BUS-X 100 Final Review

Carissa is 25% owner in a corporation that builds custom machinery. Last year the corporation suffered due to intense competition. After losing $1,000,000 last year, the business is shutting its doors. The business has unpaid debts of $9,000,000. What is Carissa's personal liability?

$0

Eric knows there is no guarantee his new green energy firm will succeed, but he quits his day job to start the new business anyway. This relates to the entrepreneurial characteristic of:

tolerance for uncertainty.

Suppose that last year it cost 1,000 British pounds to buy an American-made bicycle from the U.S. Due to changes in the currency exchange rate, a few months later the same bicycle only cost 800 British pounds to purchase. This change:

will likely increase the number of imports of these bicycles to Great Britain

As Rachel Smith and her friends prepare to graduate from college, they are faced with numerous job offers that include starting salaries better than they could have imagined. Based on this information, what is this economy's most likely stage in the business cycle?

Expansion

Vanessa's business plan outlines her startup costs and cash flow forecasts. This is most likely found in which section of her plan?

Financial projection

Which of the following would represent the healthiest economic scenario for the United States?

GDP expansion, unemployment at 5%, and 2% inflation

Which business forms incur "unlimited personal liability" for all owners and are viewed as an "extension" of the owner(s)?

Sole Proprietorships and General Partnerships

Who are the members of NAFTA?

United States, Canada, Mexico

According to economists, inflation is:

a general rise in the level of prices

China his become a dominant exporter of electronics to the U.S. and European markets. What is a direct effect of China's growth in exports?

an increase of jobs and income in China

An individual's desire to create a new business is referred to as:

the entrepreneurial spirit.

Money received from the sale of shares of ownership in a business is called:

equity capital.

Thomas wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because:

he will get to keep all of the profits the business makes.

During the recent economic crisis, many companies found that it was:

increasingly difficult to acquire and use many of the traditional sources of financing that they were accustomed to.

CPI increased by 10% last month, alarming economists. This news is an indication that:

inflation may be spiraling out of control.

Leadership can best be defined as the ability to:

influence others.

If Procter & Gamble, a U.S. leader in household products, and Reckitt Benckiser, a British leader in household products, form a partnership to develop and distribute a line of ecologically friendly laundry detergent, the partnership would be a(n):

joint venture.

Suppose the Australian dollar increases substantially in value relative to the currencies. What is the likely result?

Australian exports will decrease and imports will increase.

Suppose Russia would like to increase the amount of luxury goods brought into their country from other countries. What trade policy should they enact to accomplish this goal?

Decrease tariffs on luxury good imports

Which of the following business forms does NOT require you to register the business with the Indiana Secretary of State:

General Partnership

An undercover investigation of large electronics manufacturing plants overseas revealed that employees often work in crowded conditions for long hours, and are exposed to a variety of hazardous chemicals. In addition, it was suspected that some of these chemicals are disposed of in nearby drainage pipes that lead to the sea. These are examples of which two concerns regarding the impact of business on society?

Health/safety risks and environmental damage

All business forms require

filing tax returns with the IRS.

In all states except the one in which it is incorporated, a business is known as a(n)______________ corporation.

foreign

The United States, whose economy exhibits elements of both capitalism and socialism, has what is known as a _____ economy.

mixed

A SWOT analysis is an identification and evaluation of a firm's strengths, weaknesses, _____, and threats.

opportunities

Penicillin, airplanes, and air conditioning were all:

created by individual inventors and small companies.

Joan's taffy manufacturing company has grown slowly, but steadily over the past 5 years. She now would like to expand by purchasing new equipment. What is her most likely source of funding?

Bank lending

When Sony Corporation of Japan purchased Columbia Pictures Entertainment Inc., of the United States, Sony made a(n):

Direct investment in the United States

Perfect competition is characterized by:

many buyers and many sellers

When incorporating, a business

may incorporate in any state it chooses.

