FB116 Midterm Study Guide

Which of the following is true about a green​ economy? A. A green economy has no impact on energy efficiency. B. A green economy is one in which companies care only about the​ "green," meaning dollars. C. A green economy does not present new job opportunities. D. A green economy is one in which businesses focus on helping conserve the environment. E. A green economy does not include the manufacture and sale of hybrid vehicles.

A green economy is one in which businesses focus on helping conserve the environment.

Which of the following is a merger in which two companies sell the same types of products and are in direct competition with each​ other? A. A horizontal merger B. A product extension merger C. A conglomeration D. A market extension merger E. A vertical merger

A horizontal merger

Jim and Rhonda are owners of a​ Men's store. Jim runs the day to day operations in the​ business, while Rhonda primarily provided capital when the business started. What type of partnership do they​ have? A. A restricted partnership B. A limited partnership C. An​ investor-centric partnership D. A general partnership E. A full partnership

A limited partnership

Which of the following is a type of business structure in which two or more entities share the ownership and the profits and losses of the​ business? A. A sole proprietorship B. Synergy C. A partnership D. An acquisition E. A merger

A partnership

Which of the following is regulated by the U.S. Securities and Exchange Commission because the shares of ownership can be traded on public stock​ exchanges? A. A market extension merger between two private universities B. A horizontal merger of two private cooperatives C. A publicly owned corporation D. An acquisition of one​ single-owner car dealership by another similar firm in a small town E. A limited liability company

A publicly owned corporation

Which of the following is an unincorporated business​ owned, and usually​ controlled, by a single​ individual? A. An S corporation B. A limited liability company C. A C corporation D. A publicly owned corporation E. A sole proprietorship

A sole proprietorship

Which of the following best describes​ capitalism? A. An economic system focused on adherence to government policy and procedure B. A planned economic system C. An economic system where individuals and businesses are responsible for producing and selling goods and services based on customer needs and wants D. A system where the government controls the production of products and services E. An economic system where most products and services are provided by businesses and​ individuals, but some products and services are provided by the government

An economic system where individuals and businesses are responsible for producing and selling goods and services based on customer needs and wants

Which of the following best describes​ capitalism? A. An economic system focused on adherence to government policy and procedure B. A planned economic system C. An economic system where individuals and businesses are responsible for producing and selling goods and services based on customer needs and wants D. An economic system where most products and services are provided by businesses and​ individuals, but some products and services are provided by the government E. A system where the government controls the production of products and services

An economic system where individuals and businesses are responsible for producing and selling goods and services based on customer needs and wants

Initial public offerings (IPO)

CORPORATIONS 'GO PUBLIC' WHEN THEY OFFER STOCK TO THE GENERAL PUBLIC - ANNOUNCED IN THE NEWSPAPER IN A FORMAT CALLED A 'TOMBSTONE'.

Which of the following is true about​ e-commerce? A. E-commerce means that a company can only sell products or services over the Internet. B. E-commerce refers to business to consumer​ (B2C), business to business​ (B2B), and consumer to consumer​ (C2C) trades. C. ​E-commerce is only for​ business-to business and​ business-to-consumer trade. D. E-commerce does not require the use of technology. E. ​E-commerce is a dying business model.

E-commerce refers to business to consumer​ (B2C), business to business​ (B2B), and consumer to consumer​ (C2C) trades.

Which of the following is true about​ supply? A. Excess supply is indicative of reduced demand for goods and services. B. Supply is an unlimited resource. C. ​Shortages, or reduced​ supply, lead to lower prices. D. Supply has no effect on prices. E. Supply is derived from the​ producers' desire to maintain a low level of profits.

Excess supply is indicative of reduced demand for goods and services.

Capitalism______

Free market economy - the government role is to protect the entrepreneurs ability to compete in the market

Types of unemployment______

Frictional, seasonal, cyclical, structural (CSFS)

Partnership types______

General partner, limited partner, silent partner, secret partner

Which of these measures how productive a nation is and the overall market value of final goods and services produced in a country in a​ year? A Productivity B. Gross domestic product C. Producer price index D. Leading indicators E. Consumer price index

Gross domestic product

Prospectus______

IS ISSUED BY INVESTMENT BANKERS WHO UNDERWRITE THE OFFERING AND DETAILS THE COMPANIES FINANCES AND THE TERMS OF THE OFFERING. - AN EVALUATION OF THE CORP'S ASSETS AND LIABILITIES

Which of the following terms refers to the first sale of a​ company's stock to the​ public? A. Primary public offering B. Initial public offering C. Initial investment offering D. Initial market offer E. Initial securities proposal

Initial public offering

Which of the following involves buying and selling of securities based on information that has not been disclosed to the​ public? A. Insider trading B. Asset allocation C. Floating rate notes D. Diversification E. Prospectus

Insider trading

Which of the following is true of​ globalization? A. It involves companies doing business in multiple countries. B. It is of little concern to business leaders. C. It is not dependent upon a world economy. D. It is slowed by advances in technology. E. It has little impact on the world economy.

