capital.

What types of financial data are analyzed to indicate variances in a business's profitability? A. Depreciation rates and insurance premiums C. Sales and investment income B. Investment income and depreciation rates D. Insurance premiums and sales

C Sales and investment income. Businesses earn income in a variety of ways, such as sales, rentals, dividends, and accumulated interest. Changes in income affect a business's profitability. If the business's profitability drops over time, then it might need to cut expenses. If the business's profitability increases, the business might decide to expand or replace equipment. So, it is important for a business to continuously monitor its sources of income. Insurance premiums are expenses. The depreciation rate is the level at which the value of an asset (e.g., machinery) decreases over time.

Which of the following is a production activity: A. Receiving B. Advertising C. Scheduling D. Marketing

C Scheduling. Scheduling is the production activity that establishes the timetable to be followed in production. Businesses establish schedules in order to have the necessary raw materials and the right number of employees on hand to produce the goods. Scheduling helps businesses to produce the goods that customers need and have those goods available when customers want them. Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. Advertising is any paid form of nonpersonal presentation of ideas, goods, or services. Receiving is the acceptance of a shipment of goods.

Expressing empathy and being willing to help others are the aspects of emotional intelligence that relate to A. relationship management. C. social awareness. B. self-management. D. self-awareness.

C Social awareness. Social awareness, self-awareness, self-management, and relationship management are the four primary areas of emotional intelligence. The aspect of emotional intelligence in which you know and understand the emotions of others is called social awareness. Being socially aware involves the ability to "step into another person's shoes" (expressing empathy) and being willing to help or serve others. It also involves the ability to see the bigger picture, which is organizational awareness. Self- awareness refers to knowing your own emotions. Self-management is the ability to manage your own emotions. Relationship management is the ability to manage the emotions of others.

Since Juanita wants to access her business records in 30 years, she needs to know this drawback to storing information on CD/DVD: A. Some CDs/DVDs are not secure. B. Some CDs/DVDs are unreadable. C. Some CDs/DVDs last only a decade. D. Some CDs/DVDs are expensive to buy.

C Some CDs/DVDs last only a decade. If Juanita plans to access her business records 30 years from now, she should store her information in a medium that will last that long. Unfortunately, some CDs/DVDs last only 10 years. It may be true that some CDs/DVDs are unreadable or are not secure from hackers or theft. But, these drawbacks are not as significant as the fact that the medium needs to last—even if it is readable and secure. CDs/DVDs are not usually expensive.

Corporate governance is primarily concerned with __________ desires. A. vendors' B. CEO's C. stakeholders' D. competitors'

C Stakeholders'. Corporate governance is the system of rules and practices that control the company. Corporate governance revolves around balancing the desires of the stakeholders in a company. Corporate governance is not just concerned with the CEO's or vendors' desires; instead, it focuses on the desires of all stakeholders, including customers, financiers, the community, the government, and managers. Corporate governance is not necessarily concerned with a company's competitors' desires.

How do credit unions differ from commercial banks? A. They offer higher fees. B. They offer higher interest rates. C. They are created and owned by members. D. There are no requirements for membership.

C They are created and owned by members. Credit unions differ from commercial banks in that they are created and owned by their members. Membership is based on a common link among members, such as employment at the same company or residence in the same county. Credit unions usually offer lower fees and interest rates than commercial banks.

What is the primary purpose of data-cleansing processes? A. To correct non-response errors B. To control the employees' intranet access C. To maintain a useful customer database D. To monitor the system for security breaches

C To maintain a useful customer database. The data-cleansing process removes duplicate records, updates expired data, and completes incomplete data fields. An effective data cleansing will result in a database that contains useful, relevant, and accurate data. Having a "clean" database helps the organization process good information to make sound business decisions. Businesses use a variety of security software and procedures to control employees' access to their intranets and to monitor security breaches. Businesses do not use data-cleansing processes to correct non-response errors on surveys.

When Armand is comparing his checkbook balance with his bank statement, he must make sure that he has subtracted the __________ from his checkbook. A. payroll deposits B. accumulated interest C. transaction fees D. check numbers

C Transaction fees. Reconciling bank statements involves comparing the entries in a checkbook with the entries listed on the bank statement. It is important to make these comparisons to determine inconsistencies and mistakes. If a check is not recorded correctly, and if the mistake is not caught, the individual runs the risk of having insufficient funds in his/her checking account, which results in bounced checks. Some financial institutions charge transaction fees for checking accounts, so it is important to make sure that those fees are subtracted from the checking account balance. Accumulated interest and payroll deposits are added to the checking account balance rather than subtracted from it. Check numbers are not subtracted from the checkbook when reconciling bank statements and checkbook balances.

Which of the following is away to demonstrate empathy: A. Give advice to people in need. B. Develop a good imagination. C. Use tact when speaking. D. Ignore a coworker who is different.

C Use tact when speaking. Tact is the ability to do or to say the right thing in any circumstance. Empathy is the ability to put yourself in another person's place. Using tact is one way to demonstrate empathy. Developing a good imagination is a way to develop empathy. Empathetic individuals refrain from criticizing or giving advice. Ignoring a coworker because s/he is different is prejudicial. Empathetic people are not prejudiced.

A business's balance sheet lists $3,800 in cash, $15,125 in accounts payable, $2,775 in taxes, $10,350 in machinery and equipment, and $6,280 in salaries. Calculate the business's total liabilities. A. $27,030 B. $18,470 C. $15,225 D. $24,180

D $24,180. A business's balance sheet shows the business's financial condition at a certain point in time. It includes all assets, liabilities, and the owner's equity. Total liabilities—the debts the business owes— include items such as accounts payable, salaries, taxes, and long-term notes such as mortgages. Total liabilities do not include cash or machinery and equipment, which are considered assets. To calculate the business's total liabilities, add the figures for accounts payable, taxes, and salaries ($15,125 + $2,775 + $6,280 = $24,180).

An economy with a high unemployment level tends to have A. rapid GDP growth. B. a high supply of money. C. fewer monetary policies. D. a lower rate of inflation.

D A lower rate of inflation. When a lot of people are out of work, they lose their buying power, which means less money is in circulation. Because unemployed people have less disposable income, the demand for goods and services is low, which tends to slow or lower the rate of inflation (rise in prices). The amount of monetary policies that the government establishes does not affect unemployment rates. When the GDP grows, an economic expansion is occurring, which indicates that people and businesses are spending money and the unemployment levels are low.

What type of law is intended to enforce the rules and regulations of governmental agencies: A. Procedural B. Statutory C. Commercial D. Administrative

D Administrative. Administrative law deals with the rules and regulations that have been established by governmental agencies. Most governmental agencies have an effect on business in some manner, such as issuing licenses or prohibiting unfair trade practices. Administrative law implements the rules and regulations, which also involves resolving disputes. Statutory, commercial, and procedural are not types of law that enforce the rules and regulations of governmental agencies.

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD) ensures that credit contract terms A. are subject to review by state legislatures. C. cannot be changed. B. can be published in the newspaper. D. are written in plain language.

D Are written in plain language. The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD) ensures that credit contract terms are written in plain language that consumers can easily understand. This act does not ensure that contract terms can be published in the newspaper, that they cannot be changed, or that they are subject to review by state legislatures.

Behavior that is characterized by respect for personal rights as well as for the rights of others is __________ behavior. A. aggressive B. passive C. offensive D. assertive

D Assertive. Assertive people stand up for their own rights as well as the rights of others. Passive behavior is characterized by a failure to exercise personal rights and a lack of respect for personal needs. Aggressive behavior is characterized by a willingness to ignore the rights of others and to exploit them in order to achieve personal goals. Offensive behavior is unpleasant or displeasing actions.

What type of financial statement includes an accounting of the shareholders' equity for a company? A. Annual report B. Income statement C. Cash flow statement D. Balance sheet

D Balance sheet. The balance sheet gives a summary of a company's financial health at a specific point in time. It contains two major sections: a listing of the company's assets and a listing of its liabilities. The liabilities section also indicates the shareholders' equity, which is the value of all the outstanding stock owned by shareholders. Shareholders' equity is determined by subtracting the liabilities from the assets. The income statement, also known as the profit-and-loss statement, shows a company's profitability over a specific period of time. The cash flow statement tracks the money that comes into and flows out of a company. An annual report is not a type of financial statement, but it does contain financial statements, along with a good deal of other information about the company.

Which of the following reasoning processes does a virtual auditor use to identify financial system transactions that are very similar to each other but are not exactly alike: A. Cross-source reasoning B. Contextual reasoning C. Temporal reasoning D. Comparative reasoning

D Comparative reasoning. A virtual auditor, which is a type of compliance technology, uses multiple reasoning processes to continuously review financial transactions and processes to identify errors and/or compliance violations. Comparative reasoning is used to identify financial system transactions that are very similar to each other but not exactly alike. For example, after identifying two close matches, comparative reasoning is used to determine if one transaction was entered multiple times or if the two entries in the system are for two separate transactions. Contextual reasoning is used to consider each financial transaction's circumstances and how they compare to historical patterns in the system. Temporal reasoning involves considering the timing of a financial transaction. Cross-source reasoning is used to compare financial transactions and processes in multiple financial systems.

