Exam #3 Intro to business
The FDIC provides basic deposit insurance of ____ per depositor.
$250,000
A certain mutual fund containing both corporate stocks and bonds has a total value of $2,500,000. The fund also has $500,000 in liabilities and 50,000 shares. What is the net asset value per share for this mutual fund?
$40
APSCO Lighting, Inc., had a gross profit of $234,000 for the last twelve-month period. Operating expenses were $185,000. What was APSCO's net income before taxes?
$49,000
As the accountant for Ideal Manufacturing Company, you determine the following totals in your balance sheet: total assets¾$124,000; current liabilities¾$41,000; long-term liabilities¾$13,000. What is the total owners' equity for this company?
$70,000
For mutual funds, the yearly management fees generally range between ____ percent.
0.25 and 1.5
Tavia Jacobson is the owner of Jacobson's Home Interiors. She would like to begin accepting Visa, MasterCard, or Discover credit cards, but she is concerned about the cost. As a merchant she should expect to pay between ____ percent to the credit-card company for processing credit-card transactions.
1.5 and 4
Americans comprise ____ percent of all Internet users.
11
The cost of goods sold for McPherson Fashions is $360,000. The beginning inventory for the firm was $20,000. Twelve months later the ending inventory was $40,000. What is the firm's inventory turnover?
12 times a year
Current estimates suggest that about ____ people in the world use the Web.
2.3 billion
Darlene Law has enough money to purchase 1,000 shares of stock in Ana Corporation. If she buys on margin, she can purchase an additional 1,000 shares. What is the margin?
50 percent
Approximately what percentage of Americans use the Internet?
77 percent
Claire browses for clothing at Banana Republic's Web site, but goes to a Banana Republic store to try on and purchase the clothing. This demonstrates what aspect of e-business?
A firm's Web site may lead to increased sales in its physical stores.
Credit union members usually are
All of these answer are correct
If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following is a true statement?
Assets equal $195,000.
An Internet consulting company uses its Web site to allow its corporate clients to obtain information, analyze data, and ask questions. This consulting company is using a ____ model.
B2B
An Internet distributor of office supplies has a system of bidding and awarding contracts online for customer purchases. This is most likely a ____ model.
B2B
Amazon.com has a ____ model.
B2C
Which of the following is not a suggested tip for making investment decisions?
Choose the least expensive online broker for stock purchases.
Axon Corporation decides to issue convertible bonds. Why might Axon prefer to issue convertible bonds?
Convertible bonds generally carry a lower interest rate than regular bonds.
Academic Standard, Inc. (ASI)Academic Standard, Inc. (ASI), sells its products through the Internet. Amanda is one of the biggest buyers of the company's products for her business. Nearly all of the interactions between Amanda's company and ASI have been electronic, saving both time and energy.Although transaction costs are reasonable, ASI has encountered financial problems with high production costs. Jonathan, a veteran employee of ASI, suggested to senior management that certain aspects of production may need to be handled by other, more efficient companies. Jonathan also suggested that the company might want to create a physical store to possibly increase its visibility and potential profits. He explained many disadvantages of operating solely through the Internet.Refer to Academic Standard, Inc. All except ____ forces are primary external environmental forces that ASI needs to be mindful of in regard to the company's use of technology.
Customer service
Christopher notices that his Discover Card statement gives the company's Web address (Discovercard.com) and directs him there to pay his bills and answer his questions. What e-business strategy is Discover employing with this reference to its Web site?
Decreasing expenses
Christine's First JobChristine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam. She recently interviewed with a relatively small and new company and was offered a job. The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges. Christine accepted the job.Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting. She had to teach them how data is transformed into financial information and, from that point, reported on various statements. When she talked about the statement of financial position, they had no idea what she was talking about. She was the qualified individual responsible for accounting. No one else working with her had much knowledge. They did not even know the different financial ratios that someone could use to understand the financial standing of a company. Christine knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports.Refer to Christine's First Job. If the owners were interested in obtaining the company's current ratio, Christine should do which of the following?
Divide current assets by current liabilities
In her college economics class, Kelly will give a report on money. The title of her paper is "Money: It Doesn't Disintegrate When Handled or Melt in the Sun." Which of the five essential elements of money will she talk most about?