The downside of _____ decision-making is that decisions take longer and the team may react poorly if their input is not accepted.

participative

Stan has a lot of expertise in architecture, but doesn't know much about management. He'd like to share ownership in a business with another person who could offer the management expertise to make the business successful. He would most likely form a:

partnership.

A medium-sized hardware manufacturer wants to become deeply involved in exporting, but it does not yet wish to actually manufacture any of its products overseas. The company wants to maintain control over its sales while gaining experience in foreign markets. Which option would be best for this company?

Establishing its own sales offices in foreign countries.

Which of the following is true about sustainability strategies?

As awareness of environmental issues has increased, many companies have made increased efforts to implement sustainable business practices.

As Greece, Spain, and Portugal have struggled with recession, high unemployment, and soaring government debt, concerns have risen that their economic problems could spiral out of control and spread to the global economy. What international organization could most likely assist in this situation?

International Monetary Fund

If Procter & Gamble, a U.S. leader in household products, and Reckitt Benckiser, a British leader in household products, from a partnership to develop and distribute a line of ecologically friendly laundry detergent, the partnership would be a(n):

Joint venture

Judy, Betty, and Bob want to limit liability for their business debts, but they want to avoid double taxation. Which type of business ownership would you recommend?

LLC

Three college graduates want to start an auto shop. Two of the partners will do most of the work, so they plan to share 40% of the profits each. The remaining partner will get 20% of the profits. Because working with other people's cars can create liabilities, they want a form of business that provides liability protection. Which form of business best fits their needs?

LLC

Exchange rates between countries are usually determined by:

a number of factors including interest rates, inflation, and imports/exports for the countries.

Germany wants to retaliate against India for trade restrictions that limited the number of German cars that could be brought into India. Which of the following policy decisions would Germany utilize to accomplish this goal?

Adjust import tariffs on cars from India from 5% to 20%.

Ten years ago when Mary started a small business, it cost $10,000 to design and launch her website—and it didn't even have e-commerce capability. Now, she is able to launch an online store for less than $100 per month. This is an example of which factor contributing to entrepreneurship?

Advances in technology

You manufacture construction equipment. The price of steel has increased by 30%, forcing you to increase the price of your equipment by the same amount. What is the likely effect?

Demand will decrease

With regard to taxation of partnerships, which of the following statements is true?

Each partner is taxed in the same way as a sole proprietor.

If the value of the Canadian dollar increases substantially relative to other currencies what is the likely result?

Canadian exports will decrease and imports will increase.

You and four friends are opening a studio to create new Xbox games. You hope to raise $500,000 early on by selling equity in the business. You'll then reinvest profits back into the business to drive growth and minimize taxes. Within 5 years, you hope to sell the majority of the business to an angel investor or venture capital firm. Which form of business best fits your needs?

Corporation

Which of the following business forms are created under state law and require registration with the Secretary of State?

Corporations Limited Liability Companies Limited Partnerships Limited Liability Partnerships (All of the above)

An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies is called a(n):

Economic Community

American automakers are concerned about the availability of so many foreign cars to U.S. consumers, which they hear could cause loss of jobs in the American auto industry. To address the situation, the encourage Congress to:

Enact export embargo

Tony Shinn is applying for a mortgage to purchase his first home. His credit rating is poor due to several late payments on his credit cards and car loan. He is upset because his friend Jerry—who has excellent credit—was approved for a loan, while Tony was rejected. This mortgage company's actions were:

Ethical—because credit history is an important factor in credit decisions.

If Japan were concerned that electronics coming from China were hurting the Japanese electronics industry, which of the following actions would they take?

Increase import tariffs on Chinese electronics by 50%

If the U.S. were to increase the tariff for steel by 50%, what is the desired effect of this change?

Increase the price of steel imports and decrease the amount of steel imports

Adam Smith's view of an economic system that best serves the interests of society?

Individuals in the country may pursue their own economic gain and self-interest by doing whatever is best for them.