What do some investors use to hedge the risk of investing in the foreign exchange market? A. No-load funds B. Emerging markets C. Venture capital D. Derivatives

D Derivatives. Derivatives are financial instruments whose value depends upon the value of other financial instruments or market indices. Investors frequently use derivatives to hedge or reduce the risk of investing in the foreign exchange market, which is sometimes volatile. The derivatives help to reduce the impact of significant fluctuations in foreign exchange markets. Emerging markets are financial markets in countries with developing economies. Emerging markets are usually receptive to foreign investment, but they are also more volatile and risky than financial markets in developed countries. Venture capital is invested money that is used for new business opportunities. No-load mutual funds have no up-front sales charges.

To identify internal business trends, the MNY Financial Services Company can analyze financial variances by A. predicting long-term sales for its various products. B. reviewing long-term financial objectives at irregular intervals. C. obtaining reports from purchasing and inventory control. D. comparing its data for six consecutive months.

D Comparing its data for six consecutive months. By comparing and contrasting two or more sets of financial data, the company can determine if there are differences and patterns among the data. Detecting these differences and patterns can indicate trends, such as customer defections, lower profits, or higher sales. By studying variances, the company can act on the identified trends by seeking new markets, cutting costs, adding, enhancing, or eliminating certain financial products, etc. Reviewing financial objectives and budgets is one set of data needed to analyze certain variances. The company needs to compare this data with actual sales and profits. To detect changes and take appropriate action, these types of comparisons should be made on a regular basis. Because businesses analyze different variances, they obtain reports from the purchasing and inventory control departments when they want to analyze purchasing activities and product sales. The situation does not provide enough information to determine what type of variances the company wants to analyze. Companies often analyze variances and consider the implications of the variances to forecast sales.

Which of the following forms of technology is most useful in operations: A. Smart phones B. E-readers C. Assistive technology D. Computer-aided design

D Computer-aided design. Computer-aided design is very useful in operations. Designing and testing products in the virtual world before trying them out in the real world can save companies a lot of time and money. Using computer software, a company can design, test, and redesign a product many times over until it's ready for production—all without wasting unnecessary resources. Assistive technology is any device that enables people with disabilities to participate fully in the workplace. The term is too broad to determine whether it would be useful in operations. E-readers are devices that enable people to download electronic books. While smart phones might also be useful in operations, computer-aided design stands out as the most useful and specific technology to enhance this business function.

An advantage to businesses that use master data management applications is the ___________ of the data. A. complexity B. variation C. replication D. consistency

D Consistency. Master data management involves the collection, storage, accessibility, and maintenance of the business's nontransactional data (e.g., product, employee). Effective master data management involves providing consistent, accurate data for all employees who use the data throughout the organization. An important aspect of master data management is ensuring that the organization uses one rather than several versions of a particular computer application. Effective master data management applications reduce the replication of data records. Master data management applications often handle complex data; however, if the complex data are not consistent, the data are not useful to the employees who use it.

What is a common course of action for small banking institutions interested in competing globally and improving their efficiencies, viability, and profitability? A. Dissolving their financial holding companies B. Rapidly expanding their operations C. Following global regulations more closely D. Consolidating with larger banks

D Consolidating with larger banks. In recent years, many small banking institutions have consolidated or merged with larger banks in efforts to compete globally and improve efficiencies, viability, and profitability. Rapidly expanding operations without consolidating with a larger bank is usually not conceivable for a small banking institution. Following global regulations is important but not necessarily enough to compete successfully on a global level. A financial holding company is a large organization that owns most or all of the shares of individually incorporated subsidiaries that engage in other types of financial activities. Small banking institutions aren't likely to have the resources to be financial holding companies.

Purchasing is important to international businesses because A. supplies should be delivered in a timely fashion. B. good relations with vendors reduce prices. C. quality standards should be maintained. D. controlling costs increases competitiveness.

D Controlling costs increases competitiveness. Effective purchasing controls costs, which enables businesses to lower selling prices. For example, Japan, South Korea, and Taiwan can often produce for less. American companies must reduce costs to be competitive in such world markets. Good relations with vendors and suppliers are important but do not reduce prices. Maintaining quality standards is a production goal.

If Hannah wants to invest in the capital markets, what types of securities should she purchase? A. Corporate bonds and treasury bills B. Common stock and certificates of deposit C. Treasury bills and certificates of deposit D. Corporate bonds and preferred stock

D Corporate bonds and preferred stock. Capital markets buy and sell long-term securities. Corporate bonds, common and preferred stock, and treasury bonds are examples of securities that are sold on capital markets. Treasury bills and certificates of deposit are money market securities, which are short- term securities.

According to the classical theory of unemployment, the best solution for unemployment is to A. decrease inflation. B. increase prices. C. encourage spending. D. cut wages.

D Cut wages. According to the classical theory of unemployment, the best solution for unemployment is to cut wages. If wages aren't allowed to rise too high, the cycle of unemployment will be stopped in its tracks. For classical economists, increasing prices, encouraging spending, and decreasing inflation are not preferred solutions for unemployment.

Tara knows that for her small business to grow, she must increase her cash flow. She's unsure, though, whether she should take out a loan or a line of credit. Which of the following budgeting software tools could Tara use to assess the potential impact of each source of funding on her business: A. Zero-based modeling B. Decision trees C. Environmental scanning D. Debt modeling

D Debt modeling. Some budgeting software applications include a debt modeling tool which allows the user to assess the potential impact of loans and lines of credit. To use the debt modeling tool, the user would input the terms of the loan or line of credit, including the interest rate, term, principal, etc. Decision trees are a data-mining technique commonly used to classify data and build models. Environmental scanning involves gathering information about the environment surrounding a business, analyzing that information, and determining the future impact of that information on the business. Zero-based budgeting is a method of budgeting that requires a manager to demonstrate the need for every expense instead of relying on figures from a previous period.

When preparing a statement of equity, what does a business deduct from its total net income to obtain its retained earnings? A. Bad debt B. Depreciation of assets C. Sales tax payable D. Dividends paid

D Dividends paid. Retained earnings are the income that a corporation keeps after paying dividends to its stockholders. This amount, which includes any forwarding balance of retained earnings from the previous accounting period, is reported on the company's statement of equity, which is also called the statement of retained earnings. The depreciation of assets, sales tax payable, and bad or uncollectible debt are not included on the statement of equity.

Which of the following is not a benefit of goal setting: A. Providing a way to measure your progress B. Keeping you on target C. Helping you know what resources you need D. Ensuring you accomplish all your goals

D Ensuring you accomplish all your goals. Goal setting helps you to stay on target, to know what resources you need, and to measure your progress along the way. However, setting goals does not ensure that you will accomplish them in the end—you must continue working hard to make sure that happens.

Which component on a purchase order indicates the total price for all quantities of a single item: A. Product code B. Subtotal C. Unit price D. Extension

D Extension. A purchase order is the form that a business fills out to order goods and services. It is considered a contract between the buyer and seller. As a contract, the purchase order contains information, such as the buyer, seller, shipping address, types and quantities of items needed, prices, etc. The extension indicates the total cost of each quantity of products the buyer is purchasing. The extension amount is determined by multiplying the quantity purchased by the price per unit. For example, if a purchase order indicates that a buyer wants 12 of product X, which costs $18 each, then the extension price for Product X is $216. The product code is the vendor's identification number for the item. The subtotal is the total cost of the order before taxes

What kind of product utility is most likely to result from production activities? A. Possession C. Time B. Place D. Form

D Form. Form utility is usefulness created by altering or changing the form or shape of a good to make it more useful to the consumer. This change takes place during the production process, e.g., production turns flour and other ingredients into bread. Place utility is usefulness created when goods or services are made available at the place where they are needed or wanted by consumers. Time utility is usefulness created when products are made available at the time they are needed or wanted by consumers. Possession utility is usefulness created when ownership of a product is transferred from the seller to the user.

Which of the following pieces of federal legislation requires financial institutions to develop techniques for protecting customer information: A. Sherman Antitrust Act B. Fair Credit Billing Act C. Robinson-Patman Act D. Gramm-Leach-Bliley Act

D Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act is also known as the Financial Modernization Act of 1999. The main feature of the Act concerns the privacy of customers' financial information. To guarantee the privacy of that information, the Act also requires financial institutions to develop and maintain techniques and methods for protecting the information. The intent is to prevent private financial information from becoming public. The Fair Credit Billing Act, the Robinson-Patman Act, and the Sherman Antitrust Act are not recent and do not concern protecting customer information.

According to most analysts, the three economic indicators that stock market investors and traders should pay the closest attention to are A. inflation, unemployment, and bonds rates. B. interest rates, overhead expenses, and inflation. C. Gross Domestic Product, overhead expenses, and unemployment. D. Gross Domestic Product, unemployment, and inflation.

D Gross Domestic Product, unemployment, and inflation. According to most analysts, the three economic indicators that impact the stock market the most (and, therefore, the three that stock market investors and traders should pay the closest attention to) are the Gross Domestic Product, unemployment, and inflation. The Gross Domestic Product (GDP) is the final market value of the total output of all goods and services produced within a country's geographic boundaries during a year's time. The stock market mirrors the GDP—if the GDP goes up, the stock market usually goes up with it. The unemployment rate is the percentage of the workforce that is unemployed. The stock market is inversely related to the unemployment rate—if the unemployment rate goes up, stock prices usually go down. Inflation is a rapid rise in prices that may occur when demand exceeds supply or when productivity declines and costs of labor go up. If inflation and interest rates both rise, the stock market will suffer. However, if inflation goes up while interest rates stay low, the stock market is likely to benefit. Overhead expenses and bond rates are not economic indicators.