Durability
Pure Training, Inc.Pure Training, Inc., is a company that helps people start their own businesses. As part of the training it provides, the company covers many different aspects of entrepreneurship for Internet-based companies. One principle its trainers focus on is customer service. Pure Training emphasizes the importance of connecting with potential and current customers as well as improving customer service. Developing a social media presence is another focus of Pure Training in its entrepreneur-based sessions. The trainers provide their clients with sufficient market research and statistics to understand trends in various areas that involve the Internet and social media. Pure Training prides itself on helping entrepreneurs launch and maintain successful businesses through a major Internet presence.Refer to Pure Training, Inc. When Pure Training is discussing typical measurements for various types of social media and it starts discussing "number of fans," "number of likes," and "growth of wall responses," clients should know that these are typical measurements for Correct answer:
A friend overhears your conversation with another friend, who is discussing his new job with "the Fed." What does the term Fed stand for?
Federal Reserve Board
Maria Salvador from Dallas sighed as she wrote a check for her last payment to a Houston jeweler from whom she had bought a beautiful diamond. She anticipated that it would take four to five days for the check to reach the jeweler and for him to deposit it and another two or three days for the check to clear through the
Federal Reserve System
Which of the types of resources needed for an e-business is Storybook.com most likely to receive from an investor?
Financial
Web site designers, Web masters, and programmers belong to which of the following specialized e-business resources?
Human
Which of the following is the last step in building a social media plan?
Implement and integrate the plan
How is LinkedIn different than most social networking sites?
It is for professionals.
____ is considered a social networking site for professionals.
M&B BankKen is a senior manager at M&B Bank. Initially, he started as a front counter worker and slowly progressed up the career ladder. In his role as a senior manager, Ken is keeping a keen eye on the industry, the Federal Reserve System, and the bank's competitors. Ken's previous boss did not do that well, and as a result the bank had suffered.Several employees have pointed out that many businesses are not aware of the procedures for or a systematic way to evaluate the creditworthiness of their customers, collect past-due payments from customers, and protect their businesses from such losses. Based on feedback from several employees, M&B has decided to offer credit-counseling workshops for individuals and small businesses.Refer to M&B Bank. M&B is chartered by the U.S. Comptroller of the Currency. M&B can be described as which of the following?
National Bank
Which of the following is true about the differences between no-load mutual funds and load mutual funds?
No-load funds do not charge when you buy shares and load funds do.
Which of the following best describes the organization of a statement of cash flows?
Operating, investing, and financing cash flows
If you are taking a common sense approach to evaluating a firm's accounting information, which of the following would not be something that you would hope to see?
Paying great attention to current profit and not worrying about the future
Haverting, Inc., is a fast-growing biotech company. What is Haverting likely to do with any profits it generates?
Reinvest them in Haverting to finance growth
Money that an electronics retailer receives through the online sales of extended warranty plans provides a(n) ____ for the company.
Revenue Stream
The act that created the Securities and Exchange Commission was the
Securities Exchange Act of 1934.
Which of the following would not be included in the M1 definition of money?
Small-denomination CDs
Which of the following is true about marketing messages and social media?
Social media marketing messages are not like traditional marketing messages.
What do users say is their primary reason for using social media? Correct answer:
Staying in touch with family and friends
Pro-future, Inc.Sandy is a personal financial planner at Pro-future, Inc. Pro-future is a financial company that focuses on personal and business financing. When potential customers come to Sandy for financial advice, she first determines their investment goals in order to create a financial plan that fits their needs. Once she has created a suitable financial plan for a customer, Sandy gives her clients a pamphlet with suggestions for helping to accumulate the amount of money that they need.Advice about risk is given to all of Sandy's clients. Sandy also makes strategic financial plans for each of her customers, which helps them to track and achieve their financial goals.Refer to Pro-future, Inc. What is a possible suggestion Sandy might give her clients in order to meet their retirement goals?
Take advantage of any employer-sponsored retirement plans.
Which of the following statements is false?
The format and information contained in one firm's financial statements are most likely to differ drastically from the format and information contained in another firm's financial statements.
Community BankJeffrey is the training manager for the Community Bank in Maryland. Jeffrey has developed a training program for all new employees that emphasizes understanding the basics of money. Jeffrey and the bank's management believe that if the employees understand the basics of money, they can utilize the information in their own personal finances as well as guide and answer questions from bank customers.The bank recently hired Laila. She was hired at a high-level position because she brought with her extensive bank management experience. Laila's responsibilities included making sure that the reserve requirement would always be met and keeping track of the interest rate that the Federal Reserve System charged for loans to member banks.Refer to Community Bank. One employee asked Jeffrey how much money could be found in the whole country. Jeffrey indicated that the government tracks this type of information via supply of money. What are the main measures of the supply of money?
