BUSI EXAM 2 (Ch.8-13)

Which of the following is a similarity between retailers and wholesalers? a. Both are members of the channel of distribution of products. b. Both sell products directly to the consumers. c. Both are marketers who encourage consumers to buy through different venues. d. Both sell products to other businesses.

a. Both are members of the channel of distribution of products.

Which of the following statements is true of equity financing? a. It is more flexible than debt financing. b. It is more risky than debt financing. c. It yields the same tax benefits as debt financing. d. It requires firms to agree to burdensome covenants.

a. It is more flexible than debt financing.

A(n) _____ is one that relies heavily on debt. a. highly leveraged firm b. equity financing company c. no-liability company d. non-leveraged firm

a. highly leveraged firm

Kanlane is a retail store that exclusively sells personal care products, which include shower gels, lotions, fragrance mists, and others. Kanlane is a(n) _____. a. department store b. specialty store c. convenience store d. outlet store

b. specialty store

In the context of preferred stock, which of the following is true of payment of dividends? a. Unlike dividends on common stock, dividends on preferred stock are usually an unstated amount. b. A corporation has a legal obligation to pay a dividend to all its stockholders. c. A corporation cannot pay any dividend to its common stockholders unless it pays the full dividend on its preferred stock. d. If a firm skips a preferred dividend in one period, the amount it must pay the next period is triple the amount.

c. A corporation cannot pay any dividend to its common stockholders unless it pays the full dividend on its preferred stock.

Which of the following is a similarity between corporate stocks and corporate bonds? a. Both are informal IOUs. b. Both are certificates of debt. c. Both are marketable. d. Both represent ownership in a corporation.

c. Both are marketable.

Institutional investors do not: a. hold shares in major U.S. corporations. b. hold corporate bonds. c. accept deposits. d. hold government securities.

c. accept deposits.

Which of the following is a challenge that a marketer faces when designing a product? a. Creating a package of features that can relate to consumers' day-to-day lifestyle and activities b. Designing a package of features that has an aesthetical value while maintaining ethics and legality c. Creating a package of features that does not imitate the process taken up by its competitors d. Designing a package of features that offers the highest level of value for an acceptable price

d. Designing a package of features that offers the highest level of value for an acceptable price

Mr. Whyte analyzes the stock market for companies to invest in. He realizes that DDrive, an online car rental service operating in his city, has stocks that are currently underrated in the market. He decides to invest in this company as he believes that its market price will increase over time, yielding him a good amount of capital gain. By investing in this company, Mr. Whyte uses the _____ strategy. a. investing for growth b. investing for income c. buying and holding d. value investing

d. value investing

Which of the following is a difference between a statement of retained earnings and a stockholders' equity statement? a. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock. b. Preparing a statement of retained earnings is mandatory for a firm, whereas preparing a stockholders' equity statement is optional. c. A stockholders' equity statement only shows changes in stockholders' equity that arise from the issuance of additional shares of stock, whereas a statement of retained earnings also shows how net income and dividends affect retained earnings. d. Preparing a stockholders' equity statement is mandatory for a firm, whereas preparing a statement of retained earnings is optional.

a. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock.

Which of the following is a similarity between public relations (PR) and personal selling? a. Both focus on creating positive relationships with the public to generate a favorable impression about a company or its products. b. Both develop marketing activities to stimulate wholesalers and retailers to push specific products more aggressively over the short term. c. Both involve the formation of a deep relationship between the marketer and the partner in exchange for either payment or the provision of goods. d. Both involve the active stimulation of word-of-mouth via unconventional, and often relatively high-cost, tactics

a. Both focus on creating positive relationships with the public to generate a favorable impression about a company or its products.

PowerLife Inc. is a food company that has several product lines, including dairy products and powdered fruit-flavored drink mixes. The company recently introduced ready-to-drink packaged fruit juices. The company is now experiencing a fall in the sales of its powdered drink mix as an increasing number of consumers are preferring to buy the packaged juice instead. Which of the following is illustrated in this scenario? a. Cannibalization b. Segmentation c. Market penetration d. Product bundling

a. Cannibalization

Which of the following is a difference between consumer products and business products? a. Consumer products are products that are purchased for personal consumption, whereas business products are products that are used either directly or indirectly to produce other products. b. Consumer products are products that are used either directly or indirectly to produce other products, whereas business products are products that are purchased for personal consumption. c. Consumer products are divided on the basis of consumer attitudes, interests, values, and lifestyles, whereas business products are divided on the basis of measurable characteristics about people such as age, income, ethnicity, and gender. d. Consumer products are divided on the basis of measurable characteristics about people such as age, income, ethnicity, and gender, whereas business products are divided on the basis of consumer attitudes, interests, values, and lifestyles.

a. Consumer products are products that are purchased for personal consumption, whereas business products are products that are used either directly or indirectly to produce other products.

In the context of physical distribution, which of the following is a key management decision regarding materials handling? a. How can we move products most efficiently through the supply chain? b. How should we move products within our facilities? c. How can we serve our customers most effectively? d. How should we manage incoming and outgoing orders?

a. How can we move products most efficiently through the supply chain?