The French-Canadian culture relies heavily on nonverbal communication to get messages across. This means it is a(n) A. ethnocentric culture. B. religious culture. C. corrupt culture. D. high-context culture.

D High-context culture. Since the French-Canadian culture relies heavily on nonverbal communication to get messages across, it is a high-context culture. A low-context culture is one in which people speak more directly. Relying on nonverbal communication does not make a culture more religious, more corrupt, or more ethnocentric (believing their culture is superior). SOURCE: EC:045

Before a person can become more orderly and systematic, s/he must __________ all current activities. A. prioritize C. schedule B. perform D. identify

D Identify. The first step in becoming organized is to identify all of the things that you have to do. A recommended way to do this is to make a list of them. The activities can then be prioritized according to their importance, scheduled, and performed.

What effect do some environmental laws have on businesses? A. Limit equipment purchases B. Require more employees C. Control exterior landscapes D. Increase operating costs

D Increase operating costs. Environmental laws are intended to conserve and protect the natural environment. Many of these laws have an impact on the way businesses operate by requiring them to decrease pollution or control waste. As a result, businesses often need to spend money to comply with the rules and regulations, which leads to an increase in operating costs. For example, a business might need to purchase pollution-control devices. Environmental laws do not require businesses to hire more employees or develop exterior landscapes. The laws do not limit equipment purchases. In fact, businesses may need to buy more equipment to comply with the laws.

The owner of Bob's Bargains has prepared a one-page report to inform the staff about current sales volume. This is an example of a(n) __________ report. A. industry C. feasibility B. complex D. informal

D Informal. A short report that presents facts without analysis is considered an informal report. A formal report is more complex, has several different parts, and provides an analysis of the facts in the report. A feasibility report is a type of complex report that evaluates the viability of a course of action. There is not enough information provided to determine if the report contains sales data for the industry.

Which of the following types of credit requires a down payment: A. Revolving credit B. Open-account credit C. Credit card D. Installment credit

D Installment credit. Installment credit is a type of credit account set up to handle one total amount of credit which is to be paid off in regular installments. The credit user makes a down payment and signs an agreement to pay monthly installments, including interest, until the total is paid. Revolving credit limits the total amount of money that may be owed and charges interest on outstanding balances. A credit card is an identification card that permits the credit account holder to charge purchases to the credit account. Open-account credit allows credit users to buy at any time during a set period, usually 30 days.

A country is experiencing civil unrest. What is likely to happen to the value of its currency? A. It will not be affected. B. It will increase. C. It will stabilize. D. It will decrease.

D It will decrease. A country's economic and political stability can affect the value of its currency. If a country is experiencing civil unrest, its political environment is volatile. Because foreign business partners and investors are uncertain about the country's future, they are likely to decrease their business activities, causing the country's currency value to decrease. The value of the currency in a politically unstable environment is not likely to increase, stabilize, or remain unaffected.

The North American Free Trade Agreement (NAFTA) reduced trade barriers and government restrictions among Canada, Mexico, and the United States. This is an example of A. a reconstructed market. C. convergence. B. an emerging market. D. liberalization

D Liberalization. Liberalization is the removal of government regulations on the flow of capital and international trade. Trade agreements such as NAFTA reduce trade barriers, which involve fewer government restrictions in relation to international trade. An emerging market is a financial market in a country with a developing economy. Convergence is the merging of financial providers from different financial sectors. Reconstructed market is a fictitious term.

Coaching is mostly about A. talking. B. organizing. C. instructing. D. listening.

D Listening. Coaching is mostly about listening. It isn't really about talking or instructing. Listening is important because coaches must truly understand what the other person is saying and where s/he's coming from. Although organization is certainly helpful, it is not the most important skill in coaching.

Determining what consumers want in order to promote and sell those goods and services is a function of the business activity of A. risk management. B. quality management. C. production. D. marketing.

D Marketing. Marketing is a primary business activity that involves creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders. Marketing is an important business activity because it identifies what consumers want and plans how to promote and sell those goods and services to the consumers. Management is the process of planning, organizing, directing, and controlling business activities to achieve objectives. Production is the process or activity of producing goods and services wanted by consumers. Risk management is the business activity that involves the planning, controlling, preventing, and procedures involved in limiting business losses. It optimizes the relationship of potential loss to gain.

Budgets can be described in terms of A. savings, sales, and success. C. desires, debt, and discipline. B. account books, bills, and bankruptcy. D. money, maps, and management.

D Money, maps, and management. Budgets can be described in terms of money, maps, and management. Budgets are about money, can be compared to maps, and are great management tools. Account books, bills, and bankruptcy; desires, debt, and discipline; and savings, sales, and success are all related to certain aspects of budgeting, but none describes its main characteristics as well as money, maps, and management.

A certificate of deposit is a short-term debt security that is sold through __________ markets. A. modified B. capital C. commodities D. money

D Money. A financial market is an organized effort or exchange that facilitates the buying and selling of financial assets. Money markets facilitate the buying and selling of short-term, low-risk financial products, such as treasury bills and certificates of deposit. Capital markets buy and sell long-term securities such as corporate and municipal bonds. Commodities markets are involved with the buying and selling of various resources such as agricultural goods and mined goods, which are often used to make other products. Modified is not a type of financial market.

Which of the following is an example of the impact of technology on the financial-services industry: A. Blurring the lines between banking, insurance, and investments B. More walk-in bank customers C. Greater demand for investment professionals D. Rising concern about fraud and identity theft

D Rising concern about fraud and identity theft. One of the impacts of technology on the financial-services industry is rising concern about fraud and identity theft since so many financial products and services are now bought and sold online. Encryption technology helps guard against fraud and theft. Banks have fewer walk-in customers when they offer online banking. Blurred lines between the banking, insurance, and investment industries is the result of deregulation. Greater demand for investment professionals is the result of changing demographics.

What is the foundation of relational databases? A. Rich Text Format Language (RTF) B. HyperText Markup Language (HTML) C. Synchronized Multimedia Integration Language (SMIL) D. Structured Query Language (SQL)

D Structured Query Language (SQL). Computer programmers use various languages to develop computer programs. The language is the foundation of the particular program—it "tells" the computer what to do in relation to the computer user's keystrokes. Structured Query Language (SQL) is the foundation for developing relational databases. A relational database contains tables of separate, yet related, files or data organized in a computer system. The SQL allows computer users to access and manipulate these tables to obtain the desired information quickly and efficiently. Individuals and businesses use HyperText Markup Language (HTML) to develop and maintain web site applications. Synchronized Multimedia Integration Language (SMIL) is used to develop multimedia applications. Rich Text Format (RTF) is a text (document) file application developed by Microsoft.

The foundation of the principle of least authority is that computer data are more secure when access to specific types of data are only available to A. the customers who request it. C. personnel during set time periods. B. mid-level managers. D. the people who need it.

D The people who need it. By limiting access to those who use or need it, confidential data are more secure and are less likely to be seen or modified by unauthorized people. Computer passwords are common methods of limiting access to certain computer data. Top-level management usually develops or approves the policies that determine who can access certain data. Mid-level managers usually need access to certain types of business data, but not all of it. Customers are often able to access some data about their personal accounts online.

Before Alana can review the performance of her stock in the newspaper's securities table, she must locate the company's abbreviated name in the table, which is followed by the A. trade number. C. yield code. B. trademark. D. ticker symbol.

D Ticker symbol. The ticker symbol, or call letters, are a system of letters that uniquely identifies a company in a stock (securities) table. Investors and potential investors review the stock tables to assess the performance of their stock or stock they might purchase. Because stock tables have many companies listed, knowing the ticker symbol of a particular stock helps people locate stock information quickly. A trademark is a symbol, design, or word used by a producer to identify a good or service, and it is registered with the government to prevent use by others. Yield code and trade number are fictitious terms.

Ben recently developed a logo for his new business. What can Ben do to legally protect the logo from unauthorized use? A. Obtain a subpoena from the government C. File a patent request B. Register the logo as copyrighted material D. Trademark the logo

D Trademark the logo. A business can legally protect its logo from unauthorized use by registering the logo with the appropriate government agency. If an unauthorized entity compromises or uses the logo in harmful, embarrassing, or negative ways, trademark protection provides the business with legal recourse. Copyrights provide legal protection for written, musical, and artistic works. Patents are obtained to legally protect inventions and certain types of processes for a limited amount of time. A subpoena is a formal request issued by the court for an individual to submit evidence or serve as a witness at trial.

Requiring a contractor to purchase a surety bond is an example of handling business risk by __________ the risk. A. preventing B. retaining C. reducing D. transferring

D Transferring. Requiring a contractor to purchase a surety bond is an example of transferring risk—shifting the risk to someone else. If the contract is not fulfilled as expected, the surety bond is paid to the business that stands to lose. Retaining risk is keeping it. Reducing risk is preventing or controlling it. Preventing risk is taking measures to reduce the risk.

