2021, 2019, 2023, 2022, 2020
Deposit-taking institutions are commonly responsible for A. making payments on behalf of savers to creditors. B. raising funds for clients by issuing securities. C. carrying out regulatory and supervisory functions. D. using funds from insurance premiums to offer loans
. A Making payments on behalf of savers to creditors. Deposit-taking institutions commonly accept deposits (funds) from savers and use those deposits to make payments on behalf of savers to individuals, firms, and creditors to whom the savers owe money. Deposit-taking institutions, which include commercial banks, credit unions, savings and loan associations, trust companies, and mortgage companies, also use those deposits to offer loans to borrowers. Investment banks, which are investment institutions, raise funds for clients by issuing securities. Government and semi-government financial institutions carry out regulatory and supervisory functions. They also increase the funds available to investors, manage risk, and assume risk. Insurance companies, which are categorized as finance and insurance institutions, use funds from premiums to offer loans. They also manage and pool individuals' risk, invest funds to raise more capital, and create investment products
Which of the following statements regarding environmental scanning is true: A. The information gathered during environmental scanning is dynamic. B. Environmental scanning should be done once or twice a year. C. Only managers and supervisors should be involved in environmental scanning. D. All trends identified through environmental scanning must be acted upon immediately.
. A The information gathered during environmental scanning is dynamic. Businesses must keep in mind that the information gathered during environmental scanning is dynamic—it changes all the time. Keeping track of all these changes is why environmental scanning is so crucial to business success. Because the environment is dynamic, scanning must be done continuously, not once or twice a year. On a certain level, all employees should be involved in a business's environmental scanning efforts. Everyone should be aware of the environment and how it affects the business as well as their particular job. Not all trends identified through environmental scanning can be addressed immediately or all at once—the business must prioritize these trends in its strategic planning.
Which of the following is a characteristic of the illegal practice of affinity fraud: A. Primarily involves buying and selling commodities B. Targets identifiable groups of people C. Fails to offer testimonials during sales pitches D. Pays a minimal dividend to encourage additional investment
. B Targets identifiable groups of people. Affinity fraud often takes the form of a Ponzi or pyramid scheme and involves targeting members who belong to the same group such as a church, senior citizen's social club, or civic organization. Because the scammer claims an association with the group and often lures group leaders or respected group members into investing in the scheme, other group members may believe that they can trust the scammer, which prompts them to hand over their money for "investment." The leaders or respected group members who fall prey to the scheme may provide testimonials to encourage investment. Group members who invest later in the scam often do not see any return on their investment. Affinity fraud does not primarily involve buying and selling commodities.
Shoshanna wants to become a manager at her office by the end of next year. She writes down what she wants, breaks it down into achievable steps, visualizes herself succeeding, and periodically reviews her progress. Shoshanna is engaging in A. objective predicting. C. success forecasting. B. goal setting. D. progress planning.
. B Goal setting. Goal setting is the ability to visualize, set, and focus on achieving objectives. It's how you determine what it is you want to do. The basic steps of goal setting include choosing your goal, writing your goal down, breaking your goal down, visualizing your goal, and reviewing and updating your goal regularly. Objective predicting, success forecasting, and progress planning are not terms commonly used to describe goal setting.
What do investors often consult to monitor the success of their investment portfolios? A. Financial almanacs C. Foreign news reports B. Securities tables D. Investment guides
. B Securities tables. Securities tables, often referred to as stock tables or financial tables, are filled with information about the status of different securities. Numbers on securities tables include the 52-week high and low, dividends, volume, yield, P/E ratio, the previous day's ending price, and the net change. By monitoring these numbers, investors can assess the overall health of their investment portfolios over time. Investors do not typically consult financial almanacs, foreign news reports, or investment guides to monitor the success of their investment portfolios
Angelica has determined that many of her colleagues are acting unethically. Whom should she talk to first? A. Her supervisor C. Top company executives B. The colleagues involved D. The authorities
. B The colleagues involved. When a financial professional is aware that an unethical action is occurring, the first party they should talk to is the person or people involved directly. Angelica should have a conversation with her colleagues to help clarify the details of the situation and make sure that the other parties are aware of her concerns. She should do this before talking to her supervisor to give her colleagues a chance to explain and to make sure she fully understands the situation. She should also not go directly to top company executives or the authorities without first gaining an understanding of the situation and going through the appropriate chain of command.
Which of the following most likely led to a greater emphasis on governance structures in recent years: A. Stock market crash C. Accounting fraud B. Competitor saturation D. New technology in the industry
. C Accounting fraud. Governance structures help balance the interests of a company's stakeholders and would most likely be impacted by internal happenings such as accounting fraud. Competitor saturation, a stock market crash, and new technology in the industry are all examples of external factors that most likely would not affect a company's governance structure.
Which of the following websites is most likely to contain accurate, trustworthy securities information: A. StandardLine C. Morningstar B. Wikipedia D. Facebook Finance
. C 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 website.
Becoming more socially minded in marketing can bring a business A. more products. C. higher profits. B. lower costs. D. a competitive advantage.
. D A competitive advantage. Since many consumers are interested in socially responsible products, being socially minded can give a business a competitive advantage over companies who are not practicing socially responsible marketing. Socially minded marketing does not necessarily lead to lower costs, higher profits, or more products.
. Which of the following computer applications helps manufacturers track and manage the inventory that they use to produce goods: A. Critical path C. Reverse Logistics Systems (RLS) B. Job sequencing D. Material requirements planning (MRP)
. D Material requirements planning (MRP). MRP software helps manufacturers streamline production efforts and operate efficiently. The software has forecasting applications that help manufacturers determine the quantities of and delivery systems for the raw materials that they need for production. Job sequencing involves determining the order in which tasks must be carried out to complete a process or activity. Reverse logistics occur when unwanted or undesirable goods are returned to a business for reuse, recycling, or disposal. Critical path involves evaluating the sequence of steps to complete complex project tasks and identifying alternative systems to use project resources in the most efficient manner.
A statement of equity helps companies make decisions about how to A. organize income statements. C. control their production costs. B. analyze financial trends. D. reinvest their retained earnings.
. D Reinvest their retained earnings. Retained earnings are the income the business keeps after dividends are paid. Businesses report their retained earnings on the statement of equity, which is also called the statement of retained earnings. The statement of equity shows how much money the business has at the end of an accounting period. This knowledge enables the business to make decisions about how to use the money, which may include remodeling facilities, buying new computer equipment, hiring staff, or developing new products. The statement of equity will not help the business make decisions about how to analyze financial trends, control its production costs, or organize income statements.
When writing an executive summary, be sure that you A. include every point from the full report. B. use as much business jargon as possible. C. make the summary at least 1/10th as long as the full report. D. target people who don't have time to read the full report.
. D Target people who don't have time to read the full report. Executive summaries are written for people who don't have the time (or inclination) to read the full report. You should avoid using business jargon— instead, write as clearly and simply as possible. The summary should be no more than 1/10th the length of the full report. You do not need to include every point in your summary; instead, just cover the major points.
When businesses in a particular industry carry risks that commercial insurance companies typically do not cover, they often form __________ to __________ risk. A. captive insurance companies; transfer B. insurance rating companies; avoid C. insurance brokerage firms; assume D. independent life insurance agencies; minimize
A Captive insurance companies; transfer. Organizations (i.e., corporations, industry/professional/trade associations) often form their own insurance companies, which are known as captive insurance companies. The founding organizations control their captive insurance companies' underwriting processes, premium rates, and claims-processing policies. This is an advantage to the founding companies because a primary reason they form their own insurance companies is they often carry risks that commercial insurance companies do not cover. For example, mining companies tend to carry more risk due to the dangerous nature of the mining process. When businesses purchase insurance, they are minimizing risks by transferring them to another entity; therefore, in these situations, businesses are not avoiding or assuming risks. Organizations do not form insurance rating companies, insurance brokerage firms, or independent life insurance agencies to transfer unusual types of risks. SOURCE: RM:043
Which of the following may happen if a business cuts costs: A. It may pay fewer taxes. C. It may boost its community involvement. B. It may improve product quality. D. It may hire more employees.
A It may pay fewer taxes. If a business cuts costs, it may pay fewer taxes (if finding tax loopholes is part of the cost-savings plan). This is not always a good thing for the community in which the business operates! When a business cuts costs, it usually sacrifices product quality, spends less time and money in the community, and does not create new jobs.
What type of currency system is most likely to benefit a small country that relies heavily on exports to support its economy? A. Pegged B. Free floating C. Speculative D. Decentralized
A Pegged. In a pegged currency system, the nation's currency value is fixed to the value of something else, usually another country's currency. A government may peg its currency to another country's currency as a way to stabilize it and to make trade between the two countries simpler and smoother. Small or emerging economies often use a pegged currency system. In a free-floating currency system, the currency exchange rate is determined by the unimpeded interaction of supply and demand in the foreign exchange market with no government intervention. Speculative and decentralized are not types of currency systems.