Jean is about to purchase the franchise rights for a fitness facility. Her key reservation about pursuing a franchise as opposed to opening her own gym from scratch is:

Jean must pay a franchise fee to get started, along with a certain percentage of profits.

If the size of the economy has grown for the last three quarters, but prices overall have dropped

The economy is in an expansion phase and CPI is decreasing.

If the size of the economy has grown for the last three quarters, but prices overall have dropped, which of the following is true?

The economy is in an expansion phase and CPI is decreasing.

A small country in Central America previously produced all of their own clothing because they have a strong textiles industry. Recently, the began importing clothing from Philippines, Vietnam, and Bangladesh. What is the likely result?

The importing country will likely shift resources from textiles to a higher value industry.

As a farmer, Gary Forsythe is familiar with the economics of perfect competition. How is the price at which he sells his corn determined?

The price is determined by combining the actions of all buyers and all sellers together.

What is the primary disadvantage of a sole proprietorship that a corporation overcomes?

Unlimited liability

If the United States and Japan cannot settle their trade disputes on their own, they should probably settle them through the:

WTO

You live in a mixed economy and currently produce granola bars that are organic and non-GMO. As a result, consumers are willing to pay more for your product than others on the market. Based on the concept of supply and demand, how is this likely to affect your production planning?

You will increase production to take advantage of the higher prices.

Keisha and Donnie decide to go into business together. They start by writing an agreement explaining the terms of the business they will both own, along with each of their responsibilities. Keisha and Donnie created a(n):

articles of partnership.

Using a loan from his parents, Eric starts his own landscaping business by purchasing a lawn mower, weed eater, and a used truck for transporting the equipment. When recording his transaction for his new business,

assets increase and liabilities increase.

Which of the following industries would most likely have the characteristics of an oligopoly?

automobiles

Peter Piper approached Jane B. Nimble about becoming a partner or active owner in a firm that destroys environmental waste. While Peter would like to become an active owner in the firm, he is concerned about his liability because he has recently inherited a lot of money. In this situation, Peter should:

become a member in an LLC.

For many years, HBO insisted that its current shows would only be offered via paid cable subscription. Partly because of the rise of Hulu, Netflix, and other on-demand viewing services, HBO launched its own HBO Go on-demand service. This is an example of HBO being influenced by what factors in the business environment?

competitive

A growing pizza restaurant was originally formed as a sole proprietorship because it was based on the owner's family recipe. The restaurant has become so popular that several wealthy people have inquired about investing money to help the business open more locations. If the owner had known there would be an opportunity to sell shares of the company in exchange for investment capital, he would have chosen a(n):

corporation.

The type of entity that exists independent of the owners is a(n):

corporation.

Cash, marketable securities, notes receivable, and merchandise inventory are examples of:

current assets

The price of computers drops by 20%. What is the most likely impact on supply and demand?

demand up, supply down

When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc., of the United States, Sony made a(n):

direct investment in the United States.

American automakers are concerned about the availability of so many foreign cars to U.S. consumers, which they fear could cause loss of jobs in the American auto industry. To address the situation, they encourage Congress to:

increase import tarrifs.

As the price of jeans rises, manufacturers that make and sell jeans are likely to:

increase production and thus increase the supply.

Unless specified in the charter, a sole proprietorship has a

legal life limited to the life of its owner

Once managers have generated a set of different alternative courses of action, they must evaluate the advantages and disadvantages of each. Which of the following represent the key criteria managers should consider when evaluating alternative courses of action?

legal, ethical, economically feasible, practical

The partner who can lose only what he or she has invested in a business is the

limited partner.

The _____ ratio is based on the principle that a high-risk investment should generate higher financial returns for a business and more conservative decisions often generate lesser returns.

risk-return

Amazon is now one of the top 10 largest retailers in the U.S., even though they don't have any substantial physical retail presence. This illustrates the impact of _____ factors in the business environment.

technology

When it built production lines in the United States, BMW engaged in what type of international expansion?