What type of letter should a business include when sending copies of a contract to a vendor? A. Request B. Acknowledgment C. Claim D. Transmittal

D Transmittal. A transmittal letter should always accompany important business papers, such as contracts, that are sent by mail. The purpose of the transmittal letter is to let the recipient know exactly what should be contained in the package and if the recipient needs to take any action. A transmittal letter accompanying contracts should indicate how many copies are included and if the recipient needs to sign and return a copy. An acknowledgment letter acknowledges the receipt of business papers. A claim letter requests a solution to a problem. A request letter asks for information.

Blair does not wear safety goggles, hearing protectors, or a coverall in her job as a woodworking shop supervisor. Blair is risking safety in the workplace by A. having poor personal habits. B. lacking job knowledge. C. using unsafe equipment. D. wearing inappropriate clothing.

D Wearing inappropriate clothing. Not wearing safety goggles, hearing protectors, or a coverall can expose a worker to the risk of injury. Lacking job knowledge, having poor personal habits, and using unsafe equipment are other ways of risking safety in the workplace.

100. Why is the choice of a risk measure for internal and external risk of great practical importance? A. It determines the minimum reserve requirements in financial trading. B. It determines the maximum number of clients that can be served effectively by a financial institution. C. It identifies the types of risks that the financial institution will encounter. D. It designates the audience that will receive the resulting financial reports.

100. A It determines the minimum reserve requirements in financial trading. Different measures can result in a lower or higher minimum reserve requirement, which results in a lower or higher profit for the financial institution. Although it does not designate the audience that will receive the resulting financial reports, some financial measures should be used for internal purposes while other measures are more appropriate for external audiences. The number of clients to serve and the types of risks to be encountered are not aspects of selecting a risk measure.

2. An important purpose of full-disclosure laws and regulations is to A. allow company employees to use inside information for personal gain. B. provide information to investors so they can make informed decisions. C. require companies to disclose all information about their operations. D. prevent a stock's par value from dropping below its market value.

2. B Provide information to investors so they can make informed decisions. Full-disclosure laws and regulations require companies to disclose—publicize—any information that could affect the value of the firms' stocks. Investors need this information so they can make informed buy, hold, or sell decisions about investments. Full-disclosure laws also prevent company employees and other insiders from using privileged information for their personal gain. Full-disclosure laws do not require companies to disclose every bit of information about their operations—some undisclosed trade secrets are permitted. Full- disclosure laws and regulations are not designed to impact par values of stock.

34. On January 3, Anna mailed her credit-card payment, which was due on January 5. The credit-card issuer received the payment on January 7. What most likely appeared on Anna's credit-card statement the following month? A. Application charge C. Processing charge B. Late fee D. Over-limit fee

34. B Late fee. Credit-card issuers often charge late fees for payments that do not arrive on time. Some credit- card issuers charge application fees, which involves billing a customer for applying for credit. Processing fees are charges to complete certain activities. Over-limit fees are charges applied for credit transactions that go over or exceed the credit-card holder's credit limit.

35. Which of the following statements about deposit-taking financial institutions is true: A. The Small Business Administration and the Federal Housing Administration are examples of deposit-taking financial institutions. B. When a saver deposits funds, s/he receives a claim on the individual or firm to whom the depository institution lends these funds. C. A deposit-taking institution's primary liabilities are checking accounts, savings accounts, money market accounts, and certificates of deposit. D. Two types of commercial banks are mutual savings banks and savings and loan associations (S&Ls).

35. C A deposit-taking institution's primary liabilities are checking accounts, savings accounts, money market accounts, and certificates of deposit. Deposit-taking institutions such as commercial banks are one type of financial institution. Deposit-taking institutions serve as financial intermediaries. Savers deposit their funds in depositary institutions, and then these deposit-taking institutions lend the funds to individuals and firms who need to borrow money. Checking accounts, savings accounts, money market accounts, and certificates of deposit are liabilities for deposit-taking institutions. Essentially, the funds deposited in these accounts are loans made to the institution by individuals, firms, and the government. When a saver deposits funds in a deposit-taking institution, s/he receives a claim on his/her bank account, not the individual or firm who borrows those funds from the bank. The Small Business Administration and the Federal Housing Administration are examples of government and semigovernment financial institutions. Mutual savings banks and savings and loan associations are types of thrifts, not commercial banks.

36. Which of the following types of insurance companies serves as a financial intermediary: A. Property C. Liability B. Life D. Health

36. B Life. Life insurance companies are a type of financial intermediary because they receive funds from their customers (savers) and lend the funds to other customers (borrowers). Property, liability, and health insurance companies are not financial intermediaries. Like life insurance companies, they sell their services to customers, but they do not lend funds to borrowers.

4. Which of the following mutual funds is most likely to be tax inefficient: A. A fund with a low portfolio turnover rate B. A fund with a high portfolio turnover rate C. A fund that concentrates on a specialized sector D. A fund that attempts to match a broad market index

4. B A fund with a high portfolio turnover rate. Regardless of fund type, a fund with a high portfolio rate replaces a high percentage of its investments every year. Every time that the fund sells one item in its portfolio and purchases another, a capital gain or loss is being realized. Because these capital gains or losses occur so frequently, it is difficult for fund investors to successfully time the realizations and manage their overall tax obligations effectively. Specialized sector funds focus on a certain industry, and index funds attempt to match broad market indices.

43. Financial globalization tends to cause an increase in A. limits on foreigners' access to domestic markets. B. investors' exposure to business cycle risks. C. taxes on international transactions. D. herd behavior among investors.

43. D Herd behavior among investors. Although financial globalization tends to increase investors' access to many different financial markets, financial globalization also seems to increase the risks of speculative bubbles and herd behavior among investors. Herd behavior involves individuals who act together as a group without any planned direction. It is usually irrational and driven by emotions. In good times, investors hurry to join others in a buying frenzy. But, in bad financial times, fearful investors join others in a rush to get out of risky markets. By diversifying their funds in many different countries, investors are able to diversify their risk and reduce their exposure to business cycle risks. To enable capital to flow more freely across their national borders, many countries have lowered their taxes on international financial transactions.

46. Which of the following web sites is most likely to contain accurate, trustworthy securities information: A. Wikipedia C. StandardLine B. Morningstar D. Facebook Finance

46. B Morningstar. Morningstar is an independent company that provides up-to-date, reliable information and analyses of a variety of securities, including stocks, bonds, and mutual funds. Although Wikipedia contains a wealth of information, it is less likely to be accurate or trustworthy because the content is primarily provided by anonymous Internet users. StandardLine does not provide financial information. Facebook Finance is a fictitious web site.

47. The Milton Ladder Corporation, which is publicly traded, is in the process of acquiring the Bradley Chute Company. What type of document is Milton Ladder required to file within 15 days of the acquisition? A. Form 10-K C. Form 10-Q B. Form 8-K D. Form 4

47. B Form 8-K. Publicly-traded companies are required to provide information about their finances to the Securities and Exchange Commission (SEC) every quarter. For the first three quarters of the fiscal year, publicly-traded companies file 10-Q reports that focus on the company's financial situation for that period of time. At the end of the fourth quarter of each fiscal year, each company is required to file a Form 10-K, which is similar to an annual report. It includes detailed information about the company, its competitors, risks it faces, legal proceedings that the company is involved in, and audited financial statements. In addition to these standard, routine documents, a company is also required to file a Form 8-K, also known as a current report if a significant, non-recurring event occurs before a 10-Q or 10-K is due. Events might include changes in key management, introduction of a new product, legal actions, or the acquisition of another company. Form 4 tells you when insiders are buying or selling the company's stock.

77. How long are businesses required to keep their records? A. On a seasonal basis B. Varies greatly C. Indefinitely D. One year

77. B Varies greatly. The length of time that businesses use and store their records can vary greatly. Some businesses will use certain records indefinitely, while other businesses might maintain information on a seasonal basis or for only one year. The law often determines how long certain records must be maintained.

53. What do many businesses develop to encourage ethical behavior in finance? A. Penalties B. Punishments C. Sanctions D. Standards

53. D Standards. Ethical standards are unwritten rules that govern your behavior. Many businesses develop ethical standards that they expect employees to follow, particularly in finance. Finance is the process of obtaining funds and using them to achieve the goals of the business. Ethical issues may arise in the process of managing money, and having ethical standards to follow helps employees make the right decisions. There may be consequences for failing to abide by ethical standards, but businesses usually do not develop specific punishments, sanctions, or penalties.

54. Why it is important for businesses to keep accurate accounts-receivable information? A. To evaluate interest rates B. To forecast sales C. To classify stocks D. To monitor aging accounts

54. D To monitor aging accounts. The accounts receivable—all the monies owed to a firm by its customers— should be monitored carefully because they affect the business's cash flow and its ability to pay its employees and creditors. To collect the monies owed to them, the business should implement follow-up procedures to contact customers with delinquent or aging accounts. Businesses do not monitor accountsreceivable information to forecast sales, classify stocks, or evaluate interest rates.

55. Which of the following is a technological tool that businesses use to archive their financial records: A. Electronic data interchange B. Direct-response software C. Digital microfilm scanner D. Web-development programs

55. C Digital microfilm scanner. Businesses must keep a variety of financial information for a certain length of time, often for several years. Many businesses have saved their archived financial information on microfilm. Microfilm is a type of film that stores photographed images and text in a condensed format for easy storage. A digital microfilm scanner can take existing microfilm, which is older technology, and convert it into a digital format. The advantage to switching microfilm records to a digital format is that businesses can easily view the data on computers and share information quickly through the Internet. Direct-response software is a computer program that helps businesses automate their direct-marketing efforts. Electronic data interchange (EDI) is a network of computers that allows businesses to share information. Businesses use web-development programs to develop and maintain web sites.

