Business 101 Spring Final Exam (MC)
What legislation requires creditors to resolve billing errors within a specified period of time? a) Fair Credit Reporting Act b) Equal Credit Opportunity Act c) Fair Credit Billing Act d) Fair Debt Collection Practices Act
Fair Credit Billing Act
If a balance sheet shows cash as $118,000, liabilities as $115,000, and capital as $125,000, how much would the non cash assets be worth? a) $122,000 b) $233,000 c) $240,000 d) $243,000
$122,000
A corporation with a taxable earnings of $74,000 has a tax rate of 15% on the first $50,000 and a 25% tax rate on the next $25,000. The federal income taxes will amount to a) $13,500 b) $17,100 c) $18,500 d) $29,600
$13,500
It is not wise to charge anything under a) $25 b) $35 c) $50 d) $60
$25
Under the Consumer Credit Protection Act, if you report your credit card lost or stolen, your liability is limited to a) $25 b) $50 c) $100 d) $200
$50
Which of these statements is true about common stock? a) There is no risk b) Dividends are assured c) Each share has voting privileges d) There are no dividends on common stock
Each share has voting privileges
Which of the following is not an advantage of using credit? a) it allows you to shop only at one store b) it is convenient c) it is safer than carrying large sums of cash d) it is useful in emergency situations
It allows you to shop only at one store
What is the marketplace for OTC stocks? a) the New York Stock Exchange b) the American Stock Exchange c) the NASDAQ d) all of the above
NASDAQ
Which of the following is not a stock index? a) Dow Jones b) NASDAQ Composite Index c) P/E Ratio d) Standard & Poor's 500
P/E Ratio
A market characterized by pessimism is a(n) a) bull market b) bear market c) securities exchange d) auction market
bear market
The Treasury security that is available in denominations of $100 and that matures in one year or less is the Treasury a) note b) bond c) bill d) stock
bill
How are stocks of well-known companies classified? a) growth b) blue chip c) cyclical d) defensive
blue chip
The form of ownership selected depends upon a) the capital needed and the financial responsibility the owner is willing to assume b) the nature and size of the business and the tax laws c) neither a nor b d) both a and b
both a and b
The financial ability to repay a loan with the present income is a) capital b) character c) capacity d) collateral
capacity
Preferred stock a) carries more risk than common stock b) carries less risk than common stock c) pays dividends after common stock d) is less expensive than common stock
carries less risk than common stock
Net proceeds refer to the a) cash received from the sale of all assets b) accumulation of capital c) payment of all debts d) cash received from the sale of all assets minus the payments of all debts
cash received from the sale of all assets minus the payments of all debts
An official document giving power to run a corporations is a a) stock certificate b) charter c) proxy d) shareholder certificate
charter
Property you possess that is worth more than your debts is called a) collateral b) capital c) principal d) interest
collateral
Initial investments are a) conservative, high risk b) conservative, low risk c) permanent, high risk d) temporary, low risk
conservative, low risk
Which statement is true about obtaining money in corporations? a) corporations have a more difficult time than proprietorships in raising capital b) partnerships have an easier time raising money than do corporations c) corporations can borrow money more easily than can partnerships d) proprietorships and partnerships have an easier time raising money than do corporations
corporations can borrow money more easily than partnerships
The difference between cash price and total price when installment payments are made is called a) full disclosure b) cost of credit c) add-on interest d) discount interest
cost of credit
Which of the following types of debts would be discharged by bankruptcy? a) income taxes and penalties b) credit card bills c) child support d) alimony
credit card bills
Which of the following statements is true? a) you can get loans from a credit counseling service b) credit plans set up by credit counselors are voluntary c) all credit counseling services are for-profit businesses d) all of these statements are true
credit plans setup by credit counselors are voluntary
At which of the following will you probably get the lowest rate of interest for a consumer loan? a) commercial bank b) finance company c) credit union d) pawnbroker
credit union
The trade name of a business a) does not reduce the owners liability to creditors b) cannot be an artificial name c) cannot be listed as the Dixie Service Company d) does not have to be registered
does not reduce the owners liability to creditors
When a couple files bankruptcy jointly, the exempted item amounts may be a) one half b) the same c) double d) triple
double
A "quasi-public corporation" is operated only by state governments a) true b) false
false
Corporations tend to be a) many in number and small in size b) many in number and large in size c) few in number and large in size d) few in number and small in size
few in number and large in size
The interest or money that is charged a borrower for the use of credit is the a) finance charge b) collateral c) corproration d) all of these
finance charge
People who invest in a corporation are a) legally liable for the debts of the corporation beyond their investment in the shares purchased b) not taxed on dividends received c) provided one vote regardless of the number of shares held d) financially liable up to the amount originally invested