Which of the following is a business alliance organization that operates on a local level: A. Seattle Metropolitan Chamber of Commerce C. Small Business Administration B. International Federation of Social Workers D. National Restaurant Association
A Seattle Metropolitan Chamber of Commerce. The Seattle Metropolitan Chamber of Commerce is an example of a business alliance organization that operates at a local level. The purpose of the chamber of commerce is to unite individuals and different types of businesses at the local level (e.g., Seattle, Washington, USA). The organization's members work together to influence policy, advocate issues, and solve common problems. The International Federation of Social Workers consists of members throughout the world. The Small Business Administration is a U.S.-based government agency created to assist small businesses. The National Restaurant Association is a nationwide professional organization whose members work in the restaurant industry.
What is one of the main purposes of a business's sales budget? A. To estimate income B. To forecast trends C. To predict the economy D. To track the competition
A To estimate income. The sales budget sets the financial pace for a business by estimating what amount of expenses and income can be expected from the sale of the business's goods and services. Sales budgets are extremely important because they estimate the major source of income, which helps a business determine if it will be profitable. Businesses take into consideration future trends, the state of the economy, and the level of competition when developing sales budgets. SOURCE: FI:106
When businesses in a particular industry carry risks that commercial insurance companies typically do not cover, they often form __________ to __________ risk. A. captive insurance companies; transfer B. insurance rating companies; avoid C. insurance brokerage firms; assume D. independent life insurance agencies; minimize
A Captive insurance companies; transfer. Organizations (i.e., corporations, industry/professional/trade associations) often form their own insurance companies, which are known as captive insurance companies. The founding organizations control their captive insurance companies' underwriting processes, premium rates, and claims-processing policies. This is an advantage to the founding companies because a primary reason they form their own insurance companies is they often carry risks that commercial insurance companies do not cover. For example, mining companies tend to carry more risk due to the dangerous nature of the mining process. When businesses purchase insurance, they are minimizing risks by transferring them to another entity; therefore, in these situations, businesses are not avoiding or assuming risks. Organizations do not form insurance rating companies, insurance brokerage firms, or independent life insurance agencies to transfer unusual types of risks. SOURCE: RM:043
Which of the following is a technique that a business could use to analyze its customer financial information: A. Comparing profit ratios by region C. Determining who exceeded sales quotas B. Tracking average product shipping delays D. Discovering which products sold the most
A Comparing profit ratios by region. Customer financial information can be useful in business decisionmaking when it is analyzed. One example of a technique that a business could use would be comparing profit ratios among different regions. This could tell the business which market segments are most profitable, which could inform future decisions. Tracking average product shipping delays, determining who exceeded sales quotas, and discovering which products sold the most are not examples of techniques used to analyze customer financial information.
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. data normalization. C. data filtering. B. digital analysis. D. information scanning.
A 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 typically used in the business world.
Which of the following securities is commonly used to help reduce the impact of significant fluctuations in exchange rates and commodities: A. Derivatives C. Bonds B. Stocks D. Real estate
A Derivatives. Derivatives, including options, futures, and swaps, are complex financial instruments whose value depends upon the value of other financial instruments (e.g., currencies, securities, commodities, etc.) or a market index. Derivatives are often used on a global scale to help reduce the impact of significant fluctuations in currency exchange rates, the prices of specific commodities, etc. Stocks, bonds, and real estate are not commonly used in this manner. Stocks are shares of ownership in a corporation. Bonds are lending investments in which individuals lend money to a government, municipality, or corporation to earn a set rate of interest for a specified time period. Real estate is an ownership investment in which individuals purchase property in buildings and land.
Last week, a man who frequents Alice's health club and goes to the same church approached her and struck up a conversation. After a bit of small talk, the man said that he would love to help Alice earn some money in the stock market. "You can trust me," the man said. "We go to the same church and the same gym. In fact, our minister and the manager of the gym just gave me a ton of money to invest for them!" The man is attempting to commit __________ fraud. A. group affinity C. private placement offering B. natural resource investing D. life settlement
A Group affinity. Group affinity fraud typically involves a scammer who either claims or actually is a member of the investor's group. In this case, the man is a member of the same health club and attends the same church as Alice. Because the scammer is a member of the same group, investors may falsely believe they can trust the scammer, especially if the scammer has lured in a few well-respected group members (like the minister or the gym manager) to buy into the scam early on. Natural resource investing fraud occurs when a scammer convinces investors to put money in fraudulent energy investments. Investors are tempted by the scammer's promise of a fast, easy return. Private placement offering fraud involves convincing investors to buy nonexistent stock from businesses. Life settlement fraud occurs when a scammer purchases a large life insurance policy from the insured for an unreasonably small amount of money. This usually occurs when the insured person needs money to pay necessities such as medicine and medical care before death.
Stocks in which of the following industry sectors are least likely to be affected by changes in the business cycle: A. Health care B. Energy C. Technology D. Capital goods
A Health care. Health care, food, drink, and tobacco are generally considered to be noncyclical industries, meaning that they are not greatly impacted by changes in the business cycle. The demand for such products and their stocks remains fairly steady regardless of the stage of the business cycle. Stocks in industry sectors such as energy, technology, and capital goods, on the other hand, often change in response to changes in the business cycle. The energy sector is affected by supply and demand of energy around the world, and political unrest can impact the industry considerably. Energy stocks seem to perform best late in the business cycle. Technology stocks are also affected by the business cycle, often in direct relation to the demand for capital goods. Technology stocks and capital goods stocks do well during business cycle expansion.
Budgets are important to the management process because they A. help determine roles and responsibilities. B. shift focus from future events to daily issues. C. ensure that organizational goals come before personal goals. D. remove the possibility of financial constraints.
A Help determine roles and responsibilities. Budgets can be used to determine employees' responsibilities and measure performance so that resources are used wisely. Budgets do not shift the focus from future events to daily issues; in fact, they encourage organizations to focus on both the big and small pictures. Budgets also do not necessarily put the focus on organizational goals over personal goals; rather, they try to allow both sets of goals to align. Finally, budgets do not remove the possibility of financial constraints altogether, but they allow organizations to recognize constraints before they become problematic.
Which of the following is a factor that often leads to workplace stress and burnout: A. Interpersonal conflict B. Adequate compensation C. Sufficient time to meet deadlines D. High control of work assignments
A Interpersonal conflict. Stress is a mental, physical, or emotional feeling of pressure or tension. Burnout is a type of exhaustion that results from too much stress, which is a mental, physical, or emotional feeling of pressure or tension. Many things can cause stress and burnout in the workplace including inadequate compensation (pay), unrealistic deadlines, little control over work assignments, and interpersonal conflict. Interpersonal conflict can occur from a variety of circumstances in the workplace.
When you use money to make money, you are A. investing. C. rationing. B. saving. D. reimbursing.
A Investing. Using money to make money is called investing. Saving is setting aside part of your current income for future use. Rationing is a function of relative prices that determines who gets the goods and services produced—it is determining how scarce resources will be distributed. Reimbursing involves paying back or refunding money that someone has spent.
A statement of changes in equity is most useful for A. investors. B. managers. C. customers. D. employees
A Investors. The statement of changes in equity is a financial statement that specifically looks at the changes to the owners' equity over time. It gives the clearest picture of how invested wealth has grown, changed, or contributed to a business. Because of the specific focus on wealth, it is most useful to the investors of the business who have an interest in seeing the effect of business operations on their investments. Employees, managers, and customers would not necessarily have as much to gain from the statement of changes in equity because they are not as concerned with invested wealth and generally are not directly affected by changes in equity.
Why will it benefit you to learn as much as possible about a prospective employer before you go for a job interview? A. It prepares you to ask good questions. B. It shows that you do a lot of reading. C. It ensures that you'll be considered for the job. D. It gives you something to discuss during the interview.
A It prepares you to ask good questions. As a job applicant, you should find out as much as possible about the business before a job interview so that you are prepared to ask intelligent questions about the company. This does not ensure that you'll be considered for the available job, but it does indicate your interest in the company and the job. It does not necessarily indicate that you have done a lot of reading, since you may have obtained information about the company from other sources such as current employees or television news. It is not necessary for you to have something to discuss with the interviewer as the interviewer decides what will be discussed. SOURCE: PD:028
Internal audits are used by __________, while external audits are used by __________. A. management; stakeholders B. stakeholders; employees C. creditors; management D. employees; competitors
A Management; stakeholders. Internal audits are performed for management within a company to analyze practices and examine risks. External audits are done by outside firms and are used by stakeholders such as investors, creditors, and lenders. External audits are generally not used by employees, management, or competitors. Internal audits are not used by stakeholders or creditors. SOURCE: PD:214
. Which of the following is a type of simple written report that usually is distributed to employees within a business: A. Memorandum B. Handbook C. Proposal D. Newsletter
A Memorandum. Memorandums are a frequently used form of brief, written communication exchanged by people within a business. Memorandums often are distributed to employees within a business to update them on the progress of various projects, or inform them of changes in policies and procedures. They are informal and simple because they are intended only for the use of the business's employees. A proposal usually is a complex written report that is formal and may be distributed to those outside the business. Handbooks and newsletters are internal company publications, but they are not typically written in a simple report format and distributed to employees.