55. Which of the following is a common outcome of poor financial-information management in a finance department: A. Employees cannot understand financial statements. B. Employees receive information before it's needed in the department. C. Employees cannot correctly assess trends. D. Employees are able to increase their efficiency.

55. C Employees cannot correctly assess trends. When financial information is poorly managed, employees are hindered from correctly assessing their performance and trends. It also takes a long time to access requested information, thereby delaying use of the information and decreasing employee efficiency. Employees' ability to understand financial statements is not an outcome.

56. Which of the following leads accountants to apply unethical earnings-management practices: A. Postponing a large purchase to a later time B. Meeting analysts' estimated earnings C. Accelerating payment of expenses when earnings are high D. Selling securities for a gain

56. B Meeting analysts' estimated earnings. Managers are often pressured to ensure that analysts' estimated earnings are reached. Managers should focus on use of accounting principles that provide the most accurate results rather than on providing the most desired results. Otherwise, they will be guilty of cooking the books to provide a more favorable financial report than actually exists. Postponing purchases, accelerating expense payments, and selling securities for a gain are ethical earnings- management practices.

57. What must a business do before deciding which data-mining technique to use? A. Filter the raw data B. Acquire the desired results C. Determine the research question D. Analyze product usage patterns

57. C Determine the research question. Data mining is the process of searching computer databases to look for patterns and relationships among data. Businesses use data mining to find answers to questions. For example, a bank might ask the question, "Which customers tend to visit the bank between noon and 5 p.m. on Tuesdays?" Before the bank can answer this question, it must identify what types of data it will need to answer the question, and then set appropriate computer queries to obtain the data. After determining the research question, the business can filter the data and analyze the results, which may or may not include product usage patterns. The data may or may not provide the results that the business desired.

58. Which of the following questions would be the least difficult to answer using data mining techniques: A. What makes some customers a better credit risk than others? B. When will this customer place his/her next order? C. Why did this customer move her/his checking account to another bank? D. What product will a particular customer order next?

58. A What makes some customers a better credit risk than others? Data mining is frequently used to classify groups of people or things. For example, data mining could help us to understand what makes customers who are a better credit risk different from the customers who are not. However, data mining is not as effective when trying to pinpoint information about one particular customer. Because a customer's decisions are based on many factors that a database cannot capture, it is difficult to determine that specific person's actions. Therefore, a database would not be an efficient tool to use to predict when the customer will place his/her next order, to learn why s/he moved a checking account to another bank, or to determine what product s/he will order next. Probability models are more successful in predicting what a customer will do and why.

59. In what stage of the data-mining process would you clean data in a database? A. Exploration C. Prediction B. Model building and validation D. Deployment

59. A Exploration. The exploration stage of data mining generally starts with preparation of the data. This includes such activities as data cleaning, data transformation, selecting subsets of records for analysis, selecting the variables of interest, and choosing the analytic method to apply. The second phase of the data-mining process is model building and validation in which various models appropriate for the study are identified, and the best one is selected. Deployment is use of the selected model. Prediction is not a stage in the data-mining process; however, data miners want to make predictions from their data-mining activities.

59. What is a benefit of managing budgeting data efficiently through budgeting applications? A. Decreases auditors' ability to trace the numbers used in budgets B. Increases amount of time that needs to be spent on value-added activities C. Decreases the need for having an audit trail D. Increases management's confidence in budgets

59. D Increases management's confidence in budgets. The efficient management of budget data benefits businesses in a variety of ways, including error detection and control, decreasing the time needed for completing the accounting cycle, and increasing management's confidence, not only in budgets, but also in financial statements and performance scorecards, etc. Since use of efficient budgeting applications decreases the amount of time required to complete the accounting cycle, financial professionals have time to spend on value-added activities, such as decision-making and presentation of information, rather than having to spend more time on them. An audit trail and increased ability to trace the numbers used in budgets are natural outgrowths of the use of budgeting applications.

6. Which of the following is an example of a preventive internal control: A. Variance analyses C. Segregation of duties B. Data reconciliations D. Physical inventories

6. C Segregation of duties. Several types of internal controls are used in compliance. Preventive controls such as the segregation of duties attempt to prevent unwanted events (noncompliance) from occurring. Detective controls, on the other hand, are used to identify and document noncompliance. Data reconciliations, variance analyses, and physical inventories are all detective internal controls. Corrective controls are used after noncompliance has been identified. They may include disciplinary action or additional training.

60. Why would a meta-learner be used in data mining? A. To determine the best fit of classifications resulting from multiple models B. To orient analytic models to the data stored in a data base C. To enhance search engine optimization (SEO) strategies D. To select the analytic model to apply to the data in a database

60. A To determine the best fit of classifications resulting from multiple models. Often, businesses use a variety of models to understand the data in their data bases. When they generate different results from one another, the business applies a meta-learner to figure out which results are best. Search engine optimization (SEO) strategies relate to increasing the number of hits to a web site from search engines. By the time meta-learners are applied, businesses have already selected a variety of analytic models. The meta-learner is not responsible for orienting models to data in a data base.

60. Which of the following questions should the user of financial analysis applications be able to answer: A. Why are products being added to the company's product mix? B. Which projects are business priorities? C. What will the company's actual amount of profit margin be next year? D. What is the change in the company's liquidity?

60. D What is the change in the company's liquidity? By using financial analysis applications, a business gains insight into its financial health, such as the company's liquidity. These applications also are useful in helping to identify trends. The applications cannot accurately forecast a business's actual amount of profit margin; however, they help to identify trends impacting the profit margin. These applications cannot identify project priorities or tell why products are being added to the product mix. They report financial data.

61. The purpose of using the locking function for a database is to A. set queries to retrieve data from specific data fields. B. allow users to import data from external programs. C. develop reports and summarize various data. D. ensure that only one person can edit data fields.

61. D Ensure that only one person can edit data fields. Many databases allow users to view the same information at the same time. The locking function prevents more than one person at a time from making changes to the database. The import function allows users to import data from external programs. The primary purpose of the locking function is not to develop reports, summarize data, or set queries.

61. What is a benefit of managing budgeting data efficiently through budgeting applications? A. Decreases auditors' ability to trace the numbers used in budgets B. Increases amount of time that needs to be spent on value-added activities C. Decreases the need for having an audit trail D. Increases management's confidence in budgets

61. D Increases management's confidence in budgets. The efficient management of budget data benefits businesses in a variety of ways, including error detection and control, decreasing the time needed for completing the accounting cycle, and increasing management's confidence, not only in budgets, but also in financial statements and performance scorecards, etc. Since use of efficient budgeting applications decreases the amount of time required to complete the accounting cycle, financial professionals have time to spend on value-added activities, such as decision-making and presentation of information, rather than having to spend more time on them. An audit trail and increased ability to trace the numbers used in budgets are natural outgrowths of the use of budgeting applications.

61. In which of the following situations would a firm use cost-analysis applications: A. To predict sales volume for a certain period of time B. To determine the number of delinquent accounts C. To assess income changes over a certain period of time D. To evaluate the amount of money associated with inventory storage

61. D To evaluate the amount of money associated with inventory storage. To maintain profitability, a firm must evaluate its costs in relation to its various business functions, which include purchasing, marketing, human resources, operations, etc. Businesses often analyze the various costs associated with carrying products. For example, a temperature-sensitive product may require special warehousing accommodations, which increases the costs associated with storing the product. Businesses use accounts-receivable applications to determine the number of delinquent accounts. Income reports summarize income changes. Businesses use budgeting applications to estimate sales volume.

63. Which of the following establishes the guidelines for the way that a publicly owned company reports its financial position: A. The federal government B. The board of directors C. The accounting department D. The stockholders

63. A The federal government. Governments require businesses to provide certain types of financial information to regulatory agencies and shareholders. Public corporations are required to provide financial information that has been verified by an independent auditor to shareholders (owners of the company) and prospective investors. The board of directors and the accounting department perform activities to ensure that the corporation is in compliance.

65. What type of accounting system is used for internal decision making, is not governed by generally accepted accounting principles, and emphasizes the future? A. Managerial B. Tax C. Financial D. Double entry

65. A Managerial. Managerial accounting systems are used primarily to aid managers with their decision making, planning, and controlling. Businesses are not required by law to have managerial accounting systems; therefore, there is less emphasis on the precision of data. These systems also do not have to meet generally accepted accounting principles. Tax and financial accounting are governed by generally accepted accounting principles, and they emphasize the business's past financial performance. These systems are designed to provide financial information to external audiences. A double entry accounting system is an accounting concept requiring every accounting transaction to be recorded in two accounts: in one, the transaction is a debit, while in the other account, the transaction is a credit.

65. Which of the following is a financial report that financial institutions often review to decide if they will approve applicants' requests for business loans: A. Payment voucher B. Corporation charter C. Petty-cash summary D. Cash-flow statement

65. D Cash-flow statement. A cash-flow statement is a financial report that contains estimates as to when, where, and how much money will flow into and out of a business in a given timeframe. Lending institutions want to look at loan applicants' cash-flow statements to determine if they have enough money to operate. If an applicant seems to have problems paying bills due to continuous cash shortages, a lending institution may believe it is too risky to process the loan because the applicant may not be able to pay back the loan. A corporation charter is a permit granted by the government to a business that allows the business to operate as a corporation. A petty-cash summary documents a business's small cash transactions. A payment voucher is a receipt.

