BUS 101 Test 2
Which is not considered a key disadvantage of starting a franchise: Rules and regulations from the franchisor Significant start-up costs Brand awareness Ongoing royalty payments
"Brand awareness" is not considered a key disadvantage of starting a franchise.
Which of the following is not part of the accounting cycle? Bookkeeping Ratio analysis Journaling Preparing a trial balance
"Ratio analysis" is not part of the accounting cycle.
Which is TRUE about sole proprietorships? They are not common but are typically large in size They are common but typically small in size They are both the largest and most common type of business They are both not common and not large in size
"They are common but typically small in size."
Exporting
Least risky way to expand your business.
Americans with Disabilities Act (ADA)
Legislation passed in 1990 that prohibits discrimination against people with disabilities. Under this Act, discrimination against a disabled person is illegal in employment, transportation, public accommodations, communications and government activities.
Which one of the following statements about the limited partners in a limited partnership is true? Multiple Choice Limited partners have a financial stake in the business. Limited partners are subject to unlimited liability. Limited partners are involved in the day-to-day decision making of the business. Limited partners can only be partners for a limited period of time.
Limited partners have a financial stake in the business.
Which one of the following incentive types is the most difficult one for monitoring and measuring an individual employee's contribution? lump-sum salary piece-rate hourly
Lump-sum
Which one of the following statements regarding hiring from within an organization is false? Unlike external hires, internal hires will need to be trained on company processes and goals. Internal promotions are viewed positively. Hiring from within is less expensive than hiring externally. Organizations can access internal employees' performance appraisals, which can help them make informed decisions.
The false statement regarding hiring from within an organization is: "Unlike external hires, internal hires will need to be trained on company processes and goals."
Which of the following ratios would you calculate if you wanted to assess a company's ability to pay its short-term liabilities with the cash it has on hand? Multiple Choice return on assets debt to owner's equity current ratio return on equity
current ratio
Which of the following is an example of a leverage ratio? Multiple Choice earnings per share debt-to-owner's equity ratio return on assets current ratio
debt-to-owner's equity ratio
In the development phase of training, managers may do which one of the following: ensure that training environments are conducive to learning and that the training meets the organization's goals and objectives. compute the return on the training investment. assess whether the training program has successfully addressed the needs of the organization by meeting its stated objectives and goals. conduct a needs assessment.
ensure that training environments are conducive to learning and that the training meets the organization's goals and objectives.
Which of the following is not considered to be a current asset? Multiple Choice Cash Retained earnings Inventory Net receivables
Retained earnings
Retained earnings are Multiple Choice the money the company has earned but has yet to collect from customers. the profits that are being distributed to the owners. the profits that are reinvested into the company instead of being distributed to the owners. the amount of money the company retains to pay bills.
Retained earnings are the profits that are reinvested into the company instead of being distributed to the owners.
Benefits of forming a franchise include the following except: Royalty payments Name recognition Training and support Managerial instruction
Royalty payments.
S corporations are taxed like a ______ while C corporations face ______. sole proprietorship; double taxation partnership; varying tax responsibilities dictator; double taxation partnership; double taxation
S corporations are taxed like a sole proprietorship (pass-through taxation), while C corporations face double taxation.
Which of the following is the simplest legal form of business organization? Multiple choice question. Sole proprietorship S corporation Limited liability corporation C corporation
Sole proprietorship
A partner faces unlimited liability.
That's correct. In a general partnership, partners typically face unlimited liability, meaning their personal assets can be used to cover the partnership's debts and obligations.
National Labor Relations (NLRA)
The National Labor Relations Act (NLRA) is a U.S. federal law from 1935 that protects the rights of employees, allowing them to form unions, engage in collective bargaining, and participate in concerted activities for mutual aid.
The following are advantages of franchises
The ability to work as an independent businessperson while enjoying the advantages of a regional or national organization. The franchisee acquires an established brand name. Training and support to help with production, marketing, accounting, and human resource management.
Calculating ______ allows one to compare the financial performance of two or more companies better than just looking at their financial statements. profit or loss financial ratios cash on hand cash flows
financial ratios
Ceteris paribus, individuals expect that relatively safe or certain investment opportunities are associated with _______ rates of return.
lower rates of return.
Sole proprietorship: Key advantages
o Be your own boss. o No sharing of profits o Avoid double taxation. o Most common form of business in US o Ease of formation o Ease of dissolution
Limited Partnerships
o Sharing profits o Joint ownership o No involvement in decision making. o Limited liability.
General partnerships
o Sharing profits and losses o Joint ownership o Shared financial responsibility. - Shared running of the business
Sole proprietorship: Key Disadvantages
o Unlimited liability o Difficult to raise funds. o Difficult to attract human capital. o Lack of permanence
An acquisition occurs when Multiple Choice one company takes over another company, usually by purchasing it from its owners. when a company operates under a name distinct from the names of its owners. when the owner of a business allows the someone else the right to run and operate their business for a fee. two companies enter into an agreement to operate as a new company.
one company takes over another company, usually by purchasing it from its owners.
A negative halo affect occurs when Multiple Choice one employee's performance is negatively impacted by a coworker whose performance does not meet expectations. one customer's behavior negatively impacts another customer's satisfaction with a service. one of the partners in a partnership decides to leave the partnership and suffers a negative impact on their reputation as a businessperson. the demand at a franchisee's business is negatively impacted by the performance of another franchisee.
one employee's performance is negatively impacted by a coworker whose performance does not meet expectations.