How can a company protect its company name from being imitated by others? A. Obtain trademark protection C. Apply for a patent B. Place it in the public domain D. Obtain a copyright
A Obtain trademark protection. Trademarks protect the unique names of organizations by preventing others from using them. Items placed in the public domain are available for legal use by anyone. Patents are used to protect original inventions. Copyrights are used to protect literary and artistic creations.
How can a financial-information management system contribute to the development of future budget requirements? A. Organizing and analyzing past resource usage data B. Managing company assets C. Restricting access to confidential information D. Collecting and analyzing competitive data
A Organizing and analyzing past resource usage data. Financial-information management systems help collect, organize, and analyze many pieces of financial data in order to improve a company's finances as a whole. A financial-information management system can take past resource usage information and use it to determine future budget requirements. A financial-information management system also manages company assets, collects and analyzes competitive data, and restricts access to confidential information, but these functions do not necessarily relate directly to the development of future budget requirements.
Which of the following is one of a business's biggest expenses: A. Payroll C. Rent B. Insurance D. Utilities
A Payroll. Payroll is the money a business pays out for salaries and wages to its employees. It is one of a business's biggest expenses. Therefore, it is important for businesses to get full value for their payroll dollars in order to control expenses. Utilities are part of operating expenses and include heat, water, etc. Insurance is a contractual agreement in which one company will pay for specified losses incurred by the other company in return for installment payments. Rent is money payments for the use of land or property.
An important purpose of regulations in the finance industry is to A. prevent the banking system from failing. B. limit the amount of money individuals can earn. C. challenge the integrity of the financial system. D. ensure companies are held accountable for product safety.
A Prevent the banking system from failing. Regulations require safeguards that help ensure that the banking system does not collapse. Regulations aim to prevent and offset the negative effects of bank failures. Regulations in the financial industry do not aim to limit the amount of money that individuals can earn. Financial regulations help reinforce the integrity of the financial system rather than challenging it. Financial regulations do not necessarily relate to product safety
Colin is an experienced computer programmer who has contacted an organization to help him find a new job in another city. After the organization helps Colin obtain a job, Colin's new employer will pay a fee to the organization. What type of organization is helping Colin find a job? A. Private employment agency C. Government job placement office B. Academic counseling center D. Internet referral service
A Private employment agency. Private employment agencies match professional businesspeople with companies that are looking for workers who possess specific qualifications or expertise. The agencies often specialize in a specific field, such as computer programming. Private employment agencies charge fees for their placements. Payment arrangements vary, but often the employer pays a fee based on a percentage of the new hire's salary. The example does not describe an academic counseling center, which is located at high school or college. The example does not describe a government job placement office, which is a government agency. There is not enough information provided to determine if the employment agency is an online business.
In relation to the business cycle, the stock prices of non-cyclical industries tend to A. remain steady throughout all phases. B. steadily decrease during the expansion phase. C. increase dramatically during the contraction phase. D. increase slightly during the trough phase.
A Remain steady throughout all phases. The business cycle affects the stock prices of various industries in different ways. The demand for the products of non-cyclical industries (e.g., food, beverage, tobacco, healthcare) tends to remain consistent throughout all phases of the business cycle. Therefore, the stock performance of non-cyclical industries tends to remain steady throughout all stages of the business cycle, as well. Changes in the business cycle tend to affect the stock prices of other industries, including energy and capital goods. The energy sector (e.g., oil) is affected by the global supply and demand, which influences energy stock performance. Historically, energy stocks tend to perform best late in the business cycle. Capital goods stocks tend to perform well during the expansion phase of the business cycle because businesses are expanding and buying equipment.
A current employee who is asked to help orient a new employee will be serving as the new employee's A. sponsor. B. manager. C. apprentice. D. trainee.
A Sponsor. The sponsor method of orientation and training involves current employees who volunteer or are asked to be of assistance to the new employee. Sponsors provide job information, advice, and other kinds of job-related help. An apprentice or a trainee is a worker who is learning a job. A manager performs management functions and probably would be the one to ask an employee to help orient a new employee.
. Martin was speeding, but he was only driving a couple of miles over the speed limit so he could keep up with traffic. Martin was most likely breaking __________ law but not __________ law. A. the letter of the; the spirit of the B. criminal; civil C. civil; criminal D. the spirit of the; the letter of the
A The letter of the; the spirit of the. The letter of the law refers to the literal meaning of a law as it is written, word for word. However, the spirit of the law is the intent of the law. It is the social and moral consensus of how to interpret the law. In the given example, the posted speed limit is the letter of the law, whereas the spirit of the law is to drive safely and keep up with traffic. If Martin is only going a couple of miles over the speed limit and is still safely keeping up with traffic, he is most likely violating the letter, but not the spirit of the law. This example does not pertain to criminal law or civil law.
Bobbi, who works for an insurance company, is responsible for calculating the risk of loss, establishing premium rates, and designing insurance policies to cover risk. Bobbi works as a(n) A. underwriter. B. agent. C. accountant. D. financial analyst.
A Underwriter. The work of underwriters is important to the insurance industry. Underwriters are responsible for calculating the risk of loss, establishing premium rates, and designing policies to cover risk. Many choose to specialize in life insurance, health insurance, or property and casualty insurance. Insurance agents are responsible for selling insurance policies and other financial services. Accountants are responsible for preparing, analyzing, and verifying a variety of financial data. Financial analysts evaluate companies and industries and make recommendations to buy, sell, or hold certain securities. Financial analysts are also known as securities analysts or investment analysts. SOURCE: PD:152
Which of the following is a positive characteristic for the members of a corporation's board of directors to possess: A. Independent thinking B. Indecisiveness C. Single-minded attitude D. Conformity
A Independent thinking. It is important for members of a corporation's board of directors to be able to think independently. This involves questioning current policies and proposed actions so that the board as a whole acts in the best interests of the corporation and its shareholders. Board members should also be open-minded and willing to listen to suggestions and different opinions so they can make informed, thoughtful decisions. Conformity often involves following or agreeing with others to "fit in" with the group. Conformity, indecisiveness, and a single-minded attitude can lead to decision-making practices that do not look out for the best interests of the corporation and its shareholders.
Cornell wants to start his own business, but he isn't exactly sure what product or service he wants to pursue at the moment. The first step of the entrepreneurial process that Cornell should focus on is A. verification. B. idea generation. C. illumination. D. a feasibility study.
B Idea generation. Coming up with an idea is the first step in the entrepreneurial process; without an initial idea, none of the other steps can be completed. A feasibility study is conducted to see if the idea is viable. Two steps in the feasibility study are illumination (where the idea becomes realistic) and verification (where the idea is found to be practical and useful).
Pamela was dismissed from her job as a financial database administrator because she shared her username and password with a coworker so that they could access a customer database that is typically off-limits to them. Pamela failed to fulfill her responsibilities as a data A. auditor. B. steward. C. sponsor. D. processor.
B Steward. A data steward is, in essence, responsible for ensuring the integrity of an organization's data. To ensure those data's integrity, data stewards must make sure that data are used ethically and honestly—and only by those individuals authorized to do so. Pamela failed to fulfill her responsibilities as a data steward because she allowed a coworker to access data that they were not authorized to see or use. An auditor is responsible for verifying the accuracy of business records. In business, a sponsor is typically an individual or organization that financially supports a project, event, or promotion. A data processor is responsible for analyzing facts and figures and putting them into formats useful to the business.
The main objective of using marginal analysis in decision-making is to determine whether a business activity will result in A. a net revenue smaller than marginal revenue. B. a marginal revenue equal to or greater than marginal cost. C. a marginal expense that is greater than marginal cost. D. a net revenue larger than marginal revenue.
B A marginal revenue equal to or greater than marginal cost. Marginal analysis, which involves determining whether the marginal revenue of a business activity will be equal to or greater than marginal cost or expense, is used to identify profitable options for an organization. If marginal cost is greater than marginal revenue, the activity is not likely to be profitable and should not be pursued. Net revenue cannot be determined until all transactions are measured and accounted for, so it cannot be used to analyze future business activities
One of Margaret's financial goals has always been to leave money behind for her family. As a result, she spent her life spending very little and had a large estate when she passed. Now that Margaret has died, who is legally responsible for managing and distributing her wealth and assets according to her wishes? A. Her attorney B. An executor C. A beneficiary D. Her daughter
B An executor. An executor is the person legally responsible for overseeing the assets of the person who has died. The executor has a fiduciary duty to manage the deceased's assets according to their last wishes. It is possible for an executor to be a family member or any attorney, but that is not always the case. Beneficiaries are the people who are the recipients of the deceased's assets, but they do not manage those assets (unless specifically appointed executor, as it is possible to be both).