Two: M1, M2
Jim Andrews purchased a government security that cost $50. At maturity, this security will be worth $100. Jim purchased a
U.S. savings bond
Pure Training, Inc.Pure Training, Inc., is a company that helps people start their own businesses. As part of the training it provides, the company covers many different aspects of entrepreneurship for Internet-based companies. One principle its trainers focus on is customer service. Pure Training emphasizes the importance of connecting with potential and current customers as well as improving customer service. Developing a social media presence is another focus of Pure Training in its entrepreneur-based sessions. The trainers provide their clients with sufficient market research and statistics to understand trends in various areas that involve the Internet and social media. Pure Training prides itself on helping entrepreneurs launch and maintain successful businesses through a major Internet presence.Refer to Pure Training, Inc. Pure Training was founded 10 years ago and it's now ready to venture into offering workshops for businesses selling to other businesses primarily through the Internet. Which of the following is most likely to be a new addition to their agenda?
Webinars
Which of the following statements is true about retirement plans?
You must pay taxes on Roth IRA contributions.
In bond quotations, prices are quoted as
a percentage of face value
The percentage of deposits that a bank must retain for depositors is called
a reserve requirement.
A reduction in price that is offered to customers who accept slightly damaged or soiled merchandise is referred to as
a sales allowance.
Extreme Sports, a bicycle, ATV, and motorbike retailer, buys its inventory on credit. Before Extreme pays for this merchandise in 60 days, the money owed is classified on its balance sheet as a(n)
accounts payable
In explaining money to his twelve-year-old, Mike, the president of a small business, said that money is "symbolic." This should be correctly interpreted to mean that money is
an artificial device that aids in the exchange of resources for products, services, and resources.
With a margin requirement of 50 percent,
an investor purchasing $6,000 in stock must pay at least $3,000 of it in cash.
The following quotation would most likely be found in the ____ of a business report: "This report evaluates the significant decrease in sales experienced in the previous quarter and incorporates the results of surveys and interviews with customers, management, and economists."
analysis
Increasing the reserve requirement is a powerful ____ weapon that reduces the overall supply of money.
anti-inflation
Christine's First JobChristine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam. She recently interviewed with a relatively small and new company and was offered a job. The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges. Christine accepted the job.Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting. She had to teach them how data is transformed into financial information and, from that point, reported on various statements. When she talked about the statement of financial position, they had no idea what she was talking about. She was the qualified individual responsible for accounting. No one else working with her had much knowledge. They did not even know the different financial ratios that someone could use to understand the financial standing of a company. Christine knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports.Refer to Christine's First Job. When Christine talked about the accounting equation and the resources owned by the business--the cash, inventory, and equipment--she wants to make clear that she's referring to the ____ of the firm.
assets
12b-1 fees
cannot exceed 1 percent
Betsy Garnett applied for a loan at Capital Bank. When the bank officer interviewed her, he asked her how much money she made. The loan officer was concerned about Betsy's
capacity
The most liquid asset is
cash
When Betty Tran prepared a personal income statement, the remainder or residual value is called
cash surplus.
In lending money, lenders consider a prospective borrower's
collateral, capacity, and character.
A(n) ____ fund is a fund that invests in the stocks contained in a specific stock index.
exchange-traded
The statement of cash flows for a business offers information on all of the following except
expenses during a particular accounting period.
A ____ of funds exists when one investment company manages a group of mutual funds.
family
The typical dollar bill has an expected life span of
five years
The requirement that investors should have access to all important facts about stocks, bonds, and other securities so that they can make informed decisions is called
full disclosure
Bob Jones believes that some information in his credit file is inaccurate. Therefore, he
has the right to request that the credit bureau verify it.
Revenues - cost of goods sold - expenses = net income characterizes which financial statement?
income statement
Which of the following is not considered a high-risk investment?
index funds
Vince is saving to buy his first car. The Mini Cooper he wants is $28,000 right now, but it will take at least a year for him to accumulate the down payment. He also knows that although money is a store of value, he will probably need more than $28,000 to buy the car next year because of
inflation
The practice of board members, corporate management, and employees buying and selling a corporation's stock is
insider trading
Maya Michey graduated from college and is seeking employment in the banking industry. She believes she has what it takes to be successful because she
is honest and likes to interact with people.
