BUSI 1301 Midterm SC

Which of the following statements is true of nonprofit organizations?

They employ people and take in revenue.

In the context of the diversity in the American population, Caucasians continue to represent the largest chunk of the population at 63%.

True

Which of the following is a difference between the millennial generation and Generation Z?

Unlike the millennial generation, Generation Z approaches adulthood planning to work for success.

In the context of the history of American business, which of the following was a result of rapid industrialization in America from the mid-1700s to the mid-1800s?

Unprecedented production efficiency

Raoul is an illiterate who does not have proper skills for any job. As a result, he is unable to find permanent employment. As a last resort, Raoul starts a diner in his home to earn a regular income for his family. In the given scenario, Raoul most likely started the diner because it offered _____.

a chance of survival

The government in the town of Rodenham has granted exclusive rights to a few telecommunications companies to operate in specific geographic areas. The companies have to provide their services in the areas allotted to them, and no company is allowed to extend its services to the areas allotted to its competitors. This system has been put in place because it would be inconvenient for each company to build its own infrastructure in all areas. The given scenario exemplifies:

a natural monopoly

The government of Lebitz, a European country, learns that low-priced textile imports from Pruneia, an Asian country, are affecting the sales of domestic textile companies. The Lebitzian government decides to levy a 6% tax on all textile goods imported from other countries. In this scenario, which of the following trade restrictions does the Lebitzian government impose?

a tariff

Fabotels is a hotel aggregator that buys budget hotels that succumb to financial losses and then refurbishes them under the company's brand name. Fabotels recently purchased Ravine Comforts, a small lodge that was running into huge debts. The business deal between Fabotels and Ravine Comforts exemplifies a(n) _____.

acquisition

The Federal Trade Commission:

actively promotes fair competitive practices.

In the context of opportunities and threats, overhead costs for small businesses:

are often lower than big companies.

Diana has to give a presentation on air pollution and its effects at a conference. She begins the presentation by asking the conference participants to imagine themselves carpooling to work instead of using their individual vehicles. This small exercise helps the participants to relate to the topic at hand. In the given scenario, Diana uses _____ to open her presentation.

audience involvement

The overstating of needs or setting low budget goals by managers in a budgeting process can result in _____.

budgetary slack

The _____ of a firm combines the revenue projections from the firm's sales budget and the cost projections from the firm's other operating budgets to present a forecast of expected net income.

budgeted income statement

In the context of the legal and ethical dimensions of business conduct, it is illegal but ethical to:

collaborate with other medical clinics to guarantee low prices in low-income counties.

Openi, an island nation, is able to increase its textile production without having to compromise on the production of other materials. This is in contrast to other nations that need to lower the production of other materials to increase their textile production. In this scenario, Openi has a _____ in textile production.

comparative advantage

In a sole proprietorship, any debts the company incurs are:

considered to be the owner's personal liabilities.

A Japanese company encourages its employees to participate in charitable activities. The company gives annual paid leave of ten days to its employees to volunteer at nonprofits or take part in activities that support environmental causes. Given this information, the company's initiative is an example of _____.

corporate philanthropy

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

corporation

Pastello, a bakery in New Jersey, needs to sell all the goods in its inventory before they perish. The bakery owners, Mark and Julia, plan to use the cash received from selling the goods to open a new outlet of Pastello in a different locality. In this scenario, the goods stored in Pastello's inventory represent its _____.

current assets

Boson Corp., an American software development company, wants to expand its business in international markets. Therefore, it buys property in Greitch, a South Asian country, and sets up a production facility despite the high costs involved. In this scenario, Boson Corp. is most likely involved in _____.

direct investment

Torino Mex, a men's fashion boutique, is renowned for creating designer clothes for Latino Americans. However, it introduced a new line of designer clothing that especially caters to young Hispanic Americans to widen its customer base. Which of the following dimensions of the social environment is highlighted in this scenario?