Which of the following cost classifications can help a decision maker determine how well different department managers performed: A. Classification by function C. Classification by behavior B. Classification by controllability D. Classification by relevance
B Classification by controllability. Classification by controllability, which is based on a manager's control over particular costs, helps an organization determine how well its managers handle costs that they personally impact. Classification by function, which identifies costs as product costs or period costs, is not necessarily linked to specific managers. Classification by behavior refers to whether a cost is fixed or variable within an organization. Classification by relevance determines whether a cost is a sunk cost or an out-of-pocket cost within an organization.
One of Jordan's employees has become unhappy at work in recent weeks, so Jordan decides to give the employee more responsibility and decision-making authority. Jordan is increasing the employee's job A. rotation. B. depth. C. automation. D. scope.
B Depth. Job depth is the amount of control and decision-making authority an employee has in a job. Job rotation is an instructional method in which employees are rotated periodically from one job to another to broaden the employees' perspective of the business. An employee's job scope is the number of tasks involved in a job and the frequency with which they occur. Automation is a method of operating or controlling a process in which tasks are completed by automatic means such as technology, reducing human effort and labor.
Which of the following is a true statement regarding enterprise risk management (ERM): A. All risks considered in ERM are negative. B. ERM focuses on the combined impact of all risks. C. ERM can make achieving goals more difficult. D. Risks usually relate to relationships between employees.
B ERM focuses on the combined impact of all risks. Enterprise risk management takes into account all of the risks that an organization may face and looks at their combined impact. Not all risks are negative; risks can be positive, and positive risks must be considered as well as negative risks. Enterprise risk management does not make it more difficult to achieve goals; in fact, it can help an organization achieve its goals. Risks are not usually related to relationships between employees; there are many types of risks related to all aspects of an organization. SOURCE: RM:062
20. What must a business be organized to do to be able to contribute to society? A. Preserve the environment B. Earn a profit C. Sell an idea D. Hire an advisor
B Earn a profit. The goal of business is to earn a profit. If businesses do not earn a profit, they will not be able to contribute to society. Businesses contribute to society in many ways, and most of these require money. For example, they create jobs and hire employees so members of the community have income to support themselves and their families. Businesses often allow employees to participate in certain community activities on company time, such as cleaning up a neighborhood. Businesses also donate money to support community programs. None of this would be possible if the business was not organized in a way that allowed it to earn a profit. SOURCE: EC:103
. Salaries, commissions, and bonuses obtained from a job are examples of __________ rewards. A. intrinsic C. concomitant B. extrinsic D. vocational
B Extrinsic. These are the actual rewards obtained for performing the job. Intrinsic rewards come from within yourself. Concomitant rewards result from such working conditions as a pleasant work environment or good relationships with coworkers. Vocational satisfaction or reward is the overall pleasure obtained from working in an occupation
Eugenia is using presentation software to prepare slides for her next workshop. In addition to putting the name and date of the workshop on the title slide, where else could Eugenia include this information in her presentation? A. Headers B. Footers C. Animations D. Transitions
B Footers. A footer is a line of text appearing at the bottom of a presentation slide. A presenter may choose to include the name and date of his/her presentation in the footer to remind viewers of the focus of the presentation. Slide numbers are also often included in footers for the presenter's and viewers' reference. A header is a line of text or other data that appears at the top of a presentation slide or word processing document. The header may include the page number, section title, main title, etc. The date of the presentation is not typically included in a header. Animations are movements added to objects (e.g., text, images) on presentation slides. Transitions are animations added to slides. Transitions dictate how one slide is removed from the screen and replaced with another. The presentation name and date are not typically included in animations or transitions.
What is one of the most important components of the production process? A. New technology B. Human resources C. Goods and services D. Inputs and outputs
B Human resources. Human resources, the people who work to produce goods and services, is one of the most important components of the production process. People are needed to run the businesses, operate the equipment, and deal with customers. Even in predominately automated facilities, people need to oversee the operation and perform the tasks that cannot be done by machines. Goods and services are created by the production process. People are needed to develop new technology. Production converts inputs (raw materials) into outputs (goods and services).
Why is the choice of a risk measure for internal and external risk of great practical importance? A. It determines the maximum number of clients that can be served effectively by a financial institution. B. It determines the minimum reserve requirements in financial trading. 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
B 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. SOURCE: RM:058
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. precision. C. dividing. B. accumulation. D. allocation.
D 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
Gathering and communicating financial information that businesses can use to plan the business's operations is the focus of __________ accounting. A. accrual B. managerial C. financial D. equity
B Managerial. Managerial accounting involves obtaining and analyzing financial data, which the business can use to make decisions about how to operate the business. For example, businesses gather financial information to develop budgets to guide the business's operations. They also analyze costs in relation to profit in order to make decisions about which products to produce and sell. Accrual is a method of accounting that records transactions at the time they occur even if no money changes hands at the time. The focus of financial accounting is preparing information for external users. Equity is the net worth of the business. SOURCE: FI:657
Which of the following is an acceptable file name for a word-processing document: A. Office Calendar 3/30/2021* C. Office Calendar: 3/30/2021 B. Office Calendar 3 30 2021 D. Office Calendar <3 30 2021>
B Office Calendar 3 30 2021. Regardless of whether you use a PC or Mac computer, word-processing programs typically refuse to let you use certain symbols in your file names. Top on this list of prohibited characters are the following: \ / : * ? < > | . If you try to use any of those particular symbols in a file name, you'll get a message that your file name is invalid, and you'll have to choose a new name for the file. Of the list of file names provided, only "Office Calendar 3 30 2021" is acceptable because it is the only name without any prohibited symbols.
Why has online technology's use increased in financial-information management? A. Removal of electronic information exchange procedures B. Passage of laws that recognize electronic documents as legally binding C. Recognition that the security of transactions is no longer an issue D. Protection of customers' right to privacy
B Passage of laws that recognize electronic documents as legally binding. As businesses have become more comfortable with the use of electronic information, their willingness to accept electronic documents as legally binding contracts has also increased. This has been buoyed by the passage of laws recognizing electronic documents and signatures as legally binding. Electronic information exchange procedures have not been removed. These procedures provide a way for people to exchange information electronically. Security remains an issue for online financial-information management. Although customers' right to privacy is an issue, it has not contributed to the increased use of online technology in financial-information management.
What is the first step in designing a multi-table query? A. Determine the criteria. B. Pinpoint exactly what you want to know. C. Locate the correct tables. D. Set the correct join direction.
B Pinpoint exactly what you want to know. In order to create a successful multi-table query, the first step is figuring out exactly what question you want the database to answer. If you aren't exactly sure what you want to know, the database cannot provide you with the information you need. Determining the criteria for the query, locating the correct tables, and setting the correct join direction are all important steps to take before creating the query, but none of them will be successful unless the exact question has been determined first. SOURCE: NF:124
Monica wants to be a good employee and help her company achieve its goals. Which of the following actions should she take: A. Come to work even when she's sick or has a family emergency B. Plan her vacation time wisely to make sure she isn't absent at crucial times C. Make sure not to be more than half an hour late each day D. Make up for missing many days by working even harder when she's at work
B Plan her vacation time wisely to make sure she isn't absent at crucial times. It's hard to be a good employee if you're not at work. Monica should be sure to plan her vacation time wisely so she isn't gone at crucial times for her work team. It's important to be at work, but coming in when she's sick or has an emergency isn't always a good idea for Monica. Monica shouldn't be late; even 10 minutes a day can add up quickly. Even if Monica works hard, it's still important for her to be present at work when she's scheduled to be there
What is a benefit to businesses of using a central data repository for financial information? A. Reliance on historical data C. Focus on low volumes of data B. Quick response to complex queries D. Reliance on a single software application
B Quick response to complex queries. A central data repository is a centralized database that businesses use to maintain, update, and store large amounts of financial data throughout their organizations. The benefits to businesses of using a central data repository include quick response to complex queries, accessibility to consistent data, economies of scale, and accessibility by several different software applications. A central data repository contains both current and historical data.
The MIB Company uses protective computer software programs to minimize losses associated with its customers' financial transactions. It is managing risks associated with A. purchasing. C. overhead. B. security. D. performance.
B Security. Risk management is a business activity that involves the planning, controlling, preventing, and procedures to limit business losses. Businesses use technology to minimize security risks. One way that businesses control security risks is by installing firewalls on computer networks to prevent computer hackers from obtaining confidential financial data (e.g., customers' credit card numbers). Another way that businesses control security risk is by limiting employees' access to certain financial information, which often involves the use of passwords and security codes. Purchasing is the function of acquiring goods and services for use in the business or for resale. Overhead is business expenses such as payroll, rent, and utilities. Performance is the degree to which someone or something successfully accomplishes an activity.
A stockbroker is using customer relationship management (CRM) technology to learn more about his typical customer's purchasing pattern. The stockbroker is using CRM technology to analyze the typical customer A. duration. C. vintage. B. trajectory. D. touchpoint.
B Trajectory. CRM technology is frequently used to measure and analyze a business's typical customer trajectory, which is a pattern of purchases. Duration is the length of time that a customer stays a customer. A vintage is a group of customers that are similar in some way. For instance, they might be grouped together because they all became a business's customers in the same year. Touchpoints are all of the opportunities that a business has to connect with customers and reinforce its brand image.