Which of the following statements is true of managerial accounting? a. It involves presenting customized information on request. b. It focuses exclusively on financial information. c. It is intended for external stakeholders. d. Its practices are subject to the generally accepted accounting principles.

a. It involves presenting customized information on request.

Which of the following best describes a positioning statement? a. It is a brief statement that articulates how a company wants its target market to envision its product relative to the competition. b. It is a brief statement that highlights the pattern of sales and profits and how it has changed over time. c. It is a formal statement that assigns a specific type of ownership to a company based on the product it sells. d. It is a brief statement that mentions all the rules under which a company has received the right to use another company's brand name or symbol.

a. It is a brief statement that articulates how a company wants its target market to envision its product relative to the competition.

Which of the following statements is true of the debt-to-assets ratio? a. It is a way of measuring the degree of financial leverage. b. It is the same as return on equity. c. It is an asset management ratio. d. It measures the net income per share of common stock outstanding

a. It is a way of measuring the degree of financial leverage.

In the context of the approaches to budget preparation, which of the following statements is true of participatory budgeting? a. It is more resource intensive than the top-down approach. b. It includes entry-level employees in the budgeting process. c. It demotivates the middle and first-line managers. d. It is less time consuming than the top-down approach.

a. It is more resource intensive than the top-down approach.

Which of the following statements is true of penetration pricing? a. It makes sense only in categories that don't have a significant group of consumers who would be willing to pay a premium. b. It is often used and overused in grocery stores, drug stores, and department stores. c. It tries to increase traffic in retail stores by special sales on a limited number of products and higher everyday prices on others. d. It means pricing a handful of items or loss leaders temporarily below cost to drive traffic.

a. It makes sense only in categories that don't have a significant group of consumers who would be willing to pay a premium.

In the context of retail stores, which of the following statements is true of a department store? a. It offers a wide variety of merchandise, plus a high level of service. b. It dominates its category by offering a huge variety of one type of product. c. It offers a wide array of merchandise at significantly low prices and with less service. d. It sells discounted food and general merchandise to club members in a large warehouse format.

a. It offers a wide variety of merchandise, plus a high level of service.

Dyno Corp. is a publicly traded firm that has 800 shareholders and $25 million in assets. As per the Securities Exchange Act of 1934, which of the following actions should Dyno Corp. undertake? a. It should file quarterly and annual financial reports with the Securities and Exchange Commission. b. It should engage in insider trading with permission from the Securities and Exchange Commission. c. It should list its stocks on the over-the-counter market as it can no longer be listed on the National Association of Securities Dealers Automated Quotation System. d. It should pay commissions to the accredited investors. Hide Feedback

a. It should file quarterly and annual financial reports with the Securities and Exchange Commission

Which of the following statements is true of loss-leader pricing? a. Retailers price a handful of items below cost but aim to make up the difference on other purchases. b. Retailers price a handful of items temporarily above cost to drive traffic. c. Retailers generally place a handful of items at the front of a store. d. Retailers continuously offer products at a low price.

a. Retailers price a handful of items below cost but aim to make up the difference on other purchases.

Which of the following is a difference between retailers and wholesalers? a. Retailers sell products directly to final consumers, whereas wholesalers buy products from a producer and sell them to businesses. b. Retailers deal with a limited number of products, whereas wholesalers deal with a variety of products for meeting the varied needs of consumers. c. Retailers purchase goods in large quantities from the manufacturers, whereas wholesalers purchase goods in small quantities from the retailers. d. Retailers provide credit facilities to customers, whereas wholesalers sell goods on a cash basis.

a. Retailers sell products directly to final consumers, whereas wholesalers buy products from a producer and sell them to businesses.

Which of the following is a difference between securities brokers and securities dealers? a. Securities brokers execute trades on behalf of others, whereas securities dealers execute trades for their own accounts. b. Securities brokers issue new securities to raise capital, whereas securities dealers do not. c. Securities brokers are not paid commissions for transactions, whereas securities dealers are paid commissions. d. Securities brokers earn profits through their trades, whereas securities dealers do not earn a profit. Hide Feedback Correct

a. Securities brokers execute trades on behalf of others, whereas securities dealers execute trades for their own accounts

Rosserdam Bank, a commercial bank in Louisiana, which was previously barred from dealing in securities market and selling insurance, began involving itself in such activities in the 90s. Which of the following acts allowed Rosserdam Bank the liberty to perform those activities? a. The Gramm-Bliley-Leach Act b. The Sarbanes-Oxley Act c. The Securities Act d. The Banking Act

a. The Gramm-Bliley-Leach Act

Which of the following statements is true of management accountants? a. They assist their superiors in preparing financial statements. b. They work with multiple clients on a fee basis. c. They provide accounting information exclusively to the government. d. They ensure that all government projects meet accounting regulations.

a. They assist their superiors in preparing financial statements.