It involves companies doing business in multiple countries.

All of the following are true about the Small Business Administration​ EXCEPT? A. It helps entrepreneurs secure financing. B. It is a department of the federal government. C. It provides training and support to entrepreneurs. D. It lobbies the government to reduce roadblocks to commerce that hurt small businesses. E. Its primary mission is to improve the economy by supporting small businesses.

It is a department of the federal government.

Which of the following best describes​ communism? A. It is a completely unplanned economy. B. It is an economic system in which the government controls production. C. It is an economy in which most products and services are provided by businesses and​ individuals, and some products and services are provided by the government. D. It is a​ free-market economy in which individuals and businesses are responsible for determining what products and services to produce. E. It is an economy in which businesses are focused on efficiency and profitability.

It is an economic system in which the government controls production.

Which of the following best describes​ communism? A. It is an economic system in which the government controls production. B. It is an economy in which businesses are focused on efficiency and profitability. C. It is a completely unplanned economy. D. It is a​ free-market economy in which individuals and businesses are responsible for determining what products and services to produce. E. It is an economy in which most products and services are provided by businesses and​ individuals, and some products and services are provided by the government.

It is an economic system in which the government controls production.

All of the following statements about a corporation are true​ EXCEPT? A. It can own property. B. It can be sued. C. It pays taxes on profits​ (if it is a​ for-profit). D. It is a separate entity from its owners. E. It must end when the owner dies.

It must end when the owner dies.

Which of the following best describes​ labor? A. Labor is unnecessary to produce goods and services. B. Labor is not part of an​ entrepreneur's work. C. Labor is the physical but not the intellectual work done by employees in a business. D. Labor is an important human resource. E. Labor is the intellectual but not the physical work done by employees in a business

Labor is an important human resource

Which of the following is a description of an​ organization's current​ purpose, basic​ goals, and​ philosophies? A. Vision B. Goal C. Mission D. Contingency plan E. Objective

Mission

All of the following are true about planned economic systems​ EXCEPT? A. Planned economies tend to have high tax rates. B. Planned economies tend to have higher literacy rates than market economies. C. The government is in control of production of most goods and services in planned economies. D. Most planned economies are quite successful compared to other types of economic structures. E. Planned economies tend to disincentivize labor.

Most planned economies are quite successful compared to other types of economic structures.

Factors of Production______

Natural resources, labor, capital, entrepreneurship, technology, intellectual property (NICE-TL)

Monopoly______

Only one seller who controls the supply and the price

Stephanie and Nicole are two fashion conscious friends who decide to open a clothing store. They each contribute capital and share the running of the business. Which term best describes their business​ relationship? A. Stockholders B. Partners C. Cooperative D. Employer and employee E. Owner and investor

Partners

Levels of distribution______

Primary market, wholesalers, retailers, auxiliary services

Degrees of competition______

Pure, Monopolistic, Oligopoly, Monopoly (POMM)

Ben is performing​ a(n) __________ to figure out what opportunities and threats exist for his business. A. SWOT analysis B. operational plan C. tactical planning exercise D. risk assessment E. strategy session

SWOT analysis

The U.S. federal agency responsible for governing securities​ exchanges, protecting​ investors, and establishing regulations that govern the disclosure of information to investors is the​ _______. A. NASDAQ B. Securities and Exchange Commission​ (SEC) C. Interstate Commerce Commission​ (ICC) D. NYSE Euronext E. Federal Trade Commission​ (FTC)

Securities and Exchange Commission​ (SEC)

Forms of business ownership______

Sole proprietorship, partnership, corporations, joint ventures and cooperatives (SJPC)

Investment bankers are______

Specialists who assist in the sale of new securities

Which of the following is permanent unemployment that occurs when an industry changes in such a way that those jobs are terminated​ completely? A. Cyclical unemployment B. Seasonal unemployment C. Frictional unemployment D. Temporary unemployment E. Structural unemployment

Structural unemployment

Entrepreneur______

The ability of person to utilize the factors of production

Which of the following is true of a mixed​ economy? A. The government has a very low degree of control in a mixed economy. B. The government supplies some goods and services in a mixed economy. C. Social programs are nonexistent in a mixed economy. D. The government is in complete control of all goods and services in a mixed economy. E. The economy is completely unplanned and is focused on maximum profitability in a mixed economy.