John and his coworkers get along well, and they frequently talk about their personal lives while eating lunch together at the office. Which of the following topics is appropriate for John to bring up with his coworkers: A. The details of his divorce proceedings B. What he watched on TV last night C. The job he'd like to have in 5 years D. The church service he'd like his coworkers to attend
B What he watched on TV last night. John spends a significant amount of time with his coworkers, so it's normal for him to share some aspects of his life. But while it's appropriate to share some things, other topics should always be off limits. What he watched on TV last night is a good topic for John to bring up, as this is unlikely to offend anyone or violate any company policies. John should avoid discussing the details of his divorce. If he talks about it too much, his coworkers may wonder if it's distracting him from doing his job. John should avoid talking about his career aspirations because if he clearly wants another position, it may make his coworkers think he isn't loyal to his current job. John should also avoid discussing his religious beliefs. Religion is a sensitive subject that many people take very seriously, and John risks offending someone
What might happen if your customers are not satisfied with your project work? A. You might have to adjust your quality standards. B. You might have to redo the project work. C. You will need to start the planning process over. D. You will need to find different customers.
B You might have to redo the project work. If your customers aren't happy with the end results, you might need to redo the project work or complete another project to satisfy their needs. You do not necessarily need to adjust the quality standards, start the planning process over, or find different customers.
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. monetary B. whistleblower C. constituent D. credit
B 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.
If a decision maker chooses a software package with a lower initial purchase price, what type of cost has s/he considered? A. Sunk cost B. Indirect cost C. Direct cost D. Opportunity cost
C Direct cost. The initial purchase price of a software package would be considered a direct cost because it is directly associated with the cost object (the software package). An indirect cost refers to costs that are not directly accountable to a cost object, such as personnel and security costs. A sunk cost refers to a cost that has already been incurred and cannot be recovered, so it is not typically considered when deciding between two new choices. An opportunity cost refers to a benefit an organization could have received but gave up to take a different course of action.
An example of assertive verbal behavior would be A. complimenting someone to obtain a favor. B. maintaining appropriate eye contact. C. initiating conversations with others. D. giving a progress report in a staff meeting.
C Initiating conversations with others. Taking the initiative to approach other people and begin conversations is a good example of assertive verbal behavior. Other examples include openly expressing your positive or negative thoughts, asking questions, and requesting help. Maintaining appropriate eye contact is an example of nonverbal behavior. Giving a progress report in a staff meeting is a routine job task that does not demonstrate assertive verbal behavior. Complimenting someone to obtain a favor is not assertive but dishonest and manipulative. SOURCE: EI:008
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.
Jacob will not sell the oak desk that he made for anything less than $235. This is an example of the ___________ price. A. equilibrium C. supply B. demand D. market
C Supply. The supply price is the minimum price that producers are willing and able to receive for a product. The demand price is the maximum price that buyers are able and willing to pay for the product. The market price is the actual price that prevails in a market at any particular time—the price that you actually pay for a service or good. The equilibrium price occurs when the quantity of a product that buyers want to buy is equal to the quantity that sellers are willing to sell at a certain price.
What is the primary purpose of data-cleansing processes? A. To control the employees' intranet access B. To correct non-response errors 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 datacleansing processes to correct non-response errors on surveys.
What is a characteristic of an emerging market? A. High-yield bond markets that operate in a secure economic climate B. Strong and highly developed infrastructure C. Unstable stock markets in a transitional economy D. Low gross domestic product due to high foreign investment
C Unstable stock markets in a transitional economy. Emerging markets are growing markets (e.g., stock, bond, commodities, etc.) that result when a country initiates reforms that move it from a closed economy to an open or market economy. Because the markets are new, they are untried and relatively unstable, which is a high risk for investors. However, these markets also have the potential to provide investors with high returns, as the country's business activity increases and its economy grows. Developing countries tend to experience gains in gross domestic product due to higher production and business activity, which is often facilitated by high foreign investment. The infrastructure of developing countries often improves when the government and investors provide the financial resources to support it.
Which of the following would help keep the economy from growing too quickly when producers can't keep up with demand: A. Reducing taxes C. Reducing government purchases B. Reducing supply D. Reducing the prime interest rate
C Reducing government purchases. The economy can actually grow too quickly when producers can't keep up with the demand for their goods and services. When this happens, there is a rapid increase in prices, or inflation. Government can fight inflation by restricting the flow of money. This is accomplished by raising taxes, raising the prime interest rate for borrowing money, buying fewer goods and/or services with which to run the government, or increasing the discount rate for banks. Reducing supply would make the problem worse.
14. Positive customer relations can boost productivity by A. attracting new customers. C. avoiding wasted time and resources. B. creating new manufacturing processes. D. cutting down on equipment costs.
C Avoiding wasted time and resources. Positive customer relations can boost productivity by avoiding wasted time and resources. If a business provides a positive customer experience the first time around, it won't have to worry about correcting as many mistakes or solving as many problems. Positive customer relations does not create new manufacturing processes or cut down on equipment costs. It does attract new customers, but this does not relate to productivity
Which of the following statements regarding debt and equity markets is correct: A. If a company suffers financial difficulties, its stockholders are paid before its bondholders. B. Investors who purchase a company's bonds gain partial ownership of the business. C. Bonds, which are debt instruments, are typically less risky investments than stocks. D. Common stock, an example of a debt instrument, is traded on the equity market.
C Bonds, which are debt instruments, are typically less risky investments than stocks. Equity instruments such as common stock are traded on the equity market. Individuals who purchase equity instruments, not debt instruments such as bonds, gain partial ownership of a business. If a company suffers financial difficulties, its bondholders are paid before its stockholders. SOURCE: FI:337
Which of the following examples best illustrates the purpose of variance analysis: A. Tariq made suggestions to his manager regarding pricing strategy. B. Shamaya figured out which product line would be most profitable. C. Carter determined that storage costs exceeded the budgeted amount. D. Eileen informed her manager how much money was left for travel.
C Carter determined that storage costs exceeded the budgeted amount. Variance analysis helps managerial accountants see the difference between actual costs and standard costs. They can then isolate the areas where costs are causing problems and adjust accordingly. Carter can use variance analysis to determine that a certain cost, such as storage, is causing the organization to go over its budget. Figuring out which product line would be most profitable, making pricing suggestions, and informing a manager about the amount of money left for travel are all tasks of managerial accountants, but not necessarily related to variance analysis.
Which of the following statements regarding corporate governance is true: A. Corporate governance makes a firm's shareholders accountable to its managers. B. Corporate governance emphasizes individual goals over group goals. C. Corporate governance aligns the interests of individuals, corporations, and society. D. Corporate governance is only used to protect the interests of the shareholders.
C Corporate governance aligns the interests of individuals, corporations, and society. Corporate governance aligns the interests of all stakeholders and emphasizes group goals. It makes a firm's managers accountable to the shareholders and protects the interests of all stakeholders. SOURCE: PD:213
Which of the following are examples of deposit-taking financial institutions: A. Savings and loan associations, mutual savings banks, and insurance firms B. Commercial banks, corporations, and mutual savings banks C. Credit unions, savings and loan associations, and commercial banks D. Commercial banks, credit unions, and brokerages
C Credit unions, savings and loan associations, and commercial banks. Deposit-taking financial institutions accept funds from customers (depositors) and pay interest on the funds. Credit unions, commercial banks, savings and loan associations (banks), and mutual savings banks are types of deposit-taking financial institutions. A corporation is a form of business ownership that is owned by stockholders who have purchased units or shares of the company. Brokerages are financial intermediaries that sell securities. Insurance firms sell insurance and securities. Corporations, brokerages, and insurance firms are not types of deposit-taking financial institutions.
A company's manager did not protect confidential information about a conflict between two employees. What is a likely consequence of this action? A. Costly lawsuits B. Loss of clients C. Damaged workplace environment D. Claims of workplace discrimination
C Damaged workplace environment. When information about employee relations is not kept confidential, negative consequences can occur. While disclosing information about a conflict is not illegal, it can be damaging to the workplace culture and environment. People will feel that they cannot trust management, and they will not feel unified or cooperative. Disclosing this type of confidential information will not necessarily lead to loss of clients, costly lawsuits, or claims of workplace discrimination.
What should you do when creating a schedule for your project? A. Break down the work into specific activities and tasks. B. Figure out exactly when you will get each part of the project done. C. Determine when certain parts of the project are due. D. Identify the risks that could affect your schedule.
C Determine when certain parts of the project are due. When you are creating a schedule for your project plan, you should determine when certain parts of the project are due and make sure your schedule accounts for it. You cannot figure out exactly when you will get each part of the project done, but you can make estimates. Breaking down the work into specific activities and tasks happens before the schedule is created. Identifying risks happens after you create your schedule. SOURCE: OP:519
Dmitri is building a new website. Which of the following does he need to register to obtain a web address for his new site: A. Site builder C. Domain name B. Web host D. Street address
C Domain name. The domain name that Dmitri registers will be the unique address of his new website. A web host allows a website owner to make their site accessible via the internet. A site builder is a program that includes templates and software used to create the layout and design of a website. Web addresses are usually picked based on a company name or other important identifier, rather than the company's street address.