Which of the following statements is true of drop shippers? a. They take legal title of the merchandise, but they never physically process it. b. They provide a complete array of services to the retailers or business users who typically purchase their goods. c. They are responsible for checking the stock and removing out-of-date goods. d. They service customers who are too small to merit in-person sales calls from wholesaler reps.

a. They take legal title of the merchandise, but they never physically process it.

Which of the following statements is true of anti-price gouging laws? a. They tend to encourage hoarding. b. They increase the incentive for both businesses and individuals to replenish supply. c. They tend to encourage businesses to raise prices during and after an emergency. d. They are not much popular among consumers.

a. They tend to encourage hoarding.

_____ is sometimes called spontaneous financing because it is granted when a company places its orders without requiring any additional paperwork or special arrangements. a. Trade credit b. Commercial paper c. A corporate bond d. A promissory note

a. Trade credit

In a private placement, the issuing firm negotiates the terms of the offer directly with a small number of _____. a. accredited investors b. market makers c. securities brokers d. sweat equity investors

a. accredited investors

The _____ is computed by dividing accounts receivable by average daily credit sales. a. average collection period b. inventory turnover ratio c. debt-to-assets ratio d. tradable good quantity

a. average collection period

The top managers of Promedium Inc. are creating a master budget for the company. They require a statement of the budget goals from each of its departments to be able to make an appropriate master budget. Karren, the manager of the sales department, overstates her needs in the budget and presents the statement to the top managers. The outcome of Karren's actions is known as _____. a. budgetary slack b. budget maximization c. a budgetary crisis d. a budgetary deficit

a. budgetary slack

In the context of comparative financial statements, comparative balance sheets: a. can be used to check if the owners' equity had increased. b. are mandatory for companies that are not publicly traded. c. compare the financial performance of two or more companies. d. show the difference between the income of a firm's stakeholders and the top managers.

a. can be used to check if the owners' equity had increased.

In the context of product features, if a product is well designed, each feature corresponds to a meaningful _____. a. customer benefit b. market strategy c. product consistency d. product mix

a. customer benefit

Earnings per share (EPS) is computed by: a. dividing the net income available to common stockholders by the number of shares of common stock outstanding. b. dividing the stock's price per share by its dividend per share. c. dividing the total market value of all shares by the number of shares of common stock outstanding. d. dividing the common dividend paid to common stockholders by the number of shares of common stock outstanding. Hide Feedback

a. dividing the net income available to common stockholders by the number of shares of common stock outstanding

The accountants at Gamone Phones, a cell phone manufacturing company, discover that the firm has performed poorly over the last two quarters, leading to negative financial implications. Instead of stating the actual figures, the managers decide to wrongly present the firm's debts and overstate its earnings. The aspect of financial accounting that should be emphasized to avoid such incidents of accounting fraud is: a. ethics in accounting. b. financial forecasting. c. classified fund rating. d. leniency in budgeting.

a. ethics in accounting

Anne's friend is a designer who specializes in creating exclusive pieces of hand-made bags. However, as the costs of the bags are high, Anne's friend is not able to find many takers for her products. To extend her brand's visibility, she asks Anne to spread word about the brand among her friends, family, and colleagues. In the scenario, the promotional tool employed by Anne's friend is _____. a. guerrilla marketing b. call to action marketing c. scarcity marketing d. close range marketing

a. guerrilla marketing

Nusreen, a financial manager in a company, compares the operating budgets from the past three years to identify trends in the cost of materials purchased and to learn whether the company's net expenses have increased or decreased over the time span. Nusreen is using _____ to compare the financial statements. a. horizontal analysis b. static structuring c. liquidity indexing d. activity-based costing

a. horizontal analysis

Lecona, a start-up company, failed to acquire any major funding from potential investors. Therefore, the owners of the company set up their office in an unoccupied apartment owned by one of them. In this scenario, the company most likely incurred a(n) _____. a. implicit cost b. fixed cost c. out-of-pocket cost d. indirect cost

a. implicit cost

The _____ of a firm organizes the operating and financial budgets into a unified whole, representing the firm's overall plan of action for a specified time period. a. master budget b. capital budget c. static budget d. contingency budget

a. master budget

The right mode of transportation depends on the: a. needs of the business and on the product itself. b. criterion set by consumers. c. modes of transportation used by competitors. d. inventory system followed by marketers and the logistics taxes involved.

a. needs of the business and on the product itself.

In the context of modes of transportation, a key advantage of choosing trucks is that they: a. offer high frequency of shipments. b. are inexpensive. c. are the fastest mode of transportation. d. offer the highest flexibility in handling.

a. offer high frequency of shipments.

In the context of managerial accounting, _____ are usually easy to measure because they involve actual expenditures of money or other resources. a. out-of-pocket costs b. opportunity costs c. implicit costs d. breakeven costs

a. out-of-pocket costs

Power Toolz Inc. is a small, publicly traded corporation with only 370 stockholders and total assets of $8.9 million. It does not have its shares listed on an organized exchange. Investors who want to buy stock in this company would probably purchase the stock in the _____. a. over-the-counter market b. private-player market c. money market d. free market

a. over-the-counter market

In the context of personal selling, consultative selling involves: a. shifting the focus from the products to the customers. b. shifting the focus from social responsibility to profits. c. shifting the focus from profits to social responsibility. d. shifting the focus from the customers to the products.

a. shifting the focus from the products to the customers.