67. Which of the following represents a difference between accounting and finance: A. Finance collects and presents financial information, while accounting determines financial strategies. B. Finance tracks revenues and expenses when they are incurred, while accounting recognizes them when money is exchanged. C. Accounting recognizes revenue and expenses when they are incurred, while finance recognizes them when money is exchanged. D. Accounting collects and presents financial information, while finance creates financial statements.

67. C Accounting recognizes revenue and expenses when they are incurred, while finance recognizes them when money is exchanged. One difference between accounting and finance is their treatment of funds (i.e., revenue and expenses). Accounting generally tracks revenue and expenses when they occur rather than when money is exchanged. Accounting is responsible for collecting and presenting financial information, including the creation of financial statements.

69. Which of the following sources of financial data might a manager use to analyze expense variances: A. Cash receipts C. Payroll reports B. Customer invoices C. Payroll reports D. Productivity reports

69. C Payroll reports. A variance is a discrepancy or difference between what was planned and what actually occurred. Financial managers often use financial data to analyze variances—to determine what caused actual results to differ from the projected results. A manager might analyze expense variances to determine why a business's expenses were either higher or lower than budgeted. Payroll reports indicate the flow of funds out of a firm to its employees. Therefore, payroll reports provide information about a business expense. Customer invoices and cash receipts, on the other hand, focus on company revenue, not expenses. Productivity reports are often used to analyze operational results, but they are seldom used in expense variance analysis.

72. Overall, what does marketing allow us to do? A. Limit our spending B. Stop buying online C. Live our daily lives D. Feel better about shopping

72. C Live our daily lives. Overall, marketing allows us to live our daily lives since marketing is involved in almost everything we do. Limiting our spending and not buying online anymore are negative responses that may or may not have anything to do with marketing. Feeling better about shopping could be a positive side effect of marketing.

74. If a company is managing its information effectively, the data should be accurate and A. encrypted. B. relevant. C. anonymous D. positive.

74. B Relevant. In order to make business decisions, companies access, store, maintain, and evaluate a variety of information (facts, data). To make appropriate decisions, companies need to make sure the information that they are basing their decisions upon is accurate and relevant. For example, information from an employee's performance review will not help the business determine how to price its products. Information from an anonymous source may be incorrect and could lead to poor decisions and undesirable outcomes. Encryption is the process of transforming information into a secret code so that only the recipient can read it. Not all information needs to be encrypted. While positive information about the company is nice, it is more important that the information is honest, accurate, and relevant.

75. Ingrid is able to access information from her desktop publishing software, word-processing software, and spreadsheet software at the same time on her personal computer. This is an example of an operating system with __________ capabilities. A. multiprocessing B. multi-user C. multitasking D. multithreading

75. C Multitasking. The computer's operating system consists of the components needed to run all of the computer applications and programs. When the operating system allows the user to open and use more than one software program at a time, it has multitasking abilities. An operating system that allows more than one user to access a particular program at one time has multi-user capabilities. An operating system that allows several central processing units (computers) to access a single program has multiprocessing capabilities. Multithreading capabilities allow different components of one computer program to run at the same time.

76. An upscale department store tracks customer purchases made with store credit cards and then tailors promotional messages and merchandise offers to specific clients based on their purchases. What software allows the retailer to manage this strategy? A. Spreadsheet B. Word processing C. Database D. Systems tools

76. C Database. Database software allows companies to collect, store, and organize customer information. This information can be used to maintain, analyze, and combine customer information in order to send certain messages to specific customers. Spreadsheet and word-processing software do not perform the functions required by the retailer. Systems tools are used to maintain the computer.

81. What do you need to identify if there are complicated jobs that members of the group are unable to perform? A. Support services B. Alternative tasks C. Technical equipment D. Replacement items

81. A Support services. Support services are the technical or complicated activities that project members cannot do themselves. After you decide what type of additional help you might need to complete the project, you should identify the other people, organizations, and businesses that need to be involved in the project. Maybe you need the help of trained professionals to use complex equipment or different types of transportation. While determining the type of work that needs to be done, you might identify technical equipment. However, it is possible that a member of the group knows how to use this equipment. In many cases, it will not be possible to identify alternative tasks or replacement items. Then, it will be necessary to locate support services.

82. Do businesses such as banks and dry cleaners engage in production? A. No, the services provided by these businesses are intangible. B. Yes, these businesses produce a line of tangible products. C. Yes, the services provided by these businesses are their products. D. No, these businesses do not engage in production.

82. C Yes, the services provided by these businesses are their products. Businesses are engaged in production, whether they produce goods or services. Even though services are intangible items that cannot be detected through the senses, services are products that can be sold to customers. Businesses that provide services must have a system for producing those services.

87. Why is it important to select an occupation that matches your aptitudes? A. Matching aptitudes to careers leads to the highest possible income. B. Considering your aptitudes will make achieving your career goals realistic. C. A positive aptitude will allow you to succeed in any career. D. Selecting a career based on your aptitudes will require less time in college.

87. B Considering your aptitudes will make achieving your career goals realistic. An aptitude is your potential for learning a skill. It is similar to having a knack for something. Pursuing a career in an area that comes naturally to you will make it more realistic to achieve your career goals. Though matching aptitudes to a career is likely to lead to career success and satisfaction, it does not consider income. Aptitudes are neither positive nor negative. Each person has a different set of aptitudes. Time spent in college is not necessarily affected by aptitude. As an example, although a person has an aptitude for medicine, s/he must still complete college and medical school.

9. While reviewing a business's general ledger, a virtual auditor identified two identical journal entries within the same accounting period. What reasoning technique did the virtual auditor use? A. Contextual C. Comparative B. Symbolic D. Cross-source

9. B Symbolic. A virtual auditor uses several different reasoning techniques to evaluate financial activities. Symbolic reasoning looks for "signatures"—clues—of noncompliance as well as patterns of events such as duplicate journal entries within one accounting period. Contextual reasoning involves determining the seriousness of the noncompliance incident identified by symbolic reasoning. Comparative reasoning identifies and compares similar transactions and information. It does not focus on identical transactions such as duplicate journal entries. Cross-source reasoning inspects transactions within multiple financial systems.

90. Under which of the following circumstances is it appropriate for applicants to prepare interview follow-up letters: A. Before they agree to pre-employment testing B. When they are no longer interested in the job C. After they have submitted application forms D. In order to send information with résumés

90. B When they are no longer interested in the job. One of the reasons for sending follow-up letters is to be courteous and thank interviewers for their time. Applicants who have interviewed with a business should send follow-up letters even if they are no longer interested in the job, because that will help to build a positive relationship. At some point in the future, applicants may want to be considered for other positions with that company, and their courteous behavior in the past will be remembered. Follow-up letters are not submitted with application forms, sent with résumés, or before agreeing to pre-employment testing

95. How do ethics relate to risk management? A. Risk management is all about the ethical treatment of customers. B. The best form of risk management is adherence to business ethics. C. Risk management is insurance for lapses in business ethics. D. The best form of business ethics is risk management.

95. B The best form of risk management is adherence to business ethics. Every breach of business ethics represents a potential risk for businesses. The best thing businesses can do to overcome most risks is to do the right thing—practice business ethics. Risk management includes the ethical treatment of customers as well as a variety of other factors. Insurance is one way to overcome business risks; however, risk management is much more than insurance.

96. What risk is being avoided when financial institutions use cloud computing? A. Speculative risk C. Loss of customers risk B. Pure risk D. Return on investment risk

96. D Return on investment risk. Cloud computing keeps businesses from having to invest in computer hardware, such as servers, and software, thereby avoiding return on investment risk. Instead, businesses pay a provider only for the services that they use—much like paying an electric bill. The contract with the provider can be ended at any time. Customers will probably receive better service since the business is not having down time when its computers malfunction. Speculative risk is the chance of loss or gain. Pure risk exists when, if something happens, it will result in a loss.

97. Which of the following issues is keeping risk managers from getting the right information into the right context so that the right decisions can be made: A. Having transparency around the effects of volatility on the organization B. Having too little information that can be used to assess and understand risk C. Having many different sources of data that can be used to assess risk D. Having a centralized enterprise risk management system

97. C Having many different sources of data that can be used to assess risk. Many financial institutions maintain individual or departmental databases that cannot interact with the data throughout the organization. This keeps risk managers from having a clear picture of the organization-wide risks. Rather than having too little information, risk managers have just the opposite problem: too much decentralized information. Centralized information is needed. Transparency is needed around the effects of volatility on the organization.

99. Why are financial institutions using tokenization? A. To protect online transactions B. To create credit-cards C. To provide incentives for increased investing D. To overcome government-regulated quotas

99. A To protect online transactions. Tokenization is the process of substituting a random number in place of an account number to process the transaction online. In this way, financial institutions are able to protect customer data from fraud. Credit-card creation, provision of incentives, and government-required quotas are not aspects of tokenization.