financially liable up to the amount originally invested
The length of time a borrower takes to repay a loan is always expressed as a a) percentage b) rounded number c) decimal d) fraction
fraction
Which of the following statements is false? a) bankruptcy offers a fresh start b) the costs of attorneys' fees and court costs in bankruptcy are relatively small c) bankruptcy will not affect certain types of income a debtor may have d) future credit will be easy to obtain for persons who have filed bankruptcy
future credit will be easy to obtain for persons who have filed bankruptcy
Your FICO score is based on all but which of the following categories? a) payment history b) amounts owed c) gender and marital status d) amount of current debt
gender and marital status
Which of these strategies is not a wise investment practice? a) go fast b) define goals c) keep good records d) get good advice
go fast
Paying your bills on the day due or a few days late will earn you what type of credit rating? a) excellent b) good or fair c) poor d) there's no way to tell
good or fair
Which of the following is not an example of service credit? a) office visits to a doctor b) dry cleaning services c) hairdresser services d) repair services
hairdresser services
Which of the following is not a major cause of bankruptcy? a) insufficient income b) catastrophic injury or illness c) business failure d) emotional spending
insufficient income
The terms capital, net worth, and equity are a) interchangeable and defined as assets less liabilities b) not interchangeable but defined as assets less liabilities c) interchangeable and defined as assets plus liabilities d) interchangeable and defined as assets plus capital
interchangeable and defined as assets less liabilities
The type of bankruptcy wherein creditors ask the court to declare a debtor bankrupt is a) voluntary b) involuntary c) Chapter 7 d) Chapter 13
involuntary
The prime rate charged by banks will be ___ the rate for consumer loans a) lower than b) higher than c) the same as d) no way of telling
lower than
It is illegal to discriminate on the basis of which of the following in granting or denying credit? a) bank affiliations b) occupation c) type of residence d) marital status
marital status
Which of the following is not info that can be obtained through public records? a) marriage license applications b) bankruptcies c) lawsuits d) medical records
medical records
Which statement is true about successful entrepreneurs? a) most successful entrepreneurs experienced early successful startups b) most successful entrepreneurs do not enjoy working on their own c) most successful entrepreneurs feel that it is not necessary to obtain work experience in the types of businesses they launch d) most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over
most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over
A large, professionally managed group of diversified investments is the a) REIT b) mutual fund c) IRA d) discount bond
mutual fund
Which of the following is not a retirement plan? a) mutual fund b) IRA c) annuity d) Keogh
mutual fund
The Treasury security that is available for a minimum purchase of $100 and matures in 2, 5, or 10 years is the Treasury a) note b) bond c) bill d) stock
note
Credit that can be used again and again is called a) installment b) open-end c) closed-end d) contract
open-end
Shareholders of a corporation are often called a) boards b) officers c) owners d) buyers
owners
New businesses mainly fail because a) owners work short hours b) owners are too young c) owners lack financial resources d) owners would rather work for others
owners lack financial resources
The owner of a small grocery store wants to expand but does not have the capital a) proprietorship b) partnership
partnership
A common source of cash loans when property is pledged is a) private lender b) pawnbrokers c) life insurance policies d) loan sharks
pawnbrokers
The most expensive way to figure the finance charge for the credit user is the a) average daily balance method b) precious balance method c) adjusted balance method d) APR
precious balance method
The amount borrowed is known as the a) credit b) interest c) capital d) principal
principal
An accountant is opening an office in a small town a) proprietorship b) partnership
proprietorship
Assigning your voting right to someone else is known as a a) dividend b) cumulative right c) proxy d) participating right
proxy
Unissued shares are the a) shares bought by the organizers b) shares bought by the shareholders c) shares that might be sold and used to expand the business at a later date d) shares bought by the board of directors
shares that might be sold and used to expand the business at a later date
Which of the following is not an example of a long-term investing technique? a) buy and hold b) dollar-cost averaging c) direct investment d) short selling
short selling
In case of error or inquiries about a bill, you a) should write a note on the bill b) should not write on the bill c) do not have to pay any part of the bill d) must pay finance charges on any disputed amount that is discovered to be the store's error
should not write on the bill
When you multiply principal times rate of interest times length of repayment time, the result is a) principal b) simple interest c) refund d) unearned interest
simple interest
In a recent year, corporate sales of goods and services were about a) four times more b) eight times more c) twelve times more d) sixteen times more