As a shareholder of Syder Corporation, Carl wants to know whether the company had earned a profit over the last financial year. He begins by looking into the net income of the company to know if it has sufficient amount of money to pay off the workers and suppliers and also the amount of money remaining with the owners. In this scenario, Carl is looking at Syder Corporation's _____. a. statement of cash flows b. retention schedule c. articles of incorporation d. information repository

a. statement of cash flows

If a firm's assets equal $18,000 and its liabilities equal $7,500, then the owners' equity is _____. a. $1,35,000000 b. $10,500 c. $2.4 d. $25,500

b. $10,500

Which of the following is an example of a pure good? a. A lawn care worker b. A lockable diary c. A car wash service d. A resident doctor at a hospital

b. A lockable diary

Which of the following statements is true in the context of cash budgets? a. Cash inflows and outflows remain constant in most firms. b. Cash budgets show projected cash inflows and outflows for each month. c. Cash flow problems are minimized when customers buy on credit. d. Cash budgets normally cover a six-year period.

b. Cash budgets show projected cash inflows and outflows for each month.

Which of the following is a risk associated with licensing? a. Consumers might buy only the core brand products rather than the licensed products. b. Consumer backlash hits the core brand if licensed products are of poor quality or overpriced. c. Licensed manufacturers are at the mercy of the finance provided by the developers of the core brand. d. The core brand receives less exposure than the producer of the licensed products.

b. Consumer backlash hits the core brand if licensed products are of poor quality or overpriced.

Which of the following qualifies as consumer promotion? a. A request for customer feedback b. Free product samples c. A door-to-door product advertising d. Emails to customers about offers

b. Free product samples

Which of the following statements is true of cobranding? a. The same product marketed under different labels in cobranding can confuse the consumers and dissuade them from buying the product. b. If one partner makes a major goof, the fallout can damage the reputation of the other partner as well. c. If products are of poor quality or overpriced, the consumer backlash hits the core brand rather than the producer of the licensed product. d. Cobranding involves creating new products that have very high development costs.

b. If one partner makes a major goof, the fallout can damage the reputation of the other partner as well.

In the context of fixed margin pricing, which of the following statements is true of the profit margin? a. It is the positive difference between revenue and costs. b. It can be expressed as a dollar amount. c. It is also known as sustained discount pricing. d. It is a new product pricing strategy.

b. It can be expressed as a dollar amount.

In the context of retail stores, which of the following statements is true of a category killer? a. It sells a complete category of food and general merchandise at a steep discount in a single enormous location. b. It dominates its category by offering a huge variety of one type of product. c. It offers a wide range of various food product categories, plus limited nonfood items. d. It sells discounted food and general merchandise to club members in a large warehouse format. Hide Feedback Correct

b. It dominates its category by offering a huge variety of one type of product.

Which of the following statements is true of the Financial Accounting Standards Board (FASB)? a. It led to the establishment of the Securities and Exchange Commission. b. It is a private organization responsible for developing accounting rules. c. Its members are encouraged to form ties with private firms for the ease of communication. d. It is a 12-member team that is appointed by the Internal Revenue Service.

b. It is a private organization responsible for developing accounting rules.

Which of the following statements is true of commercial paper? a. It is only applicable to startups and small firms. b. It is normally unsecured. c. It can be issued for up to three years. d. It exclusively consists of long-term promissory notes.

b. It is normally unsecured.

Which of the following is a difference between sales promotion and personal selling? a. Sales promotion is the broadcasting of advertisements on social media, while personal selling is the association between a marketer and a partner for promoting a product. b. Sales promotion refers to the marketing activities designed to stimulate immediate sales activity through specific short-term programs, while personal selling is the person-to-person presentation of products to potential buyers. c. Sales promotion is the association between a marketer and a partner for promoting a product, while personal selling is the broadcasting of advertisements on social media. d. Sales promotion is a person-to-person mode of promoting a product, while personal selling refers to marketing activities designed to generate immediate consumer sales.

b. Sales promotion refers to the marketing activities designed to stimulate immediate sales activity through specific short-term programs, while personal selling is the person-to-person presentation of products to potential buyers.

Which of the following statements is true of agents and brokers? a. They take legal ownership of the goods they distribute. b. They connect buyers and sellers. c. They do not charge commissions. d. They do not facilitate transactions.

b. They connect buyers and sellers.

The net present value (NPV) of an investment proposal is found by: a. multiplying its estimated future cash flows with its present cash flows. b. adding the present values of all of its estimated future cash flows and subtracting the initial cost of the investment from the sum. c. subtracting the present values of all of its cash outflows and the present values of all its cash inflows. d. dividing all of its estimated future cash flows by the sum of the total present cash inflows and the total present cash outflows.

b. adding the present values of all of its estimated future cash flows and subtracting the initial cost of the investment from the sum.