The government supplies some goods and services in a mixed economy.

Which of the following is true of a mixed​ economy? A. The government has a very low degree of control in a mixed economy. B. The government supplies some goods and services in a mixed economy. C. The economy is completely unplanned and is focused on maximum profitability in a mixed economy. D. The government is in complete control of all goods and services in a mixed economy. E. Social programs are nonexistent in a mixed economy.

The government supplies some goods and services in a mixed economy.

Which of the following is true about​ demand? A. Demand is at its greatest level during an economic depression. B. A substitute good or service increases demand for the original good or service. C. Demand is greater when more supply is available. D. The price of a good or service is highly correlated to demand. E. Demand has no impact on the price of a good or service.

The price of a good or service is highly correlated to demand.

Which is true about angel​ investors? A. They are willing to put up sums of money for hopes of eventual profit. B. They usually do not have industry experience in the areas in which they are investing. C. They seek to control the businesses in which they are invested. They intend to both invest in and work the business to a great extent. D. They have limited financial means. They are typically middle​ class, and the investment is a significant risk for them. E. They fund businesses that are somewhat established but not typically in their earlier stages.

They are willing to put up sums of money for hopes of eventual profit.

All of the following are true about limited liability companies​ (LLCs) EXCEPT? A. They are an attractive company type for new and small businesses. B. They are not subject to double taxation. C. They are not required to have as many meetings as C corporations. D. They can continue operating if an owner dies. E. They issue stock.

They issue stock

All of the following are true about business plans​ EXCEPT? A. They include a risk analysis. B. They list information about competition. C. They provide funding for the business. D. They list the​ owners/managers of a business and their qualifications. E. They include blueprints of how the business will operate.

They provide funding for the business

​Ellie, a computer​ programmer, has decided to start her own small​ computer-programming business. She​ doesn't want to take out a loan or apply for grants. She wants to pay for the business with cash as she goes along. Which of the following is the best option for Ellie to finance her​ business? A. Seek an angel investor. B. Use bootstrap financing. C. Seek financing from a franchisor. D. Borrow money from the Small Business Administration​ (SBA). E. Seek the advice and funding of a venture capitalist.

Use bootstrap financing.

Merger______

When two companies come together cooperatively to form one​ company

franchisee

a company or individual enters into an agreement

Liability______

a corporation is limited to the corporations assets - no individual liability or personal liability - officers of the corp are not personally responsible

Inflation______

a general rise in the price levels

Secret partner______

active but not known to the public

revenue

actual income collected

joint venture

an agreement between two companies to form a partnership for a special goal - usually limited to a specific time - used in foreign ventures such as oversea manufacturing

Partnership______

an association of two or more individuals to act as co-owners of a business for a profit

corporate officers_____

appointed by board of directors, responsible for day to day business actives, meet regularly with board, key officers may also be on board

Goods______

are tangible

General partner______

assumes full or shared responsibilities for operating the business including profits and losses

Cyclical Unemployment______

based of the growth or recession in the economy (ex new industries)

vertical merger

between two companies that are in different levels of production/distribution markets - supplier and distributer may merge to control costs

horizontal merger

between two companies that make similar products in similar markets - companies are same level of production/distribution - closely watched by the attorney generals to prevent monopolistic practices

stock qualities

blue chip, secondary, growth, penny stock

Trough______

bottom of a recession

Corporation______

businesses that have shareholders - exist for conducting business

stakeholders______

can affect or be affected by the organization's actions, objectives and policies. Some key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources.

board of directors_____

can be within or without the corp, diversity of expertise is important - bankers, lawyers, insurance, major stockholders

preferred stock

can only be issued after a common stock is offered, usually less expensive than a common stock, have fixed dividends, preferred stockholders do not have voting privileges, priority over common stock in any bankruptcy action