. One way that organizations can achieve their corporate governance objectives is by A. allowing senior managers to serve on the board of directors. B. preventing stakeholders from viewing financial information. C. encouraging employee participation at board meetings. D. releasing an annual report detailing their failures and losses.
C Encouraging employee participation at board meetings. Achieving corporate governance objectives requires the participation of all people involved with a company. It is especially important for an organization's employees to be actively engaged in corporate governance. Employees should be encouraged to participate in board meetings to raise questions or concerns that they may have about the company's actions. Preventing stakeholders from viewing financial information, allowing senior managers to serve on the board of directors, and releasing an annual report detailing their failures and losses are not appropriate steps companies should take to achieve corporate governance objectives.
Which of the following are common categories of commodities: A. Energy, grains, and consumer goods B. Energy, metals, and consumer goods C. Energy, metals, and grains D. Metals, grains, and consumer goods
C Energy, metals, and grains. Commodities are raw, primary products commonly categorized as energy, metals, and agricultural products, which are often further divided into grains, livestock, and softs. Energy commodities include different types of fuel, including natural gas, crude oil, heating oil, etc. Metals commodities include precious and industrial metals such as gold, silver, and copper. Grains are probably the most popular of the commodities and include corn, soybeans, wheat, etc. Livestock include cattle and hogs, while softs are food and fiber commodities such as cocoa, cotton, orange juice, etc. Consumer goods (tangible items produced for personal use) are finished goods, not raw, primary products; therefore, they are not referred to as commodities.
. KRM Corporation has several safeguards in place to protect itself from both physical hazards (fires, floods, earthquakes, etc.) and business hazards such as technology failure and supply chain problems. Each year, its managers meet to reassess the relevant risks to the business and reevaluate the company's plans in the event of those risks. KRM Corporation is practicing A. security assessment training. C. enterprise risk management. B. cost-benefit analysis. D. hazardous circumstance planning
C Enterprise risk management. Enterprise risk management (ERM) is a comprehensive risk management strategy that involves planning for both physical and business risks. The company in this example is practicing ERM, not a cost-benefit analysis, security assessment training, or hazardous circumstance planning. Cost-benefit analysis is a process for evaluating business decisions that involves summarizing the associated costs and benefits of the potential outcomes. Security assessment training and hazardous circumstance planning are not terms commonly used to describe risk management.
What is a benefit of corporate governance? A. Ability to bypass sustainability efforts B. Increased distance from investors C. Improved access to capital D. Freedom from stakeholder interference
C Improved access to capital. Corporate governance includes the structures and processes that direct and control companies. Evidence indicates that well-governed companies receive higher market valuations and have increased capital flows. Strong corporate governance practices do not increase distance from investors; rather, corporate governance makes companies more accountable and transparent to investors. Corporate governance does not give companies the ability to bypass sustainability efforts. It instead gives them more tools to increase sustainability. Finally, corporate governance increases stakeholder involvement, rather than limiting it.
In corporate governance, oversight of management, segregation of control, and policy development are all examples of A. external control mechanisms. C. internal control mechanisms. B. tasks of the board of directors. D. transparency in management.
C Internal control mechanisms. Internal control mechanisms monitor the progress and activities of an organization and make corrections when the company goes off track. Examples of internal control mechanisms include oversight of management, segregation of control, independent internal audits, and policy development. These are not examples of tasks of the board of directors—rather, internal control mechanisms are intended to make sure that the board of directors behaves in accordance with company values and goals. These are also not examples of transparency in management or external control mechanisms. External control mechanisms are controlled by people outside of an organization and are designed to serve the objectives of regulators, governments, trade unions, and financial institutions, for example
A person reacting to conflict by trying to persuade others to take a certain course of action is an example of A. problem-solving. B. yielding. C. negotiating. D. forcing.
C Negotiating. When a person negotiates, they are trying to persuade someone to take a certain course of action. Negotiating a compromise is often necessary to resolve a conflict. For example, you want something from me, so you offer me something I want in return. We negotiate until we are both satisfied and have resolved the conflict. Problem-solving involves looking at all sides of the issue and working with the other person to come up with a satisfactory resolution. Yielding means accommodating or "giving in." Forcing often involves using physical or emotional responses such as throwing punches or using offensive language.
A control that financial institutions have implemented to protect bank accounts when debit cards are used to pay for online transactions is A. e-invoicing. B. malware. C. PIN debits. D. Pan-European Public Procurement On-line (PEPPOL).
C PIN debits. In addition to account numbers, customers must also provide their PIN number to process online payments. This adds an additional layer of protection for online transactions. Malware is malicious software used to illegally obtain account and personal information provided for online transactions. Einvoicing is electronic billing. PEPPOL is an initiative that aims to provide standardized processes for businesses to bid on government contracts.
An executive summary should be A. full of technical detail. B. lengthy. C. persuasive. D. written in passive voice.
C Persuasive. An executive summary should be convincing and successful in achieving its purpose. It should not be lengthy. Because the executive summary is often the only piece of a document that is read, it should be concise, containing the most important details. An executive summary should not be full of technical detail because it should be accessible and easily understood by a wide audience. Finally, executive summaries should not use passive voice; they should use active voice whenever possible.
The Taguchi quality-control method focuses on A. reducing waste. B. conformance to standards. C. product design and development. D. manufacturing processes.
C Product design and development. The Taguchi quality-control method focuses on product design and development, rather than manufacturing processes. It does not focus on conformance to standards or reducing waste.
Most automobile salespeople try to get an idea of what price range the potential customer can afford. This is part of which of the following marketing functions: A. Pricing B. Marketing-information management C. Selling D. Distribution
C Selling. This is a marketing function which involves determining client needs and wants and responding through planned, personalized communication that influences purchase decisions and enhances future business opportunities. Determining an appropriate price range of products to show customers is part of the selling function. Pricing is a marketing function which involves determining and adjusting prices to maximize return and meet customers' perceptions of value. Distribution is a marketing function which is responsible for the moving, storing, locating, and/or transferring ownership of goods or services. Marketing-information management involves gathering, accessing, synthesizing, evaluating, and disseminating information for use in making business decisions.
Considered together, salaries and sales commissions are a A. direct production cost. B. capital expenditure. C. semi-fixed expense. D. type of payroll tax.
C Semi-fixed expense. Considered together, salaries and sales commissions are a semi-fixed (also known as semi-variable or mixed) expense. The expense is fixed until a certain point and then becomes variable. Salaries and sales commissions are not a capital expenditure—a capital expenditure is a onetime purchase a business makes, such as land or equipment. Salaries and sales commissions do not relate directly to production, and they are not a tax of any kind
Julie's grandparents have offered to give her a $1,000 gift at either the beginning or end of college. Why should she take the gift at the beginning of college? A. She will pay fewer taxes before she begins college. B. Inflation will increase the value over time. C. She can start earning interest sooner. D. She shouldn't; she should wait until after college
C She can start earning interest sooner. If Julie were to wait until after college to accept the gift, she would miss out on four years of interest payments that she could be earning. Therefore, she should accept the gift as soon as possible so that she can maximize her interest returns. Inflation does not increase the value of money over time; rather, it decreases the value. Julie will not necessarily pay fewer taxes on the gift before she begins college; taxes are dependent on many other factors.
Why is it important to determine the root cause of variances? A. To increase sales C. To make the appropriate adjustments B. To figure out where to allocate costs D. To weigh costs vs. benefits
C To make the appropriate adjustments. Determining the root cause of a variance in the budget helps determine what adjustments need to be made. If the true root cause is not identified, it will be difficult to make the right adjustments needed to be more successful. Determining the root cause of variances does not necessarily help figure out where to allocate costs, increase sales, or weigh costs vs. benefits.
Which of the following international financial institutions provides financing and advice to countries to encourage economic development: A. Commonwealth of Nations B. Small Business Administration C. World Bank Group D. Liberty Institute
C World Bank Group. The World Bank Group, which includes the World Bank as well as several other international organizations, is an international financial institution that provides financing and advice to impoverished countries to encourage economic development and eliminate poverty. The Small Business Administration is a U.S. government financial institution that provides financial assistance and advice to American small businesses. The Commonwealth of Nations and the Liberty Institute are not financial institutions. The Commonwealth of Nations is an international organization that promotes world peace, democracy, and free trade. The Liberty Institute is an international organization based in the country of Georgia that advocates civil liberties as well as public accountability and effective governance. SOURCE: FI:336
Seth's manager asked him to develop a report that compares their company's fourth-quarter performance with others in its industry. Which financial-analysis software feature should Seth use to generate information for his report? A. DuPont modeling B. Ratio analysis C. Benchmarking D. Forecasting
C Benchmarking. Many financial-analysis software applications can provide users with benchmarking information that compares a company's financial performance with other specific companies in its industry and/or with industry standards. Other financial-analysis software features include ratio analysis, DuPont modeling, and forecasting. Financial ratios are comparisons of different numbers from a business's financial statement. Most financial-analysis software calculates the different financial ratios automatically and then evaluates those ratios to determine company strengths and weaknesses for the user. DuPont modeling helps the user examine the impact of each financial ratio on return on equity. Forecasting features are often used to make predictions, develop budgets, and experiment with "what-if" scenarios.
