Business Principles (Overall Review)

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

In 1565 this town was settled by Spanish Explorers long before Jamestown and the Plymouth Colony.

St.Augustine

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

True

Digital natives only spend when a business offers them value.

True

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

True

The Federal Trade Commission:

actively promotes fair competitive practices.

Italian explorer who the United States of America was named after

Amerigo Vespucci

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

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

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

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

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

False

Who among the following individuals uses nonverbal communication?

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

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

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

Which of the following is a quote from Aristotle:

I count him braver who overcomes his desires

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

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 its role as a regulator, the Fed:

Oversees mergers and acquisitions

Many offspring or fruit, plentiful or abundant

Prolific

In latin this term means time flies.

Tempus Fugit

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.

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

They are hard to change

Which of the following statements is true of nonprofit organizations?

They employ people and take in revenue.

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

True

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

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

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

considered to be the owner's personal liabilities.

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.

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

non tariff barrier

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

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

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

A person who experiences discrimination in the standard workplace

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

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

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

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

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

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

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

American culture associates youth with creativity and independence.

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

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

Franchising is used by companies to move into foreign markets.

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

True

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

True

Inventory is an example of a current asset.

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

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

True

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

True

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

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.

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

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

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 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

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

Unlike the millennial generation, Generation Zapproaches 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

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

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

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.

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

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

Balance of payments includes financial flows such as foreign investments

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

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