Three basic economic factors______

capitalism, socialism (mixed economies) and communism

Frictional Unemployment______

caused by employment disputes or personal factors

Seasonal Unemployment______

caused by weather (ex construction)

Alien corporation______

chartered by a foreign government but conducts businesses domestically

Types of corporations______

close corporations (private), public corporations(G. corp), sub chapter 's' corporations

two basic types of stock

common stock, preferred stock

Limited partner______

contributes capital but does not by law participate in managing the business

Free market economy______

cornerstone of capitalism and the key principle by which capitalism operates

conglomerate merger

corp acquires companies involved in different markets and at different levels of production/distributions - to diversity the business and broaden the customer base

Liability______

defined as an obligation (debt) of an entity that arises from past transactions

Market price______

determined by the balance between the supply curve and demand curve

dividends

distribution of profits/earnings - payments depend on profit of the company - not all corp pay

Close corporation______

does not offer shares to the general public, only family members, friends and trusted employees - allows corp to avoid public scrutiny

Structural Unemployment______

downsizing due to better technology or mergers

Advantages of partnerships______

ease of formation, availability of financing is better than a sole proprietorship, retention of profits - no corporate taxes, combined business skills and expertise

A not-for-profit organization______

exists to serve the​ community, not to earn profit for the owners of the organization

Oligopol______

few sellers - sizable investment needed to enter the market - considerable control over price because of limited competition

Details of corporate charter______

firms name, individuals forming corporation, purpose of corporation, # and types of stocks issued

common stock

first type of stock issued by a company, owners have voting privileges in the corp,

Macroeconomics______

focuses on studying the economy as a whole

expenses

footnoted to explain one time write-offs

Charter______

formal contract documenting of existence of the corporation - name, location, hq, purpose, etc.

Stages of financing a business______

friends and family, angel financing, venture capital financing, mature financing (FAVM)

Partnership______

governed by the uniform partnership act, least common form of business

Monetary Policies______

government control over the flow of capital into the economy

Free market economy______

government interference should be limited so that each individual could pursue their own economic interest

Fiscal Policies______

governments expenditures on programs that benefit society as a whole

corporate structure details_____

how the company organizes management and product, management is divided into - board of directs and corporate officers

Pure (Perfect) Competition______

ideal competition, the identical product is offered by many sellers to many buyers at the going rate (market rate) - price is based on supply and demand

Gross Domestic Product (G.D.P.)______

important method of measuring the factors of production

Factors of production______

include the resources a business uses to create goods and services

Capitalism______

individuals own and operate the majority of businesses that provide goods and services - government role is restricted

Incorporation______

involves being chartered by the state of federal government

Incorporation______

involves selecting a state in which to file a corp. charter

Preferred stock______

is a class of ownership in which the stockholders have a right to assets before other stockholders if a firm goes out of business.

Common stock______

is a class of ownership in which the stockholders have the right to elect a board of directors and vote on corporate policy.

Oligopoly______

is a form of competition in which only a few sellers​ exist, each with a fairly large share of the market.

Profit______

is earned when the money a business takes in is more than what it spends

Blue chip stock______

is issued by companies who have an excellent history of steady growth and stability.

Liability______

is the obligation to pay a debt.

Liquidity______

is used as a measure of how quickly an asset owned by the business can be turned into cash.

Sole proprietorship disadvantages______

lack of business skills and experience can expose the entrepreneur to large financial liability, unlimited liability (personally responsible for all business losses and could be risking personal property), lack of continuity (business ceases to exist when the owner retires or dies)

Limited liability company (LLC)

members are protected from personal liability and can claim losses on their income taxes - losses are designated at will - members share profit based on percents not on shares

hostile takeover

mergers are hostile - the management of the company being purchased does not want to be acquired by another corp - the takeover comp will have to by the targets stock for a successful takeover

Sub chapter 's' corporations______

modified corporations that allow individual shareholders to be taxed on profits at their individual tax rate - and declare losses on they returns - less than 35 employees, must be us citizens,

Resources

money, people, and materials

Monopolistic Competition______

more realistic model of competition - most products are not identical, price is determined by unique features (brand, logo, packaging) - product differentiation *fashion industry thrives on this

All corporations______

must abide by the laws of land in which they are chartered

corporation advantages_____

no personal liability- corp is responsible for all debt, ease of raising capital - bank loans, stocks, bonds, perpetual life - board members and corporate officers are replaceable

Silent partner_____

not active in management and may not be known to the public as a partner - type of limited partner

Venture capitalists______

not only invest in businesses but play an active role in managing them.