diversity

A business email should have as many attachments as possible to communicate a message.

false

A corporation is a voluntary agreement under which two people act as co-owners of a business for profit.

false

A corporation offers more flexibility than a limited liability company (LLC) in terms of tax treatment.

false

A disadvantage of an S corporation is that it can have no more than 50 stockholders.

false

A firm's operating budget represents the firm's overall plan of action for a specified time period.

false

A limited partnership is an agreement between two or more individuals to operate a business as co-owners for a limited period of time.

false

A social audit is a systematic evaluation of the positive and negative views of the public about a business firm.

false

An advantage of Google Presentations software is that it is invulnerable to hackers.

false

An ethical dilemma involves clear misconduct at the workplace.

false

As globalization gains speed, intercultural communication will become less important to business success.

false

Based on statistics from the U.S. Small Business Administration (SBA), small businesses account for 78% of all private sector employees.

false

Based on statistics from the U.S. Small Business Administration, small businesses comprise 49.9% of all businesses in the United States.

false

Communication must be static and one-way rather than dynamic and two-way.

false

Contingent expenses are costs that a firm incurs in the regular functioning of its business.

false

Corporate philanthropy includes all business donations to nonprofit groups except employee time.

false

Demographic factors include the milestones achieved during the developments in the field of computers, telecommunications, and other digital products.

false

Despite the growth rates in many high-population countries being weak, most of these nations remain ahead of the United States in terms of development and prosperity.

false

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

false

Dominic feels that an incredible string of bad luck has affected his personal life. He also feels that his boss is subjecting him to unfair treatment at work for no fault of his. Dominic's perceptions suggest that he has an internal locus of control.

false

Economists declare an official recession when gross domestic product decreases for six consecutive quarters.

false

External locus of control is a deep-seated sense that the individual is personally responsible for what happens in his or her life.

false

For entrepreneurs, there is no correlation between dollars earned and hours worked.

false

Gross Domestic Product (GDP) measures the total value of all the imports and exports of a nation on a quarterly basis.

false

Ideally, the opening of your business presentation will summarize your key points.

false

In face-to-face communication, the verbal content of a message conveys much more meaning to the listener than the tone of voice and body language.

false

In order for CPA firms to perform audits with integrity, they must be tied to the firms they audit.

false

In the United States, nonprofits employ about one in hundred workers, accounting for less paid workers than the entire construction industry and less than the finance, insurance, and real-estate sectors combined.

false

In the accounting equation, assets are equal to liabilities minus the owners' equity.

false

In the context of business behavior, producing products that you know will break before their time is illegal and unethical.

false

In the context of carbon footprint, emissions that occur outside a company's boundary, but over which it has some control, are classified as Scope 2 emissions.

false

In the context of competitive advantage, the value of the first-best choice represents the opportunity cost of producing a second product.

false

In the context of federal debt, if spending is lower than revenue, the government incurs a budget deficit.

false

In the context of foreign direct investment, a joint venture involves the merger of companies.

false

In the context of foreign direct investment, a partnership typically involves a less formal, less encompassing agreement than a strategic alliance.

false

In the context of global trade, the exchange rate can directly measure global commerce.

false

In the context of limited partnerships, the general partners of a company assume limited personal liability for any of the company's debts.

false

In the context of monetary policy, when the Fed reduces the discount rate, banks will have to obtain funds at a higher cost.

false

In the context of monetary policy, when the economy contracts, the Fed typically decreases the money supply.

false

In the context of self-reliance, when things go well, people with an internal locus of control feel that the actions of other people have led to their success.

false

In the context of social responsibility, a corporation that does not have profits as a first priority is referred to as a D-Corp.

false

In the context of the competitive environment of business, unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them.

false

In the context of the legal and ethical dimensions of business conduct, practicing collusion with competitors is legal but unethical.

false

In the context of the strategies for reaching global markets, franchising is a strategy to seek foreign suppliers.