Although Terri, Adele, and Jeff work in different departments, they all use the same computer program -- one that is outdated and inefficient. During their breaks and lunch hours, they have been discussing ways in which they can convince management to upgrade the system. Terri, Adele, and Jeff have formed a: A) Political coalition B) Public-relations board C) Departmental project team D) Workplace grievance committee

A

Businesses often use presentation software to develop computerized training materials that contain interactive buttons, which allow employees to A. test themselves B. study together C. access databases D. conduct research

A

Marketing is described as creating A. exchanges B. needs C. gaps D. advertisements

A

What doe sql statement "FROM" do at the beginning of a database clause? A. Designates tables B. Identifies filter criteria C. Retrieves fields D. Sorts query results

A

What type of financial statement includes an accounting of the shareholders' equity for a company? A) Balance sheet B) Income statement C) Cash flow statement D) Annual report

A

Which compliance reasoning process detects unbalanced journal entries? A) Symbolic reasoning B) Contextual reasoning C) Temporal reasoning D) Cross-source reasoning

A

Which of the following is a characteristic of a product trade-name franchise: A. The franchisee can choose the name of the business. B. It is not open to the public C. The franchisee has unlimited liability D. It is owned by shareholders

A

Which of the following is often cited as the most significant stumbling block in achieving compliance goals within large financial organizations: A) Poor data quality B) Lack of training C) Inadequate funding D) Improper accounting system

A

Which of the following is the most common flaw in financial information management: A) Non-financial managers have difficulty accessing needed financial data B) Non-financial managers are bombarded with excess financial data C) Financial-info management personnel often maintain operational data instead of financial data D) Most large companies do not have a financial-information management system

A

Which of the following mutual finds is most likely to be tax inefficient: A. A fund with a high portfolio turnover rate. B. A fund with a low portfolio turnover rate C. A fund that concentrates on a specialized sector D. A fund that attempts to match a broad market index

A

Which of the following potential compliance issues would temporal reasoning detect: A) a travel-expense account has a credit balance at the end of an accounting period rather than a debit balance B) Purchase orders 2870 from Bryan Industries and 2870a from Bryant industries are very similar C) A new customer recently placed an order that is 3 times larger than the avg order D) Jack temporarily changed a vendor file so funds destined for the vendor would instead be diverted to his personal checking account

A

Which stage of negotiation do many people consider the most important part of the process: A. Preparation B. Concession C. Assessment D. Mediation

A

Why does the Federal Reserve System raise interest rates? A. To fight inflation B. To increase demand for products C. To decrease supply of products D. To overcome inequalities of income distribution

A

Which of the following mutual funds is most likely to be tax inefficient: A. A fund with a high portfolio turnover rate B. A fund with a low portfolio turnover rate C. A fund that concentrates on a specialized sector D. A fund that attempts to match a broad market index

A A fund with a high portfolio turnover rate. Regardless of fund type, a fund with a high portfolio rate replaces a high percentage of its investments every year. Every time that the fund sells one item in its portfolio and purchases another, a capital gain or loss is being realized. Because these capital gains or losses occur so frequently, it is difficult for fund investors to successfully time the realizations and manage their overall tax obligations effectively. Specialized sector funds focus on a certain industry, and index funds attempt to match broad market indices.

Which of the following is an example of legal tender issued by the federal government: A. Bank notes B. Corporate bonds C. Mutual funds D. Municipal bonds

A Bank notes. Bank notes are currency. Currency is the paper or metal (coin) money that individuals and businesses use to buy and sell goods and services. Paper money and coins are issued by a country's government. Corporate bonds are bonds issued by corporations to fund operating expenses. A mutual fund is a collection of shareholders' money that is invested by professional fund managers in an assortment of different securities, such as stocks and bonds. A bond is a piece of paper (real or virtual) that says the governing body or corporation will borrow your money at a particular interest rate for a particular period of time. Municipal bonds are issued by local governments.

Items that are used to produce goods and services are A. economic resources. B. natural resources. C. capital goods. D. human resources.

A Economic resources. An item becomes an economic resource when it is used to produce a good or a service. Economic resources include natural resources, human resources, and capital goods.

A country that has a socialistic command economic system is A. Great Britain. B. the United States. C. Switzerland. D. Japan.

A Great Britain. Socialism is a modified command economic system in which government owns the basic means of production but there is private ownership of businesses as well. Socialism is characterized by freedom of choice, limited competition, high taxes, some government control, and welfare programs for citizens. Japan, Switzerland, and the United States have capitalistic economic systems.

When determining if a personal vision is realistic, a person must determine if the vision will have: A. permanent results. B. limited resources. C. few setbacks. D. measurable goals.

A Permanent results. Personal vision is the future that you want to create. It involves creating positive change through hard work over the long term. For example, Martin Luther King, Jr. had a vision in which his children would have equal rights with all Americans. His vision was to end racism, and he took many steps to make his vision come true. Due to his efforts, peoples' attitudes changed and laws were established to protect and ensure all peoples' rights, which created permanent results from his vision. When working toward a personal vision, a person may experience setbacks and challenges, such as limited resources. Not all of the results of visions can be measured because they often affect others on a personal and intangible level.

Making the customer feel important and in charge is a good way to handle which type of difficult customer? A. Domineering/Superior C. Slow/Methodical B. Disagreeable D. Suspicious

A Domineering/Superior. Domineering/Superior customers should be made to feel important and in charge which will help them to convince or sell themselves. Disagreeable customers are often surprised and calmed by salespeople who are composed, courteous, and efficient. Slow/Methodical customers may need more action on the salesperson's part in order to close within a reasonable period of time. Suspicious customers will often be your customer for life if you can gain their confidence and trust.

Which of the following is a trend that financial information can be used to identify: A. A bakery's artisan bread are growing in popularity. B. Jeannie ordered a red velvet birthday cake for her father. C. The delivery truck typically arrives 10 minutes early. D. Customers say that sourdough bread tastes better than rye bread.

A. A bakery's artisan breads are growing in popularity. Business managers and owners typically review their financial information on a regular basis to identify patters and trends. This financial information might help them to determine which products are most or least profitable, which products are experiencing a drop in sales, and which products are growing in popularity and sales. What a customer ordered for a particular occasion is not a trend. While a delivery truck early on a regular basis may be a pattern or a trend, financial information is not likely to help a person identify that trend. Financial information would not tell managers what type of bread customers say that they like best. Marketing research is much more likely to provide that sort of information.

Determine if the following statement is true or false: Employers are more concerned with their employees' job skills that their employees' personal appearance. A. False, an employee's appearance can influence the customer's perceptions about the company B. False, employers are most concerned about with an employee's ability to work well with others. C. True, employees must have skills because most employers do not have resources to train them. D. True, an employee's clothing and hygiene are not as important as his/her efficiency levels.

A. False, an employee's appearance can influence the customers' perceptions about the company. While employers want employees to possess the appropriate job skills to perform efficiently, and the interpersonal skills to get along, an employee's personal appearance is also critical to his/her success in the workplace. An employee's appearance -clothing, hygiene, physical carriage - reflects the image of the company. An employee's appearance can influence customers' attitudes and perceptions about the products that the company sells. In most situations, customers are unlikely to buy a product from a salesperson who is wearing wrinkled, mismatched clothing, has poor hygiene, and exhibits rude manners. In some situations, employees are expected to wear uniforms to work, which affects their personal appearance in relation to their jobs. Although employers do expect the employees whom they hire to possess certain skills, most employers most provide some sort of training to familiarize new employees with the organizational processes and culture.

Auto mechanics and attorneys are likely to use a _____ cost accounting system. A. Job order B. Process C. Consumer D. Cyclic

A. Job order. Businesses that can track their costs to a specific job or order often use a job order cost accounting system. Attorneys can usually identify which client should be charged for certain expenses, while auto mechanics charge each client individually for the parts/labor needed to repair his/her automobile. Process cost accounting systems works well for businesses that produce standard products continuously. Consumer and cyclic cost accounting systems are fictitious terms.

Risk retention groups are typically only allowed to offer _______ insurance coverage. A. Liability B. Life C. Homeowners D. Health

A. Liability. Risk retention groups are liability companies owned by their members, who are typically businesses, professionals, and municipalities that are unable to acquire liability insurance from traditional insurance companies. Types of liability insurance that risk retention groups typically offer include errors and omissions, medical malpractice, directors and officers, product liability, professional liability, etc. Risk retention groups are not legally permitted to offer life, homeowners, or health insurance in most countries.

A company installs automatic sprinklers in all of its facilities. Which of the following techniques is the company using to combat the internal threat of fire. A. Loss reduction B. Loss avoidance C. Loss prevention D. Risk transfer

A. Loss reduction. Loss reduction is a form of risk control. Risk control methods are used to reduce and minimize loss. Loss reduction lessens the impact of a loss after it occurs. For instance, although the automatic sprinklers won't prevent a fire from starting, they will lessen the impact that the fire has on the company's buildings. Companies utilize loss avoidance when they choose not to take part in risky activity. Loss prevention focuses on stopping certain losses from occurring. Companies transfer risk by purchasing insurance and entering contracts that transfer the risk to others.

One factor that may cause a nation to experience demand-pull inflation is a: A) decrease in demand B) shortage of supply C) fluctuation of interest rates D) change in credit ratings

B

The price that seldom, if ever, actually exists in the marketplace is the ______ price. A. relative B. equilibrium C. market D. list

B

When the U.S. federal government owes money to a contracted employee or business, the government must pay the employee or business according to the: A. Early Bird Act. B. Prompt Payment Act. C. Secure Contracting Act. D. Government Guidelines Act.