Natural monopolies______

occur when duplication would be too costly to sustain - utility companies are natural monopolies

An acquisition______

occurs when one company completely buys out another company.

The equilibrium price______

occurs when supply equals demand for a good or service

Perfect competition______

occurs when there are many buyers and sellers of products that are virtually identical and any seller can easily enter​ and/or exit the market.

The chief financial officer______

of a company is responsible for monitoring a​ firm's expenditures and costs.

franchisor

offers known usually branded products - expertise and marketing ability,

Public corporation_____

offers shares to general public, stocks are trading are regulated by SEC (Securities and exchange commission)

Sole proprietorship______

oldest and simplest form of business ownership - business owned and operated by a single person

Domestic corporation______

operates within the state its chartered

Business______

organized effort of individual(s) to make and/or sell goods or services at a profit

Socialism______

partially planned economy - government sets national goals and controls vital industries is in accordance with these goals - utilities, communications, banking - France, raw material (controlled by government to ensure proper usage)

The business cycle _____

peak, recession, trough, recovery and growth

Consumers______

people that purchase the goods for their own use or as a gift

Communism______

planned economy that advocates classless society where all citizen would contribute based on their ability and receive benefits based on their needs - China

merger

purchase of one company by another company - create change of ownership

Corporate Officers______

real people who direct and manage the business - chief executive officer, the president, general merchandise managers, executive vice president

Five pillars of successful economic system______

recruiting really smart immigrants, readjusting financial relations to incentive risk taking while curbing recklessness, research and development to bring new ideas and technology to the economy, rebuilding infrastructure to support economic growth, educating the work force up to and beyond whatever the technology demands

Supply______

refers to how much of a good or service is available for purchase at any given time.

Foreign corporation______

registered in a home state but conducts business in other states and must pay taxes and abide by local laws of each state

stocks

represent a share in ownership in a corp

Shares______

represent ownership of a corporation

Board of directors_____

represent the owners and elected by the stockholders - top greening body responsible for setting the direction and goals of the company

Corporations are divided into pieces that are called______

shares

Stocks______

shares of ownership of a company - represent equity(anything of value) in a corp

An income statement______

shows how much revenue a company produced during a period of time and how much money it spent.

A balance sheet______

shows what a company owns and owes at a fixed point in time along with the net worth of a business.

acquisitions

similar to mergers - refers to a larger corp buying a smaller corp - smaller corp may lose its identity

Sole proprietorship advantages______

simplest form, low cost of formation (no contracts, no legal fees) min documentation, retention of all profits (all profits are personal earnings, strong profit incentive), flexibility (make own hours, adapt to market changes, no chain of command), tax advantages ( owners pay personal tax rate on earnings and are no subject to higher corp. tax rates), no public scrutiny

An entrepreneur______

takes a risk by starting a new business venture

Profit______

the amount of money a business earns in excess of expenses - a business that doesn't make a profit cannot survive

Competition______

the basis for the success of capitalism - rivalry among businesses for sales and potential customers

Profit______

the driving force behind a business

Microeconomics______

the study of a market sector or specific business utilization of its resources

Economics______

the study of how wealth is created and distributed

Entrepreneur______

there person who organizes a business - manages the basic resources; materials, human resources, financial resources, entrepreneurial talent, technology, intellectual property

Gross Domestic Product (G.D.P.)______

total$ value of goods and services produced within the country (all foreign production is excluded) - most valuable measure of the world's economies

Recession______

two consecutive fiscal quarters of negative gross domestic product

Competition includes______

two or more businesses that sell similar products and services operating in a​ market-based economy

franchise

two way business agreement between a sole proprietorship, partnership, and/or corporation

Disadvantages of a partnership______

unlimited liability of general partner, lack of community - dependent on structure of original agreement, disagreement among partners, very difficult to resolve contractual relationships

Limited liability company (LLC)

very similar to sub chapter s corp - considered a hybrid of corp and a partnership

Linda runs a business in Dallas that specializes in providing business clothing to veterans free of charge so that they can dress nicely for job interviews.​ Linda's business is most likely which of the​ following? A. ​for-profit-organization B. cooperative C. governmental program D. conglomeration E. ​not-for-profit organization

​not-for-profit organization

disadvantage of corporations_____

2x tax profits of corp and profits of dividends, government restrictions and regulations, public scrutiny, cost of incorporation