Which of the following factors differentiates the governance structure of a small business from a large business: A. The impact of governance policies B. The need for a board of directors C. The number of owners D. The presence of investors
C The number of owners. Organizations of all sizes need governance, but governance structures can vary based on the size of the organization. One difference is the number of owners. A large, publicly listed corporation has many owners, while a small- or medium-sized company likely has one or few shareholders. However, the need for a board of directors does not change based on the size of the company; small companies can benefit from a board of directors as much as large companies. Furthermore, all companies are impacted by governance policies, regardless of size. Finally, organizations of any size can have investors.
Alyssa is starting a small business out of her home. When she accesses a business "how-to" website, Alyssa finds software downloads and printable worksheets that will help her plan and manage her business's income and expenses. The software and worksheets are types of A. organizational charts. B. statistical information. C. legal data. D. budgeting tools.
D Budgeting tools. A budget is an estimate of income and expense for a specific timeframe. A budget is an important financial tool that helps the business manage its money. Many websites provide budgeting tools such as software downloads or free printable worksheets. Legal data, statistical information, and organizational charts are not tools that help small-business owners plan and manage their income and expenses.
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. Web-development programs D. Digital microfilm scanner
D 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 websites.
Why has online technology's use increased in financial-information management? A. Protection of customers' right to privacy B. Removal of electronic information exchange procedures C. Recognition that the security of transactions is no longer an issue D. Passage of laws that recognize electronic documents as legally binding
D Passage of laws that recognize electronic documents as legally binding. As businesses have become more comfortable with the use of electronic information, their willingness to accept electronic documents as legally binding contracts has also increased. This has been buoyed by the passage of laws recognizing electronic documents and signatures as legally binding. Electronic information exchange procedures have not been removed. These procedures provide a way for people to exchange information electronically. Security remains an issue for online financial-information management. Although customers' right to privacy is an issue, it has not contributed to the increased use of online technology in financial-information management. SOURCE: FM:011
Which of the following examples best illustrates the law of diminishing returns: A. A company's manufacturing costs increased, resulting in higher costs and significantly lower profits. B. A declining economy and decreased demand for its products and services caused a company to reduce its production levels. C. Falling interest rates led to an increase in new housing, factory expansions, and construction projects. D. A factory added employees to increase production but experienced higher costs due to reduced production output per employee.
D A factory added employees to increase production but experienced higher costs due to reduced production output per employee. The law of diminishing returns is an economic concept that states that if one input (e.g., employees) increases while others (e.g., facilities, equipment, supplies) remain constant, the increases in output will eventually decline. A company that hires more employees without adding additional resources such as equipment experiences the law of diminishing returns. A company reducing production due to a declining economy and lower demand is responding to the law of supply and demand. Lower interest rates leading to an increase in construction projects represents growth. An increase in the cost of materials would impact profits but does not represent the law of diminishing returns.
How can an accountant best contribute to an organization's governance objectives? A. Determining whether profit margins are shrinking B. Minimizing risks associated with the objectives C. Ensuring strong community relations D. Allocating funds for the objectives in the budget
D Allocating funds for the objectives in the budget. For an organization to meet its governance objectives, all members must be working toward them. An accountant can contribute to this process by understanding governance objectives and accounting for them in the budget. An accountant does not necessarily work to minimize risks associated with objectives or ensure strong community relations. Accountants may determine whether profit margins are shrinking, but this does not necessarily relate to governance objectives
When should you record bank transactions in your check register? A. When checks bounce B. When bank statements are received C. As bank statements are reconciled D. As soon as each check is written
D As soon as each check is written. To keep accurate records, you need to record all information in the check register as each transaction occurs. Otherwise, the date, check number, or check amount may be recorded inaccurately. Waiting to record check information can result in difficulties with balancing bank statements when they arrive. This could also result in checks being returned to you for inadequate funds. SOURCE: FI:069
Which of the following is considered a presale touchpoint: A. Shipping/Delivery B. Installation C. Interaction with a salesperson D. Advertising
D Competence. A financial planner who fails to stay current is not competent, because they are not maintaining the knowledge necessary to provide accurate information. Confidentiality refers to the protection of client information. If the financial planner is unaware of new laws impacting financial products, they are not intentionally being dishonest. Objectivity refers to providing information without bias.
Which of the following statements best describes the taxation of Roth IRAs: A. Contributions and withdrawals during retirement are tax deductible. B. Contributions are tax deductible, but withdrawals during retirement are taxed. C. Contributions and withdrawals during retirement are both taxed. D. Contributions are taxed, but withdrawals during retirement are not.
D Contributions are taxed, but withdrawals during retirement are not. Contributions paid into Roth Individual Retirement Accounts (IRAs) are taxed. But, earnings on the growing funds in the account and withdrawals during retirement are tax-free. Unlike Roth IRAs, contributions to traditional IRAs are tax deductible, but investors must pay taxes on the withdrawals they make from these accounts during retirement.
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. licensing B. consolidation C. tactical planning D. convergence
D 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. SOURCE: FI:573
Mira is reviewing a financial statement for a local business. During her analysis of data, she uses Benford's Law. What can this help her do? A. Estimate business viability B. Find opportunities for profit C. Identify personnel issues D. Detect the possibility of fraud
D Detect the possibility of fraud. Benford's Law explores the distribution of digits in a large, randomly generated set of natural numbers. In this data set, the most frequent leading digit is 1, followed by 2, 3, 4, etc., exponentially decreasing until the least frequent leading digit, 9. When applied to data analytics and financial statements, this law helps identify possible deviations from this pattern, which could indicate fraudulently manufactured numbers. Benford's Law does not directly find opportunities for profit, identify personnel issues, or estimate business viability.
The ABC Corporation identifies all the risks that threaten the company. Then, it decides which risks it wants to focus on and shares this information with its stakeholders. The company is practicing A. environmental risk planning. B. corporate risk organization. C. competitive risk assessment. D. enterprise risk management.
D Enterprise risk management. Enterprise risk management involves a corporation identifying all the risks that threaten the company, deciding which risks to focus on, and sharing that information with stakeholders. This is not known as corporate risk organization, competitive risk assessment, or environmental risk planning.
Alex has a naturally outgoing and talkative personality. How could this relate to his values? A. He might have more confidence in his values. B. His values might not align with his behavior. C. He might place less emphasis on his values. D. He might place a high value on social interaction.
D He might place a high value on social interaction. Your personality, temperament, and preferences can impact your values. Alex's outgoing, talkative personality might encourage him to place a high value on social interaction. There is no indication that Alex's values might not align with his behavior, that he might place less emphasis on his values, or that he might have more confidence in his values.
Which of the following examples illustrates how environmental factors are dynamic: A. The government provides subsidies to agricultural businesses. B. Demographics influence social and cultural attitudes. C. The economy impacts government policies. D. High interest rates will eventually get lower.
D High interest rates will eventually get lower. Interest rates' fluctuating is an example of how environmental factors are dynamic, or always changing. The influence of factors on each other is an example of how environmental factors are interrelated. The government providing agricultural subsidies is an example of how certain factors impact some industries more than others.
Many businesses use infographics to help persuade readers because A. readers spend more time viewing infographics. B. original artwork usually takes longer to create. C. most people are lazy and don't like to read. D. infographics raise the perception of quality.
D Infographics raise the perception of quality. A well-designed, sophisticated visual image such as an infographic raises the reader's perception of quality and is therefore more likely to persuade readers. The length of time needed to create original artwork has no impact on the viewer. If people are lazy and don't like to read, they aren't likely to be persuaded by an infographic. The quality of the infographic, rather than the time spent viewing it, is more likely to persuade readers
Many businesses provide detailed privacy policies to their customers that explain the safeguards the company has taken to protect the customers' sensitive information. For example, a privacy policy may state that the business will not share a customer's personal information with anyone unless they are given direct permission by the customer. This is an example of a legal issue associated with A. the company's public relations. C. customers' constitutional rights. B. federal government security. D. information management.
D Information management. The government has many regulations in place that are intended to protect the privacy of customers. Businesses are required by law, therefore, to protect their customers' sensitive information. This is an example of a legal issue associated with information management, not federal government security, customers' constitutional rights, or the company's public relations efforts.
Smooth operations, clearly defined chains of command, and measurement of performance are all goals of __________ in corporate governance. A. independent audits C. external control mechanisms B. debt management D. internal control mechanisms
D Internal control mechanisms. Internal control mechanisms involved in corporate governance include oversight of management, independent internal audits, and the segregation of duties. Internal control mechanisms are designed to ensure smooth day-to-day operations, clarify the chain of command, and measure organizational performance. These are not goals of external control mechanisms, which generally seek to manage debt, comply with legal regulations, and handle other issues outside the company.