false

It is possible to establish a corporation by a simple verbal agreement.

false

Millennials outnumber digital natives by one million people.

false

One of the advantages of a C corporation is ease of formation.

false

Online technology prevents leading-edge companies from offering customized products at prices that are comparable to standardized products.

false

People can create natural resources by growing and harvesting agricultural products.

false

Reserve requirement is a rule of the Fed which requires that all of its member banks hold funds which are more than the stated percentage of the deposits held by their customers.

false

Rudy owns a small metal fabrication business that employs 23 workers. As the owner of a small business, one of the major advantages that Rudy enjoys while competing with larger firms is reduced burden of complying with government regulations.

false

Small businesses generate 50% of total employment in American inner cities.

false

Socialism is an economic system that encourages privatization and believes that all enterprises should be publicly owned.

false

Speed-to-market is the rate at which a company's competitors copy its product innovations.

false

Stakeholders refer to groups of people who have a malicious intent toward an organization and who often resort to harmful actions.

false

Ted's new company is experiencing a steady decline in profit. He needs external financing to prevent his company's profits from declining further. Considering the fact that he wants to exercise sole ownership and control over the firm for as long as possible, Ted is likely to find angel investors who are interested in helping him meet his financial needs.

false

Texting is an example of a communication channel with high channel richness.

false

The Global Entrepreneurship Monitor (GEM) shows that people living in high-income countries tend to be much more willing to start their own businesses than people living low-income countries.

false

The Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements.

false

The U.S Small Business Administration (SBA) microloan program lends an average of $50,000 to start-up businesses through community nonprofit organizations.

false

The U.S. Small Business Administration (SBA) gives interest-free loans to start-up businesses and fully guarantees loans from local commercial lenders.

false

The amount of input divided by the amount of output equals productivity.

false

The balance of trade is also referred to as countertrade.

false

The difference between a firm's revenue and its cost of goods sold is its accounts receivable.

false

The direct labor method of costing is a technique to assign product costs based on links between the daily tasks of a company that drive costs and the production of specific products.

false

The income statement is also known as the statement of financial position.

false

The most common type of corporation is an S corporation.

false

The physiological environment is a key dimension of the business environment.

false

The value of all natural resources tends to rise with low demand, high supply, or both.

false

When drafting an email using block paragraphs, you should use single spacing between paragraphs.

false

Socially responsible firms support consumer choice by:

following laws that prevent anticompetitive behavior such as collusion.

Rubicon Inc., an American guitar manufacturing company, signed a contract with a supplier in Umreia, an Asian country, to manufacture guitars. Rubicon then imported these products and sold them in its markets under its own brand name. Rubicon did this because of the availability of cheap labor in Umreia that substantially cut down Rubicon's cost of production. In this scenario, Rubicon is most likely involved in _____.

foreign outsourcing

Ronit has been involved in many start-up projects. However, none of his ventures have been successful because of severe competition in the market and personal issues such as poor health and lack of dedication. Which of the following threats is highlighted in the given scenario?

high risk of failure

In the context of the various roles employees take up in an organization, who among the following are least likely to spend most of their time listening?

hourly employees

Children's Campground is a summer program for school children. It advertises that there is one counselor for every four children and that several other highly-trained professionals are part of its staff. Children's Campground advertisements indicate that the program relies heavily on its _____ factor to provide its services.

human resources

In the context of the legal and ethical dimensions of business conduct, rewarding integrity is an example of _____.

legal and ethical behavior

Aegirine Corp., a publicly traded firm based in New Mexico, manufactures iron. According to U.S. securities laws, the firm must:

let an independent CPA (Certified Public Accountant) firm perform an annual external audit of its financial statements.