sixteen times more than sales from partnerships
In order to form a Subchapter S corporation, what is the maximum number of stockholders that the firm can have? a) 5 b) 15 c) 25 d) 100
100
Most billing cycles are of what length? a) 10 days b) 25 to 30 days c) 60 days d) 90 days
25 to 30 days
The wage earner's plan of bankruptcy is a compulsory, court-enforced plan to repay a portion of debts, over a period of a) 6 months b) 1 year c) 3 years d) 7 years
3 years
The fee a debt collector charges to creditors is often what percentage of the disputed amount? a) 10 b) 25 c) 50 d) 100
50
Which is a form of open-end credit a) American Express b) car loan c) installment loan d) bank loan
American Express
Which type of bankruptcy is commonly called a straight bankruptcy proceeding? a) Chapter 7 b) Chapter 13 c) voluntary d) involuntary
Chapter 7
Which of the following is not a characteristic of common stockholders? a) They are owners of the company b) They vote in the affairs of the company c) They elect the board of directors d) They are paid dividends before holders of any other types of stocks or bonds
They are paid dividends before holders of any other types of stocks or bonds
Credit above what you owe, but not up to the maximum, is called a) Unearned credit b) Unused credit c) Excess credit d) Risky credit
Unused credit
Which of the following is a false statement? a) There are ways to safeguard your credit when shopping online b) Using credit allows for saving c) Using credit wisely will not help you beat inflation d) The type of loan makes a difference in its cost
Using credit wisely will not hep you beat inflation
Taxes that are unique to a corporation are a) a filing fee for a charter and an organization tax b) a filing fee and an annual state tax c) a filing fee, an organization tax, and an annual state tax d) a filing fee, an organization tax, an annual state tax, and a federal income tax
a filing fee, an organization tax, an annual state tax, and a federal income tax
An agreement that involves two or more businesses to provide a good or service is called a) a corporation b) a joint venture c) a nonprofit organization d) an LLC
a joint venture
A loan for which the borrower pledges property to ensure repayment is a) an installment purchase agreement b) a secured loan c) a prorated loan d) a contract
a secured loan
To start your own businesses, you need a) adequate funds b) adequate funds and a general knowledge about business c) adequate funds, a general knowledge about business, and some work experience d) adequate funds, a general knowledge about business, some work experience, and a business opportunity
adequate funds, a general knowledge about business, some work experience, and a business opportunity
Subtracting payments made before computing the charge describes the a) previous balance method b) average daily balance method c) adjusted balance method d) annual percentage rate method
adjusted balance method
What has an effect on stock value? a) the company b) interest rates c) the market d) all of the above
all of the above
It is lawful for creditors to ask you for a) your name b) a list of assets c) your employment history d) all of these
all of these
Which of the following is not a risky investment? a) options b) futures c) penny stocks d) all of these are risky
all of these are risky
If one partner creates a contract that the others do not like a) only the partner
all partners are bound by it
A contract that offers a series of regular payments is call a(n) a) I-bond b) annuity c) mutual fund d) stock option
annuity
Which of the following statements is true? a) sometimes, debts incurred by catastrophic illness can never be paid b) most people who go bankrupt have goals and plans c) owning and operating a small business is rarely risky d) consumers often get into trouble by making purchases based on reason rather than emotion
sometimes, debts incurred by catastrophic illness can never be paid
When you take bigger risks, this stage of investing is called a) initial b) beginning c) systematic d) speculation
speculation
Carefully managing your investments in order to maximize your portfolio is called a) initial investing b) speculative investing c) systematic investing d) strategic investing
strategic investing
A virtual corporation a) is not a form of a joint venture b) does not include business partners who are competitors c) takes advantage of fast-changing market conditions d) operates solely on its own to take advantage of special opportunities
takes advantage of fast changing market conditions
Which of the following is the most serious step in dealing with credit problems? a) debt adjustment b) bankruptcy c) credit counseling d) the 20/10 rule
the 20/10 rule
When an owner of a corporation dies, a) the business automatically ends b) the corporation must be changed to either a partnership or a sole proprietorship c) the life of the corporation is not affected d) the corporation must be changed to a closely held corporation
the life of the corporation is not affected
Which statement is true about proprietorships? a) the owner must consult with others before making decisions b) the owner pays less income tax than corporations c) the owner shares all losses d) the owner shares all profits
the owner pays less income tax than corporations
Approximately how many businesses are formed as proprietorships? a) one out of two b) two out of three c) three out of four d) four out of five
three out of four