Frank is a loan officer who approves loans for small businesses. One factor he looks at carefully when making loan decisions is the amount of outstanding debt a firm already has—an information that he can find in the firm's: a. franchise agreement. b. balance sheet. c. operating budget. d. articles of incorporation.

b. balance sheet.

Keegee Corp. associates itself with an investment bank to issue some new stock. The bank has agreed to help the company develop a pricing strategy and to help find buyers for the stock. However, the bank has not guaranteed that all of the shares will be sold at the desired price. Keegee's investment bank is using the _____ approach to raise funds. a. under-subscription b. best efforts c. firm commitment d. tag-along right

b. best efforts

A commitment to meeting social responsibilities: a. results in higher employee turnover. b. can contribute to a more profitable company. c. contributes to a decrease in shareholder value. d. hinders shareholder wealth maximization.

b. can contribute to a more profitable company.

Hakeem owns shares worth $4,000 dollars in a textile firm. Having a stake in the company, he has the right to vote, the right to receive return on investment in the form of capital gain, and the right to residual claim on assets. Hakeem is a(n): a. angel investor. b. common stockholder. c. securities broker. d. investment banker.

b. common stockholder.

Relane, a fitness equipment manufacturer, advertises its products and the availability of those products through television. The customers interested in placing their orders could use a toll-free number displayed during the advertisement. Relane is selling its products straightaway to customers through a _____. a. merchant wholesaler b. direct channel c. multichannel retail model d. distributor

b. direct channel

During the maturity stage of the product life cycle, _____. a. companies invest in raising awareness about the product b. profits continue to decline as competition intensifies c. competitors begin to notice emerging categories d. strong rival marketers begin to leave the market

b. profits continue to decline as competition intensifies

Mark, an accountant, is given the task to lead an external auditing project for a multinational company. In his spare time, Mark also acts as a consultant for Mayfair Hut Inc., a local company. In this scenario, Mark is a: a. government accountant. b. public accountant. c. management accountant. d. forensic accountant.

b. public accountant.

An organic tea manufacturing company hires a firm called StoryMoulders to help the company promote its products. The firm's job is to constantly interact with media professionals and to convince them to print unpaid articles about the product in a direct or indirect way and to consistently circulate stories about the health benefits of consuming organic tea in general. In this scenario, StoryMoulders is using the promotional tool known as _____. a. greenwashing b. public relations c. propaganda d. lobbying

b. public relations

Lance signs a contract with Gerove Corp. to perform an external audit for the company. In his audit, he finds certain minor issues in the firm's financial statements but is of the view that the statements are, nevertheless, an accurate representation of the firm's financial status. In this scenario, Lance is most likely to issue a(n) _____ opinion. a. adverse b. qualified c. unqualified d. concurring

b. qualified

Which of the following is an example of a pure service? a. A designer bag b. A set of books on cookery c. A waiter at a restaurant d. A painkiller medication strip

c. A waiter at a restaurant

Identify a true statement about equity financing. a. It does not allow firms to skip dividend payments to stockholders. b. It is more risky than debt financing. c. It does not yield the same tax benefits as debt financing. d. It is less flexible than debt financing

c. It does not yield the same tax benefits as debt financing.

Which of the following statements is true of a breakeven analysis? a. It bridges the gap between the cost and the price on a per-product basis. b. It determines the type of consumers it must target to achieve a profit. c. It helps marketers get a sense of where they stand before actually introducing a product. d. It establishes a fixed margin, starting with determining the actual cost of each product.

c. It helps marketers get a sense of where they stand before actually introducing a product.

Which of the following statements is true of cost-based pricing? a. It is more risky than demand-based pricing. b. It determines the price of a product based on the amount consumers are willing to pay for it. c. It is less market-focused than demand-based pricing. d. It is seldom used in the real world.

c. It is less market-focused than demand-based pricing.

Which of the following statements is true of earnings per share (EPS)? a. It is a way of measuring the degree of financial leverage. b. It compares current assets to current liabilities. c. It measures the net income per share of common stock outstanding. d. It indicates earnings per dollar invested by the owners of a company.

c. It measures the net income per share of common stock outstanding.

Which of the following is true of the Securities Act of 1933? a. It established the Financial Stability Oversight Council. b. It required that all publicly traded firms with at least 500 shareholders and $10 million in assets file quarterly and annual financial reports with the Securities and Exchange Commission. c. It required firms issuing new stock in a public offering to file a registration statement with the Securities and Exchange Commission. d. It established the Federal Deposit Insurance Corporation.

c. It required firms issuing new stock in a public offering to file a registration statement with the Securities and Exchange Commission.

Which of the following statements is true of product packaging? a. It is unnecessary in the world of grocery stores and mass merchandisers. b. It involves incorporating qualities in a product according to consumers' taste. c. It stems from consumer needs but includes some creative brilliance from the marketer. d. It involves providing an impactful tagline for a product.

c. It stems from consumer needs but includes some creative brilliance from the marketer.