Totally owned facilities

You run a fitness studio that trains individual clients and small groups. Since you are the only trainer, you run the business as a sole proprietorship. A client was injured and sues you for $1,000,000. You have no liability insurance on the business. What is your personal liability if you lose the lawsuit?

$1,000,000

If a corporation makes $100,000 in profit, how will that profit be taxed if the money is all distributed to the owners?

$100,000 will be taxed at the corporate rate, then those after-tax profits will be taxed again as dividends when distributed to each owner.

During 2015, Luxury Jewelry Inc. had sales revenues of %1,500,000. This retailer also had expenses that totaled $800,000. What is the firms profit or loss amount?

$700,000

Small businesses represent the majority of firms in the:

construction industry.

Monopolistic competition is a market situation in which:

sellers must differentiate their products from competitors.

Which form of business is the easiest to start?

Sole proprietorship

You invested $80,000 into a consulting partnership and have a 50% stake in the business. Your partner didn't invest anything, but brings management expertise to the business. After a year, the business racks up $100,000 in debts and must close down. Based on this information, what is the total personal loss for you and your partner in the business?

$180,000

Nicole is 50% owner in a manufacturing company that runs as an LLC. She invested $25,000 when the business started and has received no money from the business since then. The company just lost a $1,000,000 patent infringement lawsuit and will have to shut down. What is Nicole's personal loss on this business?

$25,000

Winshare Art Company has issued only common stock. Currently it has 10,000 shares outstanding. The value of the stock is shown as $20 per share. In addition, $100,000 of Winshare's earnings have been reinvested in the business since it was founded. What is Winshare's total owners' equity.

$300,000

The Zebra Corporation is owned by three people. John owns 40%, Sam owns 35%, and Mitchell owns 25%. However, Mitchell does at least 50% of the work and John is a passive owner who does no work at all. If the company makes $100,000 profit this year and decides to distribute it all to the owners, how much would John get?

$40,000

Big Box Corporation has two owners who share the work equally. Susie owns 80% of the company stock and Sheryl owns 20% of the company stock. Susie invested 60% of the money required to start the business. If the company makes $100,000 profit this year and decides to distribute it all to the owners, how much will Susie get?

$80,000

When Toyota experienced declining sales, it began offering price incentives to new car buyers. Nearly, immediately, Ford and General Motors began similar promotions. These businesses:

-Represent an oligopoly in which there are few sellers, and sellers often match the prices of competitors.

You and four friends are investing $10,000 each to start a business. To keep things even, you will all own 20% of the business and will contribute 20% of the work required to make the business successful. If the business makes a profit, you'll each get 20%. However, you all agree that the business must provide liability protection and feature pass-through taxation. Which form of business best meets your needs?

LLC

Charlene and Phil would like a form of business that combines the benefits of a corporation and a partnership, while avoiding some of the restrictions associated with those forms of ownership. They should form a(n):

LLC.

If Indonesia enacts an embargo on all goods from the U.S. and changes average import tariffs from 10% to 30%, what is the expected impact in Indonesia?

Less consumer choice

Suppose Gillette is seeking a manufacturer in Bangladesh who will produce and market Gillette razors in that country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for Gillette?

Licensing

Suppose Gillette is seeking a manufacturer in Bangladesh who will produce and market Gillette razors in the country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for Gillette?

Licensing

What are the two benefits of importing?

More consumer choice, lower consumer prices.

Although changes have occurred over the years, _____ is historically considered to have a communist economy.

North Korea

Juan and Carl have a small medical practice that operates as a partnership. Juan does 70% of the work and Carl does 30%. However, Carl invested 60% of the money required to start the business. If the company makes $100,000 in profit this year, how much will each partner receive?

Profits will be shared in the proportion specified in the partnership agreement.

The relationship between sales and profits can be written as:

Sales revenue - expenses = profit

The U.S. imports trillions of dollars of goods per year. What is a benefit of importing for the U.S.?

Shift of production resources to higher-value activities