B

Which of the following technologies has proven very successful in creating "what-if" scenarios in the finance industry: A. Financial reporting and consolidation B. Digital dashboards C. Time value of money calculators D. Account reconciliation

B

Which of the following software applications is commonly used when conducting financial analysis: A. Database B. Spreadsheet C. Groupware D. Presentation

B. Spreadsheet. Spreadsheet applications organize and show financial data in a logical format. This data can be analyzed using integrated mathematical formulas. Finance professionals often use spreadsheets to conduct what-if planning. What-if planning involves identifying and considering options for financial decision-making by applying different assumptions to financial data within spreadsheet software. Database applications are typically used to store data and information. Groupware applications are usually used by multiple individuals who are all working on the same project, yet are not physically together in the same location. Presentation software is used to create and show slide shows containing text, graphics, and sound.

Brandon is developing a financial plan, and one of his goals is to save enough money to buy a new car in two years. Has Brandon set a SMART goal? A. Yes, his goal is time-bounded and measureable. B. No, his goal is not attainable or results-oriented. C. No, his goal is not specific or measurable. D. Yes, his goal is attainable and specific.

C No, his goal is not specific or measurable. A financial goal is a short- or long-term objective that is measured in terms of money. Effective financial goals are SMART goals—specific, measurable, attainable, results-oriented, and time-bounded. The goal is time-bounded because Brandon wants to save money to buy a car two years from now. It is results-oriented because Brandon will have something to show for his effort in two years—a car. However, the goal is not specific or measurable because Brandon has not indicated how much he wants to save for the car. Also, Brandon has not indicated how he plans to save for the car, such as placing 15% of his weekly paycheck in a special savings account. There is not enough information to determine if the goal is attainable because it is not specific.

Strategic management is demonstrated in which of the following phrases: A. Obtaining funds for business projects B. Recruiting appropriate employees C. Planning and organizing for the future D. Regularly updating business processes

C Planning and organizing for the future. Strategic management involves planning and organizing for the future. It does not involve obtaining funds. That is part of financial analysis. Recruiting appropriate employees is part of human-resources management and regularly updating business processes is part of operations.

7. Which of the following is most likely to be a benefit of proactive compliance plans for businesses? A. Minimized costs and a reduction in senior management B. A competitive advantage and a reduction in senior management C. A competitive advantage and minimized costs D. Increased government scrutiny and minimized costs

C A competitive advantage and minimized costs. By developing a proactive compliance plan, a business is likely to create a competitive advantage for itself and enhance its reputation. At the same time, a proactive approach to compliance can help the business to minimize costs and reduce risks. Rather than waiting for a problem or instance of noncompliance to occur, many businesses choose to do things properly—in compliance—from the start. Most proactive businesses have grown their senior management to address increasing compliance and risk concerns. This senior level position, often known as a chief compliance officer, is responsible for ensuring corporate compliance with government and industry laws and regulations. By avoiding noncompliance issues, proactive companies are likely to receive less government scrutiny than those that wait to react to instances of noncompliance.

Which of the following can be used to identify the unethical manipulation of records in a financial information management system? A. Long-term liabilities B. What-if planning C. Audit trails D. Direct checks

C. Audit trails. Although unethical individuals might erase certain accounts or transactions from their financial-information management system, a record of their erasures would appear in system audit trails. What-if planning involves identifying and considering options for financial decision making by applying different assumptions to financial data within spreadsheet software. Long-term liabilities are debts that will take longer than a year to pay. A direct check is a method of checking goods in which the goods received are checked directly against the purchase order of the invoice.

A business creates an organizational design in which no employee has to report to more than one manager at a time. This is following an organizational principle called A. line authority B. the scalar principle C. span of control D. unity of command

D

According to the Securities and Exchange Commission regulations, a publicly traded company's financial statements must be reviewed to ensure that they contain certain information. Which of the following individuals typically checks the accuracy of a company's financial statements: A. Virtual auditor B. Internal accountant C. Forensic accountant D. Independent auditor

D

Supervised by the Federal Reserve Board, the DAB Company provides investment advisory services, insurance underwriting, securities underwriting, and merchant banking services. The DAB Company is an example of a(n) A. commodities investor B. accounting firm C. central bank D. financial holding company

D

Which of the following is a reason to analyze financial data: A. To develop financial models B. To identify products which need to be recalled C. To determine a business's qualitative characteristics D. To understand accounting treatment

D

Which of the following pieces of legislation allows for the consolidation of commercial and investment banks, insurance companies, and securities firms: A. Glass-Stegall Act B. Community Reinvestment Act C. Sarbanes-Oxley Act of 2002 Gramm-Leach-Bliley Act

D

Which of the following situations could be prevented through the use of a financial-information management system: A. Elimination of mergers and acquisitions in the finance industry B. A financial institution's server crashing and preventing employees from entering customer payments C. Different versions of a database application being incompatible so that financial information cannot be shared. D. Customer service sending brochures about the company's loans to people who've just taken out loans with the company

D

Why is it important for businesses to follow local health ordinances? A. To lower the need for medical care facilities. B. To prevent accidents in the workplace C. To protect the natural environment D. To reduce the risk of widespread illness

D

What is the main form of written communication between companies? A. Telephone calls B. Memorandums C. Meetings D. Business letters

D Business letters. Business letters are the most common form of written communication used by businesses to exchange information with other organizations or with customers. Memorandums are informal letters or notes between a company's employees. They are the main form of written communication within a business. Telephone calls and meetings are not forms of written communication.

What customer-relationship-management analytic would be most suitable for sorting clients based on how likely they are to repurchase a particular product? A. Profitability analysis B. Account personalization C. Event monitoring D. Customer segmentation

D Customer segmentation. Customer-relationship-management (CRM) analytics can be used to analyze and evaluate customer data in many different ways. For example, a business can use CRM technology to segment its customers into groupings based on each client's likelihood of purchasing or repurchasing a particular product. Personalization allows a business to market to specific customers based on data in the CRM system. Event monitoring helps businesses to identify when a customer reaches a specific dollar amount of purchasing or requests an excessive number of refunds. Profitability analysis helps businesses to identify their most profitable customers.

Using technology applications to ensure compliance of financial information is beneficial to businesses because many of the applications can A. improve product quality and satisfaction levels. B. evaluate compliance problems with data provided by competitors. C. correct human-resource problems. D. detect compliance inconsistencies across different jurisdictions.

D Detect compliance inconsistencies across different jurisdictions. Businesses use compliance software to aid them in detecting financial transaction problems. Because interstate and international commerce involves following different regulations in different locations, advanced compliance technologies can scan or audit the data to ensure their compliance with different jurisdictions' regulations and rules. The purpose of compliance software is not to evaluate a competitor's compliance, correct human-resource problems, or improve product quality and satisfaction levels.

What is a primary function of the Securities Exchange Commission (SEC)? A. Sells new securities on behalf of public companies B. Distributes annual dividends to public corporations' stockholders C. Conducts the financial-statement audits for public corporations D. Oversees the registration process for initial public offerings (IPOs)

D Oversees the registration process for initial public offerings (IPOs). The SEC is the administrative agency that enforces securities regulations. The SEC works to ensure public companies fully disclose their financial information to investors and to protect the public from fraudulent activities related to the securities market. One function of the SEC is to oversee the registration process for corporations when they first offer stock to the public, which is called initial public offerings or IPOs. The SEC does not distribute dividends or sell securities. The Public Company Accounting Oversight Board oversees the auditing processes of the public corporations' financial statements.

Jill needs to find several records with similar, but not identical, information in her company database. To do so, Jill should use a(n) ______ query. A. action B. crosstab C. sum function in her D. wildcard in her

D. "Wildcard in her". If a database user needs to find several records that have similar, but not identical, information in a database, s/he should include at least one wildcard in his/her query. For example, perhaps Jill needs to locate information in the database about a past client. Unfortunately, all that Jill can remember is that the women's first name is Jackie, Jackee, or Jacquie, etc., but she doesn't even recall how to spell the client's name. To locate the client's record in the system, Jill should use a query such as 'Like "Jac*"'. The asterisk - a wildcard - represents any character or group of characters that appear directly after the letters "jac". The program would return any database entry that begins with the string "jac". Jill could them look through the entries to locate the client in whom Jill is interested. Crosstab queries are used to groud data into rows or columns, as well as to find the sum or average of a data group. An action query allows the user to insert a new entry, update an existing entry, or delete an entry.

Shelley's business uses financial analysis software to align its operational and long-term plans, as well as develop key performance indicators to monitor the organization's overall performance. The business is using its financial analysis software to support which of the following business activities: A. Cost and profitability management B. Payment behavior analysis C. Financial and management reporting D. Strategic management and scorecards

D. Strategic management and scorecards. Financial analysis software can be used to support several different business activities, including strategic management and scorecards, payment behavior analysis, financial management reporting, and cost and profitability management. Businesses often use financial analysis software to develop key performance indicators that support different scorecard methodologies. Financial analysis software is also used for payment behavior analysis, which involves evaluating payment histories and determining payment delays that may be slowing down the cash cycle. Financial and management reporting involves the creation of reports and records to share with managers, executives, and other employees. Cost and profitability management is used to allocate overhead costs, determine the cost of products, and assess the profitability of those products.