Business Exam

A financial plan determines how a business will keep track of its money (true or false)

True

An effective financial plan involves all the following processes EXCEPT

developing advertising

When demand for a product is affected by price, it is said to have

elastic demand

Spell E-person

entrepreneur

An owner's claim to the assets of a business is called owner's

equity

A board of trustees oversees the general affairs of a corporation (true or false)

false

If you are 16, you are allowed to drive a car as part of your job on public streets (true or false)

false

Financial forecasting is the process of predicting your business's profits (true or false)

false financial forecasting is predicting your business's future conditions that affect the company

money set aside for unexpected costs or opportunities

reserve capital

The principle that states people must decide which goods and services to use due to limited resources and unlimited wants is known as

scarcity

The first step in writing a strategic plan is

setting goals

The strategic part of a business plan includes

short-term and long-term goals

Which term refers to an application to operate as a corporation?

the articles of incorporation

Tax benefits are an incentive sometimes offered by

the government

"Cash crunch" is another term for negative cash flow (true or false)

true

A balance sheet is a primary financial statement (true or false)

true

A closely held corporation may decide to expand by going public and selling stock on the open market (true or false)

true

A document that shows where a business's cash has gone is a statement of cash flows (true or false)

true

A financial plan generally includes multiple projected income statements (true or false)

true

A financial plan includes a projected 12-month balance sheet (true or false)

true

A limited liability company is a business that operates and pays taxes as a partnership (True or false)

true

A transaction is any activity that has an effect on the financial situation of a business (true or false)

true

Agency power legally obligates a partnership to a contract signed by one of the parties (true or false)

true

Business owners use reserve capital to grow their businesses (true or false)

true

If you are injured on the job, your employer must pay for medical expenses (true or false)

true

Inventory is the goods retailers buy to resell (true or false)

true

Limited life is a disadvantage of a partnership (true or false)

true

Price competition means buyers will choose the lowest priced products available (True or False)

true

Start-up costs include permit fees (true or false)

true

Supplies, office equipment, and products to sell are assets (true or false)

true

The equation Assets - Liabilities = Owner's Equity is the basis for keeping all accounting records in balance (True or false)

true

The law sets limits on how late you can work if you are under 16 (true or false)

true

Unidentified costs are a problem for new businesses (true or false)

true

You should estimate your business's projected revenues on the low side and its expenses on the high side (true or false)

true

the money required to start a business

start-up capital

The final step in calculating how much money is needed to start a business is to prepare a

statement of required start-up capital

business expenses that may vary or can be adjusted depending on sales

variable expenses

A general partner has no decision-making authority (True or False)

False a limited partner has no say

Fixed expenses change with business conditions and other situations (true or false)

False fixed expenses don't fluctuate w. changes in production level or sales

An individual who starts a new business is an example of labor as a factor of production (True or False)

True

Everything we make requires the four factors of production (True or False)

True

Government policies can affect financial markets (True or False)

True

The government offers incentives to citizens to help increase consumer spending (True or False)

True

China is an example of a nation with a command economy (True or False)

True a command economy is when the government has control over production, investment, and wages

Incentives can be either positive or negative (True or False)

True a incentive is payment to stimulate investment

One result of negative cash flow is

a shortage of merchandise

A marketing plan for a new store should include all the following EXCEPT

a similar store close by

The location for a new store should have all the following attributes EXCEPT

a similar store close by

lists all the general ledger accounts that a business will use

chart of accounts

A business that is owned and operated by its members is a

cooperative

An example of a variable expense is

advertising costs

A market situation in which a few large businesses provide products for many consumers is known as

an oligopoly

An example of an incentive a business might offer to consumers is a

"children eat free" promotion

Describe 2 regulatory agencies that help protect people. What is the agency and how does it protect people?

Consumer Product Safety Commission- enforces federal safety and Environmental Protection Agency- enforces pollution standards

Opportunity cost is the cost of obtaining one more of an item (True or False)

False In opportunity cost you only obtain one item

If you are under 18, you can operate a meat slicer as part of your job (true or false)

False

What are the different types of competition?

Perfect competition monopolistic competition oligopoly

The regulatory agency that oversees non-depository institutions is the

Securities and Exchange Commission

A disadvantage of a sole proprietorship is unlimited liability for business debts (True or False)

True

Projected financial statements estimate a business's operating capital (true or false)

false projected financial statements predict the financial position of a business in the months and years to come

the process of estimating the operating capital for a business

financial forecasting

the expenses that remain the same regardless of business activity

fixed expenses

Generally accepted accounting principles set guidelines for

how to prepare financial statements

An example of an asset unique to a particular business is

hydraulic lifts

One of the most common reasons that new businesses fail is

insufficient start-up capital

Each of the following represents an area that a business might invest in to improve productivity EXCEPT

inventory

The factors of production include

land, labor, capital, entreprenuership

If a corporation goes out of business owing millions of dollars to its creditors, its stockholders

lose the money they invested

An advantage of organizing a business as a partnership is

more skills and knowledge

Which term refers to the amount of revenue that remains after expenses for the period are subtracted from profits?

net income

amount of capital needed to operate a business for the first few months or years

operating capital

An example of a one-time start-up cost is

permits

A main measurement of the success of a business is its

profits

estimate of the future assets, liabilities, and net worth of a business

projected balance sheet

Which formula represents the projected profit for a business?

projected earnings - projected expenses

statements that predict the financial position of a business in the months and years to come

projected financial statements

analysis of the amount of cash that an owner anticipates will be available for his or her business in the future

projected statement of cash flows

What is not an example of a type of economic system?

pure economy

A business transaction occurs each time a business

records a purchase

Cash reserves in a business are often used to

repair equipment

An example of a variable expense that is unaffected by sales is

repairs