Before deciding whether to purchase any Upside Corporation stock, Anna wants to study the company's financials. What part of Upside's website is likely to contain the company's most recent annual report? A. Public Relations B. Sustainability C. Leadership D. Investor Relations
D Investor Relations. Most publicly traded companies have an "Investor Relations" section within their websites where individuals such as Anna can find the companies' annual reports as well as any other information and filings they have made public throughout the year. Some companies also devote a portion of their websites to "Sustainability," which emphasizes the companies' dedication to impacting the environment and society in positive ways. The "Public Relations" component of most companies' websites contains press releases, press kits, and media resources such as product images and information. The "Leadership" section typically contains biographical profiles of senior executives and members of the board of directors.
What is the most common reason for a client to leave or fire his/her financial advisor? A. Location of the office B. Poor investment return C. High commission fees D. Lack of communication
D Lack of communication. Although a poor investment return, high commission fees, or the geographic location of the financial advisor's office may influence a client's decision to leave the advisor, the most common reason given for firing a financial advisor is a lack of communication. Above all else, financial clients expect—and need—their advisors to communicate on a regular basis. This means returning the clients' phone calls as soon as possible, replying quickly to their emails, and contacting them regularly to discuss their accounts and answer any questions that they might have. SOURCE: CR:012
During the discovery process, an entrepreneur must determine whether the proposed business venture will A. require financial risk. B. generate large profits. C. create loyal customers. D. meet a need or a want.
D Meet a need or a want. During the discovery process, an entrepreneur needs to ensure that the business idea meets an actual need or want of consumers to ensure success. Entrepreneurs do not predict whether a business venture will generate large profits or create loyal customers during the discovery process. Since all business ventures require financial risk, no discovery is needed.
Ben is a vice president of State Street Savings and Loan. Which of the following is a group that is most likely to help Ben network with others within his profession: A. Young Professionals Association C. College alumni group B. Local chamber of commerce D. National Bankers Association
D National Bankers Association. When finance professionals actively participate in finance-related professional organizations, they can network and build relationships with others who work in their field. The local chamber of commerce, a college alumni group, and the Young Professionals Association have group members from fields other than finance.
An important aspect of upholding ethical accounting standards involves the ability to be A. unconventional. B. resourceful. C. intolerant. D. objective.
D Objective. Accountants prepare the accounting information that businesses use to make financial decisions. Therefore, it is important for accountants to uphold the ethical standards of their profession by providing accurate, objective (unbiased) financial information. A person who uses unique processes or creativity to achieve a goal is being resourceful. Accountants need to follow the GAAP to perform their jobs rather than use unique processes. An intolerant person is prejudiced. An unconventional person is often viewed as unusual or eccentric.
If an accounting firm deliberately conceals information about a client's financial status, the government may charge the business with A. substantiation. C. breach of contract. B. expropriation. D. obstruction of justice.
D 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 an accounting firm 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.
Businesses consider a customer's income when determining whether to A. charge interest. C. restructure policies. B. accept cash sales. D. offer credit.
D Offer credit. Before offering credit to a prospective customer, a business needs to analyze the customer's financial status to determine if the customer has the money available to make payments on time and in the full amount of the agreement. Businesses review a customer's income, assets, debt ratio, credit history, etc., to determine if they are creditworthy. If the customer carries a high level of debt in relation to their assets, it would be too risky for the business to offer credit because the customer is more likely to become delinquent. Businesses include interest charges in their credit agreements because they need to recoup the costs associated with offering credit. Businesses receive money at the point of purchase or time of service for cash sales, so this option is not a reason for examining a customer's income. One customer's income level is not a factor that prompts a business to restructure its business policies.
What type of financial market structure involves trading unlisted stock via a dealer network? A. Under-the-table C. Debt B. Auction D. Over-the-counter
D Over-the-counter. An over-the-counter market involves trading securities outside of a formal (auction) exchange. Over-the-counter securities are negotiated trades that occur via a dealer network. Stocks traded over the counter typically involve smaller companies that do not meet the requirements to participate in auction exchanges. On an auction market such as the New York Stock Exchange, multiple traders place bids on behalf of investors. Simultaneously, buyers and sellers submit offers to buy and sell their stocks at certain prices. The stock's trade price is the highest price that a buyer is willing to pay and the lowest price at which the seller is willing to sell. Debt markets buy and sell debt instruments such as bonds and mortgages. Under-the-table is a fictitious term.
What type of variance analysis involves determining the difference between the standard costs and the actual costs of raw materials used for production? A. Fixed overhead B. Material yield C. Selling price D. Purchase price
D 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 time frame.
Which of the following types of customer relationship management software would be most appropriate for a company that is looking for a more efficient way to track potential new clients and customers: A. Matching engine technology B. Campaign management software C. Personalization technology D. Sales force automation
D Sales force automation. Many companies use sales force automation (SFA) technology to support, coordinate, and increase the productivity of their sales professionals. SFA technology, which is a type of customer relationship management software, can help automate many aspects of the sales process, such as tracking leads, prospects, and customers. Other SFA technology features include contact management, sales forecasting, and sales report generation. Campaign management software is used by marketers to develop, execute, and track the effectiveness of promotional campaigns to targeted groups of potential or established customers. Businesses often use personalization technology to target certain products to certain customers based on the customer's purchase history. Matching engine technology works in a similar manner. Based on a particular customer's needs or preferences, matching engine technology determines the product offering that would best appeal to that customer. SOURCE: CR:018
Which of the following statements is true regarding risk retention groups: A. Risk retention groups tend to pay higher licensing fees than traditional insurance companies. B. A risk retention group may insure companies from many different industries. C. Group members control risk by retaining equity and transferring liability to external sources. D. The insurance policy holders are also the company's stockholders.
D The insurance policy holders are also the company's stockholders. A risk retention group is a type of insurance company that is owned by its members—its stockholders. As the owner of the insurance company, a risk retention group retains and controls its liability rather than transferring its risks to another entity. Risk retention groups are typically formed by similar businesses and industries and pay lower licensing fees than traditional insurance companies.
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. trademark. B. trade number. C. yield code. D. ticker symbol.
D Ticker symbol. The ticker symbol, or call letters, is 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.
Which of the following is a reason that businesses monitor inflation: A. To set inflation-targeting goals C. To report to investors B. To avoid deflation D. To negotiate labor contracts
D To negotiate labor contracts. One of the reasons that businesses monitor inflation is to assist in negotiating labor contracts. Knowing the inflation rate helps managers calculate what the cost of living will be in the coming year or so. Businesses aren't responsible to report the inflation rate to investors; they can look it up for themselves. Businesses don't set inflation-targeting goals; government does. Businesses can't avoid deflation by monitoring inflation.
Are customers who do not complain a more difficult problem for businesses than customers who do complain? A. No, because the salesperson can satisfy the customers who do not complain within company guidelines. B. Yes, because records of the complaints cannot be maintained. C. No, because customers who do not complain do not express ill feelings. D. Yes, because the salesperson does not have an opportunity to handle the complaint.
D Yes, because the salesperson does not have an opportunity to handle the complaint. Salespeople are not able to satisfy customers who do not complain, because they do not express their dissatisfaction to anyone associated with the business. They do, however, express ill feelings to friends, to relatives, and to coworkers. In this way, they create a poor image of the business. Because of this, they are a much bigger problem than complainers. Once salespeople know the source of customer complaints, they can seek ways to satisfy the complainers within company guidelines.
What is the first step you should take when planning a project? A. Develop a draft plan. B. Identify resources. C. Determine quality standards. D. Identify the project's stakeholders.
D Identify the project's stakeholders. The first step is to figure out who else is involved in the project—the project's stakeholders. Identifying the project's stakeholders is the first step because you do not want to start planning any other aspects of the project without getting their input and including them in the process. Before you determine quality standards, identify resources, or develop a draft plan, you need to identify the project's stakeholders so they will be considered throughout these other steps.
Certificates of deposit and collectibles are types of A. earnings. B. accounts. C. securities. D. investments.
D Investments. There is a wide range of investments available to individuals who want the opportunity to increase their worth. Some investments are riskier than others, which means that individuals might lose money rather than make money. Certificates of deposit are safe investments because they pay a guaranteed amount of interest over a specific period of time. Collectibles are a riskier type of investment because the collectible, such as a baseball card, might lose value over time and not have any worth. Certificates of deposit and collectibles are not types of accounts or securities. Certificates of deposit earn interest while collectibles may or may not increase in value. SOURCE: FI:077
Equipment inspections, fire drills, and employee safety training are examples of a business's __________ management efforts. A. financial B. time C. resource D. risk
D Risk. Risk management involves procedures used by management to reduce possible hazards that cause losses to the business. Safety inspections, fire drills, and safety training are all attempts to reduce such hazards. Financial management involves making the best use of available funds. Time management involves making the best use of one's time. Resource management involves making the best use of available resources.
Which of the following is an example of a preventive internal control: A. Physical inventories B. Data reconciliations C. Variance analyses D. Segregation of duties
D 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. SOURCE: BL:148