Chloe and Tamara start a vintage fashion boutique. While both invest equally in the store and are entitled to equal profits, it is Tamara who looks after the day-to-day business transactions and manages the store. Chloe does not actively participate in managing the store, and her personal wealth is not at risk in case the business suffers losses. In this scenario, Chloe is a _____.

limited partner

In the context of the workforce advantage in the business environment, finding and holding the best talent will likely become a crucial competitive issue in the next decade as the baby boom generation begins to retire. However, job market contraction may not be an issue, because:

many baby boomers opt to postpone retirement in the face of inadequate financial resources.

The term _____ refers to a market structure with many competitors selling differentiated products; the barriers to enter such a market structure are low.

monopolistic competition

Michael is a middle-aged professional who lost his job five months ago when his former employer downsized. He has actively been looking for work ever since but has not been able to find a job that utilizes his abilities or offers an income similar to his previous position. He is beginning to realize that the only way for him to survive his current situation is to start his own business. In this scenario, Michael will most likely become a(n) _____.

necessity entrepreneur

In the context of the barriers to international trade, establishing standards on how certain products are produced is most likely a(n) _____.

nontariff barrier

In its role as a regulator, the Fed:

oversees mergers and acquisitions.

In the context of the stakeholder approach to business, the federal government is a key stakeholder in:

pharmaceutical companies.

In the context of international trade restrictions, _____ are limitations on the amount of specific products that may be imported from certain countries during a given time period.

quotas

The Board of Governors of the Federal Reserve holds a meeting to discuss its concern over the decreasing gross domestic product of the country. All members agree that the situation can be brought under control and the economy can be stimulated if they use the discount rate as a tool. In this scenario, the Fed is most likely to:

reduce the discount rate

A clothing company, Clendtine Fashions, pledges five percent of its annual revenue to environmental causes around the world. Being one of the top international companies, the founders of the company have an obligation to contribute toward the betterment of the world. This scenario is an example of Clendtine Fashions's participation in _____.

social responsibility

With an increasing number of workers facing challenges such as raising kids and caring for elderly parents, responsible companies are stepping in with programs such as on-site day care, company-sponsored day camp, and referral services for elder care. These actions show that these companies are fulfilling their _____.

social responsibility

According to the U.S. Small Business Administration (SBA), to officially count as "small," _____.

the average revenue of a business should range from $0.75 million to $28.5 million

During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create:

the fiscal cliff

New Tapan, an African country, invested resources in the defense sector, and as a result, its budget deficit grew. To decrease the budget deficit, the government of New Tapan cut down its expenditures in several other sectors and imposed higher taxes. Similar measures implemented by the government in the United States would most likely create _____.

the fiscal cliff

The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must hold funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____.

the reserve requirement

Which of the following statements is true of organizational barriers to communication?

they are hard to change

Priscilla is a trader of silver and diamond jewelry. Due to a recessionary trend in the industry, her business has not been making any profits for a few months. As the end of this economic trend cannot be easily ascertained, she decides to get her house mortgaged so that she can add a new line of business of trading in semi-precious stones. This financial risk appetite of Priscilla illustrates her _____ as an entrepreneur.

tolerance of uncertainty

Resorto, a European country, exported sugar worth $600 million between 2015 and 2016 and imported tea worth $750 million during the same period. In this scenario, Resorto most likely had a _____ between 2015 and 2016.

trade deficit

Albert is the owner of a car service center. As a sole proprietor, any profit that he earns is:

treated as Albert's personal income.

A benefit of using active voice in business communication is accountability.

true

A business email should have a compelling subject line.

true

A corporation can be a partner in a partnership.

true

A corporation is a business entity created by filing a form, which is known in most states as the articles of incorporation.

true

A country has an absolute advantage when it can produce more of a good than other nations, using the same amount of resources.

true

A limited liability company (LLC) can elect to be taxed as a corporation.

true

According to research from the Ethics Resource Center (ERC), organizational culture is most influential in shaping the ethical conduct of individual employees.

true

Administrative costs for small health plans are much higher than for large firms making it tougher for small firms to offer coverage to their employees.