The specific types of information that managers need depend on their area of management and on their
level within the firm.
Debts owed by a business are called
liabilities
Vance Co. is required to provide collateral in order to obtain a long-term business loan. Which of the following would not be acceptable collateral to most lenders?
liabilities
When an investor sets a maximum price a broker can spend per share, the investor is issuing a(n)
limit order
The mortgage on Prudential Insurance's local facility will be paid off over the next 30 years. The majority of this mortgage would be classified on Prudential's balance sheet as a(n)
long-term liability
Andrew buys 1,000 shares of AT&T stock with a margin requirement of 50 percent. At the time of the original transaction, AT&T stock was $24 per share. When AT&T stock then falls to about $12 per share, Andrew will likely receive a(n) ____ from the brokerage firm.
margin call
Personal Accents, Inc. (PAI)Personal Accents, Inc., (PAI) is a publicly-held company that specializes in selling a variety of skin- and hair-care products. The company owns specialty stores that appeal to both men and women. Recently PAI has obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's.Charlotte is an investor who pays very close attention to high-risk investments because she she's interested in the huge profits that can be obtained from this type of investment. Charlotte usually prefers moderately risky investments so that she can obtain a profit; but in case something goes sour, she will not lose everything. Fearing the potential loss of money in high-risk investments, she has invested in PAI. She feels that the company is established and has maintained stable profits over the years. She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively.Refer to Personal Accents, Inc. If Charlotte wants to buy more PAI stock and puts in a request to purchase it at the current market price, this would be called a ____ order.
market
Jason has to purchase specialized software that will allow his company to accept credit cards online for purchases from his company's Web site. This software is a(n) ____ resource for this e-business.
material
Anything used by a society to purchase products and services or resources is called
money
Each year, Miguel Guerra constructs a personal balance sheet to determine his
net worth
Jack Stanley graduated from college and obtained a full-time job in accounting. At the end of his first year of employment, his assets totaled $9,000. His liabilities totaled $3,000. His ____ was $6,000.
net worth
In theory, if Linda has complete and accurate information about a business decision she has to make, there is
no risk at all
If measuring the success of failure of social media activities with KPIs, the first step is to connect KPIs with
objectives.
All of the following are current assets except
office equipment
A mutual fund that sells new shares to any investor who requests them is referred to as a(n) ____ fund.
open-end
The use of webinars and online informational promotional materials is most often related to businesses selling to
other businesses
When Dell Computer allows workers in a foreign country to provide technical assistance to its customers, it is engaging in
outsourcing
Ernst & Young, KPMG, and PricewaterhouseCoopers are all
public accounting firms.
Pure Training, Inc.Pure Training, Inc., is a company that helps people start their own businesses. As part of the training it provides, the company covers many different aspects of entrepreneurship for Internet-based companies. One principle its trainers focus on is customer service. Pure Training emphasizes the importance of connecting with potential and current customers as well as improving customer service. Developing a social media presence is another focus of Pure Training in its entrepreneur-based sessions. The trainers provide their clients with sufficient market research and statistics to understand trends in various areas that involve the Internet and social media. Pure Training prides itself on helping entrepreneurs launch and maintain successful businesses through a major Internet presence.Refer to Pure Training, Inc. When Pure Training discusses KPIs in its measurement workshop, clients should know that KPIs are ____ and measure achievement of the organization's ____.
quantitative; objectives
The total return you receive on an investment over a specific period of time divided by the amount invested is referred to as the
rate of return
The primary function of the Fed is to
regulate the supply of money in the United States to maintain a healthy economy.
Rick and Joe get together and start a mortgage brokerage business. They each contribute $25,000 of capital to the business. After the first year of operation, the total owners' equity is listed as $60,000. Most likely, the additional $10,000 of owners' equity is
retained earnings
A measure that summarizes a particular characteristic of a group of numbers is called a(n)
statistic
Since Mike and Carol are nearing retirement age, they are concerned with the need for their investments to provide income. If you were a financial planner, which of the following would you not recommend to Mike and Carol as an investment?
stock of high-growth companies
M1 and M2 are both measures of
supply of money
In the Federal Reserve System, there are ____ district banks.
twelve
How many branch banks are in the Federal Reserve System?
twenty-four
Social media is used by approximately ____ of online adults.
two-thirds