Which of the following statements is true about private placements? a. Privately placed securities are mandated to register with the Securities and Exchange Commission. b. Private placements normally have more potential to raise money than public offerings. c. Private placements are usually less expensive than public offerings. d. Private placements have to prepare complex registration documents to obtain financing. Hide Feedback

c. Private placements are usually less expensive than public offerings.

Which of the following is facilitated by great packaging? a. Lesser expenditure on raw materials b. The possibility of combining many brands into one c. Providing information on the nutritional value of a product d. Enhancement in the quality of a product

c. Providing information on the nutritional value of a product

Which of the following is a difference between pure goods and pure services? a. Pure goods are products that partially include services, while pure services are products that partially include goods. b. Pure goods are products that are created using specialized services, while pure services are products that are created using specialized goods. c. Pure goods are products that do not include any services, while pure services are products that do not include any goods. d. Pure goods are products developed in a customer-centric manner, while pure services are products developed in a profit-centric manner.

c. Pure goods are products that do not include any services, while pure services are products that do not include any goods.

Which of the following strategies can a company use to decrease its breakeven point? a. Hiring more employees b. Leasing expensive equipment c. Reducing variable costs d. Increasing fixed costs

c. Reducing variable costs

Onkel Inc., a large corporation, goes out of business and announces its closure. The company liquidates its assets, and the stockholders of the company become entitled to share in the proceeds in proportion to their ownership. Which of the following common stockholders' rights is reflected in this scenario? a. Right to dividends b. Preemptive right c. Right to a residual claim on assets d. Return on investment in the form of capital gain

c. Right to a residual claim on assets

Which of the following modes of transportation provides the highest flexibility in handling? a. Trucks b. Planes c. Ships d. Railroads

c. Ships

In the context of financial statements, which of the following statements is true of long-term liabilities? a. They are debts that come due within a year of the date on the balance sheet. b. They are debts that don't come due until more than a year after the date of the financial audit. c. They are debts that don't come due until more than a year after the date on the balance sheet. d. They are debts that come due within a year of the date of the financial audit.

c. They are debts that don't come due until more than a year after the date on the balance sheet.

Which of the following is a reason why producers use channel intermediaries? a. They encourage consumers to travel to different venues to buy products. b. They help market a company's products better than the competitors' products. c. They help products move more efficiently and effectively from the factories to the consumers. d. They increase the total number of transactions involved in purchasing a product.

c. They help products move more efficiently and effectively from the factories to the consumers.

Which of the following statements is true of savings and loan associations (S&Ls)? a. They are typically divisions of huge bank holding companies that also own commercial banks. b. They act as agents for investors who want to buy or sell financial securities, such as corporate stocks or bonds. c. They traditionally accepted only savings account deposits and used them to make mortgage loans. d. They don't accept deposits but amass huge pools of financial capital from other sources and use these funds to acquire a portfolio of many different assets. Hide Feedback Correct

c. They traditionally accepted only savings account deposits and used them to make mortgage loans.

Exilant Shooters, a wedding photography company, is providing free candid photoshoots for the first fifty people who visit its Web site. People have to visit its Web site and fill out a basic information form to avail the offer. Which product characteristic is being used by Exilant Shooters to affect the rate of adoption and diffusion? a. Compatibility b. Adaptability c. Trialability d. Observability

c. Trialability

Sansburn & Sons, an institutional investor, issues a fixed number of shares and invests the money received from selling these shares in a portfolio of assets. The scenario is an example of: a. a closed corporation. b. limited liability. c. a closed-end fund. d. limited mobility.

c. a closed-end fund.

Financial accounting: a. provides information to internal stakeholders such as union heads. b. seldom adheres to the standardized and accepted accounting practices. c. addresses the needs of stockholders, creditors, and government regulators. d. records detailed information about a company's various divisions

c. addresses the needs of stockholders, creditors, and government regulators.

Members of the general public cannot directly trade stocks and other securities on the exchanges or the over-the-counter market. Therefore, most individuals seek the help of a(n) _____. a. accredited investor b. underwriter c. broker d. investment banker

c. broker

The price-to-earnings ratio is calculated by: a. dividing the stock's price per share by its net asset value per share. b. dividing the net income available to common stockholders by the number of shares of common stock outstanding. c. dividing the stock's price per share by its earnings per share. d. dividing the total market value of all shares by the number of shares of common stock outstanding.

c. dividing the stock's price per share by its earnings per share.

In the context of financial statements, the specific accounts listed in the stockholders' equity section of a balance sheet depend on the: a. liability of the top managers. b. government accountant conducting the audit. c. form of business ownership. d. contingency funds that a firm needs to retain.

c. form of business ownership.

Understanding of the timing of cash flows within the planning period is important because: a. most companies have predictable expenditures and do not experience cash shortages or surpluses. b. firms with growing sales experience steady cash flows. c. most firms experience uneven inflows and outflows of cash over the course of a year. d. companies with growing sales plan their budgets accurately and do not experience deviations.

c. most firms experience uneven inflows and outflows of cash over the course of a year.