true

Alexis decides to check with his accountant as to how much money his company owes to the raw materials supplier. To determine this, Alexis should ask the accountant to provide him with the company's balance sheet.

true

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

true

American culture associates youth with creativity and independence.

true

An effective business plan is usually 25 to 50 pages long.

true

Balance of payments includes financial flows such as foreign investments.

true

Balance of trade incorporates trade with all foreign nations.

true

Balance sheets usually classify assets into at least two major categories: current assets and property, plant, and equipment assets.

true

Capital, one of the factors of production, includes machines, tools, buildings, information, and technology.

true

Common stock is a key owners' equity account for corporations.

true

Deflation refers to a period of falling average prices across an economy, which is a sign of economic trouble that goes hand-in-hand with very high unemployment.

true

Digital natives only spend when a business offers them value.

true

Disinflation is defined as a period of slowing average price increases across an economy.

true

Each year, the Federal Open Market Committee holds eight regularly scheduled meetings to make decisions about open market operations.

true

Effective communication happens when one transmits relevant meaning to one's audience.

true

Expenses such as insurance and advertising that have been cleared before they are due are known as prepaid expenses.

true

Fiscal strategies are closely tied to political philosophy.

true

Foreign licensing helps circumvent government restrictions on importing in closed markets.

true

Franchising is used by companies to move into foreign markets.

true

Globalization has made ethics and social responsibility complicated for workers at every level.

true

Gross Domestic Product (GDP) levels tend to be somewhat understated, since they don't include any illegal activities, which can represent a significant portion of some countries' production.

true

If an email is intended for a recipient who is likely to feel negative about it, you should end the email on a positive note.

true

In American culture, older people tend to experience negative age bias more often than younger people.

true

In foreign licensing, licensors run the risk that unethical licensees may become their competitors, using information that they gained from the licensing agreement.

true

In the context of business ethics, in an ethical dilemma, every potential course of action has some significant negative consequences.

true

In the context of consumerism, smart businesses view customer complaints as an opportunity to create better products and stronger relationships.

true

In the context of creating and maintaining an ethical organization, when employees perceive more management commitment, they tend to be more fully engaged.

true

In the context of ethical behavior, encouraging fraudulent accounting is illegal and unethical.

true

In the context of franchises, the term accounts receivable refers to money owed to a parent company by franchisees who bought its goods on credit.

true

In the context of international trade, often countries with the highest trade barriers have the least competition.

true

In the context of nonverbal communication, leaning forward during a conversation is considered a sign of interest.

true

In the context of small businesses and the economy of a country, entrepreneurship rates are significantly lower in countries where it is hard to get fired.

true

In the context of the U.S. economy, small firms tend to be effective innovators because of the presence of revolutionary new ideas.

true

In the context of the barriers to international trade, per capita income is a key factor that determines the economic differences between two countries.

true

In the context of the barriers to international trade, the infrastructural differences between two countries fall into the category of economic differences.

true

In the context of the three types of emissions tracked by corporations, Scope 1 emissions refer to direct emissions produced by corporate operations.

true

In the context of your career choice, the broader economy will influence the level of your personal financial success.

true

In-person presentation is a communication channel with high channel richness.

true

Intangible assets are assets that have no physical existence—you can't see or touch them—but they still have value.

true

Inventory is an example of a current asset.

true

John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits.

true

One of the disadvantages of general partnerships is the lack of continuity.

true

One of the limitations of a not-for-profit corporation is that it cannot have stockholders.

true

Planned obsolescence represents a clear violation of social responsibility.

true

Public accountants provide services such as tax preparation, external auditing, or management consulting to clients on a fee basis.

true

Research done by Edward P. Bailey, noted professor and business communication author, affirms that it is OK to split infinitives in written business communication.

true

Small businesses often have an advantage in foreign markets where customers want to deal directly with a company's top management.

true

Studies cited in The Wall Street Journal's Career Journal suggest that during face-to-face communication, 38% of meaning comes from tone of voice.