A positive net present value (NPV) means that the: a. cost of a project outweighs its cash flow benefits. b. feasibility of a project is low, and it will be rejected by financial managers. c. present value of the expected cash flows from a project is greater than the cost of the project. d. cost of a project exceeds its benefits even after accounting for the time value of money.

c. present value of the expected cash flows from a project is greater than the cost of the project

Return-on-equity (ROE) and earnings per share (EPS) are both classified as _____. a. activity ratios b. liquidity ratios c. profitability ratios d. leverage ratios

c. profitability ratios

Which of the following is a difference between a channel of distribution and physical distribution? a. A channel of distribution is a plan for delivering the right product to the right person at the right place at the right time, whereas physical distribution is the network of organizations and processes that links producers to consumers. b. A channel of distribution includes critical decision areas like customer service, inventory, and materials, whereas physical distribution includes transportation and logistical considerations. c. A channel of distribution is designed to take purchase orders directly from the customers, whereas physical distribution is the path taken by a product to reach the end customer. d. A channel of distribution is the path that a product takes from the producer to the consumer, whereas physical distribution is the actual movement of products along that path.

d. A channel of distribution is the path that a product takes from the producer to the consumer, whereas physical distribution is the actual movement of products along that path.

Which of the following statements is true of a revolving credit agreement? a. Under the terms of a revolving credit agreement, a firm will pay interest on any funds it does not borrow. b. Under the terms of a revolving credit agreement, a firm will pay a commitment fee on any funds it borrows. c. A revolving credit agreement is a type of long-term loan. d. A revolving credit agreement is a guaranteed line of credit.

d. A revolving credit agreement is a guaranteed line of credit.

Which of the following products is an augmented product? a. A breakfast cereal box that is offered at a 15 percent discount b. An SUV that is designed specifically for travel in hilly areas c. A spreadsheet software that is promoted as a tool that can be used to plot graphical data d. A wireless charger that comes with the latest range of smartphones

d. A wireless charger that comes with the latest range of smartphones

_____ represents what customers who buy on credit owe the firm. a. Abandonment value b. Interbank spread c. Apparent consumption d. Accounts receivable

d. Accounts receivable

In the context of an independent auditor's report, which of the following is a difference between an unqualified opinion and a qualified opinion? a. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor does not find any problems with the way the firm's financial statements were prepared and presented. b. An unqualified opinion is given if the independent auditor discovers widespread and serious problems with a firm's statements, whereas a qualified opinion is given if the independent auditor does not find problems with the way the firm's financial statements were prepared and presented. c. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor discovers widespread and serious problems with the firm's statements. d. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position.

d. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position.

A major provision of the _____ banned commercial banks from dealing in securities markets, selling insurance, or otherwise competing with nondepository institutions such as insurance companies and investment banks. a. Securities and Exchange Act of 1934 b. Federal Reserve Act of 1913 c. Securities Act of 1933 d. Glass-Steagall Act of 1933

d. Glass-Steagall Act of 1933

_____ are stocks of finished goods, work-in-process, parts, and materials that firms hold as a part of doing business. a. Covenants b. Consols c. Liabilities d. Inventories

d. Inventories

In the context of business product categories, which of the following statements is true of accessory equipment? a. It includes movable capital purchases. b. Marketing of accessory equipment focuses on quality and relationships. c. Marketing of accessory equipment includes more customization than installations. d. It includes the farm products used in producing other products.

d. It includes the farm products used in producing other products.

Which of the following statements is true of return on equity (ROE)? a. It measures the net income per share of common stock outstanding. b. It compares current assets to current liabilities. c. It is a way of measuring the degree of financial leverage. d. It indicates earnings per dollar invested by the owners of a company.

d. It indicates earnings per dollar invested by the owners of a company.

Which of the following statements is true of a capital gain? a. It is the redistribution of earnings among preferred stockholders. b. It is a basic right of preferred stockholders. c. It is the acquirement of capital from stockholders for the new ventures of a firm. d. It is a type of return on investment for common stockholders.

d. It is a type of return on investment for common stockholders.

Identify a true statement about commercial paper. a. It exclusively consists of long-term promissory notes. b. It can be issued for up to three years. c. It is normally secured. d. It is only offered by firms with excellent credit ratings.

d. It is only offered by firms with excellent credit ratings.

Which of the following statements best describes profitability? a. It is the difference between actual value and perceived value of a product. b. It refers to the overall overhead costs of a company. c. It is the gap between the cost and the price on a per-product basis. d. It is the positive difference between revenue and costs.

d. It is the positive difference between revenue and costs.

In the context of retail stores, which of the following statements is true of a discount store? a. It offers a wide variety of merchandise, plus a high level of service. b. It dominates its category by offering a huge variety of one type of product. c. It sells discounted food and general merchandise to members of a club in a large warehouse format. d. It offers a wide array of merchandise at significantly low prices and with less service.

d. It offers a wide array of merchandise at significantly low prices and with less service.

Which of the following is a difference between managerial accounting and financial accounting? a. Managerial accounting presents financial statements on a predetermined schedule, whereas financial accounting creates reports upon request by management. b. Managerial accounting prepares a standard set of investment statements, whereas financial accounting prepares customized reports to deal with specific problems or issues. c. Managerial accounting summarizes the past performance of a company, whereas financial accounting provides reports on past performance and makes projections about the future. d. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders.

d. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders.

Which of the following is a difference between market orders and limit orders? a. Market orders apply only to the sell order, whereas limit orders apply only to the buy order. b. Market orders apply only to the buy order, whereas limit orders apply only to the sell order. c. Market orders place restrictions on the market prices at which orders are executed, whereas limit orders instruct a broker to buy or sell a security at the current market price. d. Market orders instruct a broker to buy or sell a security at the current market price, whereas limit orders place restrictions on the prices at which orders are executed

d. Market orders instruct a broker to buy or sell a security at the current market price, whereas limit orders place restrictions on the prices at which orders are executed

Bret likes to invest in smaller U.S. companies because of their active trading and high potential for growth and good long-term returns. Which of the following stock indices should Bret follow? a. The Dow Jones Industrial Average b. The Standard & Poor's 500 c. The Nikkei 225 d. The Russell 2000

d. The Russell 2000

Which of the following statements is true of merchant wholesalers? a. They increase the risk of producers' products being damaged or stolen. b. They provide multiple channels for consumers to buy products. c. They sell products directly to final consumers. d. They take legal possession, or title, of the goods they distribute

d. They take legal possession, or title, of the goods they distribute

In the context of budget preparation, the document created in the final stage of an operating budget is referred to as a _____. a. static cash budget b. budgeted balance sheet c. capital expenditure budget d. budgeted income statement

d. budgeted income statement

Firms that use factors: a. have to wait for customers to pay. b. rely solely on long-term financing. c. cannot eliminate their own collection department. d. do not receive the full amount their customers owe

d. do not receive the full amount their customers owe

When a firm provides its employees with a good work environment, _____. a. the employees are likely to have low morale b. productivity of the employees is likely to reduce c. the firm is likely to be rated low on social responsibility d. employee turnover is likely to be lower

d. employee turnover is likely to be lower

OnTheGo, a newly launched online fashion company, engages in an intensive advertising campaign after its launch. The company makes use of all possible media platforms to create a seamless promotional strategy to reach its target audience and to establish a strong brand image. This step taken by OnTheGo exemplifies _____. a. viral marketing b. product placement c. cobranding d. integrated marketing communication

d. integrated marketing communication

Richard wants to buy additional stock in Rancor Mobil, but the price of the stock has fluctuated in recent days. He wants to make sure he does not pay too much. His analysis suggests that $80 per share is the highest price he should pay. Richard is likely to place a _____ with his broker. a. mid-price peg b. good-till-cancelled order c. market order d. limit order

d. limit order

Historically, the most widely accepted goal of financial management has been to: a. help a firm fulfill its social responsibility. b. analyze the risk associated with investments. c. organize and manage a firm's resources. d. maximize the value of a firm to its owners.

d. maximize the value of a firm to its owners.

According to economists, anti-price gouging laws: a. may encourage businesses to raise prices during and after an emergency. b. tend to discourage hoarding. c. tend to increase the incentive for both businesses and individuals to replenish supply. d. may exacerbate the supply problems that cause inconvenience after natural disasters.

d. may exacerbate the supply problems that cause inconvenience after natural disasters.

Companies that are not publicly traded: a. are required to perform horizontal analysis to identify changes in their key account values. b. do not incur any out-of-pocket costs. c. are mandated by the Securities and Exchange Commission to provide comparative financial statements. d. obtain external audits at their own discretion.

d. obtain external audits at their own discretion.

Mr. Rob O'Leary owns 17.6 percent of the existing shares of stock in Dyna Corp. The corporation is presently issuing new stock. Before the stock is offered to other investors, Mr. O'Leary buys 17.6 percent of the new shares to maintain his share of ownership in the company. By doing so, Mr. O'Leary is exercising his _____. a. drag-along right b. right to a residual claim on assets c. right to dividends d. preemptive right

d. preemptive right

The _____ suggests that sources and uses of funds that offer the potential for high rates of return tend to be riskier than sources and uses of funds that offer lower returns. a. market risk premium b. average accounting return c. budgeted income statement d. risk-return tradeoff

d. risk-return tradeoff

In the context of the sources of funds for a business, a _____ calls for a regular schedule of fixed payments sufficient to ensure that the principal and interest are repaid by the end of the tenure for which the money has been borrowed. a. corporate bond b. treasury bill c. promissory note d. term loan

d. term loan

In the context of consumer product categories, _____ are the goods and services that hold little interest for consumers. a. shopping products b. specialty products c. convenience products d. unsought products

d. unsought products