true

Sustainable development means weaving environmentalism throughout the business decision-making process.

true

The Internal Revenue Service classifies each limited liability company (LLC) based on the tax treatment the company selects.

true

The central banking system of the United States is the Federal Reserve.

true

The consumer market basket of goods and services, in which the consumer price index (CPI) measures the change in weighted-average price over time, is created by the U.S. Bureau of Labor Statistics.

true

The earnings of not-for-profit corporations are exempt from federal and state income taxes.

true

The most basic form of a partnership is known as a general partnership.

true

The net income of a company is calculated by subtracting expenses from revenue.

true

The personal needs, the culture, and the family of an individual influence his or her ethical choices.

true

The structure of the Board of Governors of the Federal Reserve is such that no single president can appoint all of the Board's members.

true

There is no limit on the number of partners who can participate in a general partnership.

true

Unfair business practices such as predatory pricing hinder capitalism from achieving its potential.

true

Value is the relationship between the price of a good or a service and the benefits that it offers its customers.

true

Voice mail is an example of a communication channel with low channel richness.

true

When entrepreneurs develop new products that we didn't even know we needed until we had them, they are showing the entrepreneurial characteristic of vision.

true

A large film production company merges with a popular sound processing studio, resulting in the formation of a new company out of the two previously independent firms. This is most likely an example of a _____.

vertical merger

_____ has high channel richness, and especially with state-of-the-art equipment, it conveys much of the richness of actually being there.

videoconferencing

Who among the following people is most likely to become a necessity entrepreneur?

A person who experiences discrimination in the standard workplace

Ricord Books, a publication house, faced huge losses after 2008. The majority of its readers were born during the late 1950s, whose population was rapidly declining. Most modern readers preferred using e-books rather than reading from hard copies. This resulted in a decrease in the sales of Ricord Books. Identify the dimension of the social environment that this scenario exemplifies.

Aging Population

Paulina, the CEO of a steel company, invites Joseph, the representative of a potential partner firm, to visit her company. She is careful not to stress on Joseph's religious background as a means to start off a conversation. Instead, she maintains a strictly professional conversation with Joseph and stays neutral to his religious background. Which of the following biases does Paulina avoid in the given scenario?

Ethnicity bias

Who among the following individuals uses nonverbal communication?

Herbert, who maintains eye contact with his employees while talking to them

In the context of monetary policy, which of the following is a result of an increase in the reserve requirement?

Interest rates begin to rise.

Regency Placade, a renowned European electronics company, wants to set up a subsidiary in Finim, an Asian country. After conducting a survey, the company finds that Finim lacks the resources required for production. Therefore, Regency Placade decides to abandon the idea. In this scenario, which of the following most likely affected Regency Placade's plan?

Limited access to factors of production

In the context of budget preparation, which of the following is an advantage of using bottom-up budgeting?

Middle managers are likely to be highly motivated to achieve budgetary goals.

In which of the following ways do public accountants differ from management accountants?

Public accountants conduct external audits, whereas management accountants analyze the financial statements of their own organization.

Marina, a garments manufacturing company, signed a contract with Tertch Tex, a textile company, to receive 2 million pounds of yarn at a rate of $2 per pound. However, Tertch Tex hikes up the price to $5 per pound just before the day of delivery. Marina files a lawsuit against Tertch Tex for breaking an enforceable contract and receives $100 million in compensation. In this context, which dimension of the business environment is affected the most?

The economic environment

When Ruben wanted to start a new online news service, he was skeptical about investing in it because of the financial crisis in his country. However, he was put at ease after learning about the government's policy of levying low federal taxes on startup businesses. In this context, which dimension of the business environment is affected the most?

The economic environment

In the context of accounting, which of the following best defines cost?

The value of what is given up in exchange for something else

In the context of limited partnerships, which of the following statements is true of limited partners?

Their personal wealth is not at risk as long as they do not actively participate in managing the company.