On the Statement of Cash Flows, the cash received by a company when it borrows money is considered a(n) ________. Multiple Choice investing activities financing activities operating activities expense activities
operating activities
The CFO of Barrett's Exotic Bird Farm is preparing a budget that is directly related to her firm's short-term sales forecast and the expenses associated with those sales. She is most likely preparing a ______ budget.
operating budget
Retained earnings are part of a company's ________. Multiple Choice assets revenue liabilities owner's equity
owner's equity.
Qualifications include all of the following about the applicant except their ________. personality and attitude knowledge salary expectations abilities and skills
personality and attitude.
High Performance Work Systems
positively impact the bottom line. People should be considered an investment, not a cost.
To put financial records into context is a process known as ______. ratio analysis accounting economics finance
ratio analysis
A ________ is an owner of a corporation. Multiple Choice shareholder manager sole proprietor stakeholder
shareholder
Absolute advantage
the ability of an entity to produce a product or a service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than another entity producing the same good or service.
ABC Organization uses strategies that have been shown to predict various aspects of performance to choose among a pool of job applicants. ABC Organization is using ________ to decide which applicants to choose. Multiple Choice high performance work systems incentives 360-degree performance appraisals validated selection tools
validated selection tools
Funds used by a firm to conduct day-to-day operational cash flow needs are known as:
working capital
Validated Selection Tools
· Job applications · Intelligence tests · Personality tests · Interviews
Foreign subsidiary
U.S. company buys a company that already exists in another country.
Which of the following are forms of equity financing? Multiple select question. Venture capital Commercial paper Retained earnings Factoring Corporate bonds
Venture capital Retained Earnings
Multinational corporation
Walmart builds a facility/store in another country. The U.S. company will build a factory or distribution center in another country, and they actually own it. Greatest risk because governments can change.
International franchising
Work with a business or a partner in a country to help open your business in other locations/countries.
Which of the following is the most difficult and expensive legal form of business to set up? Multiple Choice limited partnership corporation general partnership sole proprietorship
corporation
Which of the following is not a vital role for managerial accountants? Cost accounting Preparing forecasts Preparing budgets Adhering to U.S. government requirements.
Adhering to U.S. government requirements is not a vital role for managerial accountants.
All earnings of a partnership are taxed as ______. a share of stock corporate income a dividend personal income
All earnings of a partnership are taxed as personal income.
The Statement of Cash Flows is an important financial document for all of the following reasons EXCEPT: Explains the net income of a company for each year Allows the company to compare cash on hand and cash bills Separates various types of cash flows Identifies times of the year with high inflows of cash
Allows the company to compare cash on hand and cash bills
An owner of a corporation is called a: Distributive member Sole proprietor Shareholder Dividend
An owner of a corporation is called a Shareholder.
A company's net income is $16 million, and its owner's equity is $10 million. The company's return on equity is ________. Multiple Choice impossible to calculate with the given information 160 200 approximately 67
160%.
Age Discrimination in Employment Act
1967 law that prohibits discrimination of employees 40 years and up.
The following are included in a company's balance sheet
Assets Liabilities Owner's equity
The fundamental accounting equation is: Assets = Liabilities + Owner's Equity Assets = Liabilities Assets + Owner's Equity = Liabilities Profit = Revenues - Costs
Assets = Liabilities + Owner's Equity
A (blank) is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners.
A corporation is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners (shareholders).
Which one of the following statements best describes what a dividend is? Multiple Choice A dividend is an ongoing fee based on the amount of revenue a franchise earns. A dividend is a percentage of the profits that is distributed to each owner of a corporation. A dividend is what one company pays to acquire another company. A dividend is a monetary payment paid by a franchisee to a franchisor.
A dividend is a percentage of the profits that is distributed to each owner of a corporation.
The following are essential elements of a general partnership
A joint ownership of the business. A sharing of profits or losses. An equal right to be involved in the management of the business.
Joint ventures and strategic relationships
A joint venture is when two companies from different countries each put in money to create a third entity together.
A limited partner has ______ say in business operations but can only lose ______ assets. limited; personal no; personal no; business limited; business
A limited partner has limited say in business operations but can only lose business assets.
The process of transforming raw data into the final financial summary of a company is known as: Bookkeeping Establishing a ledger Financial accounting Accounting cycle
Accounting Cycle
Sources of equity financing include all of the following EXCEPT: Multiple choice question. Commercial paper Retained earnings Venture capital Issuing new shares of stock
Commercial paper
________ are mergers or acquisitions where the companies are not in the same industry or do not provide access to customers or supplies. Multiple Choice Corporations Limited liability companies Franchises Conglomerates
Conglomerates
The following is an example of the costs of goods sold: Cost of a good's parts Interest paid on loans Wages to employees Cost of electricity bill
Cost of a good's parts
Which one of the following statements best describes the duties of the Financial Accounting Standards Board? Multiple Choice administering CPA exams ensuring a more consistent view of companies' finances around the world creating, updating, and enforcing the rules of accounting for publicly traded companies providing auditors to companies that need them
Creating, updating, and enforcing the rules of accounting for publicly traded companies.
Andy Martinez is the CFO of Horizon Construction Company, He is weighing the advantages and disadvantages of raising funds via debt or equity. Which of the following is a true statement? Multiple choice question. Dividend payments associated with equity financing are tax deductible Additional debt can dilute existing investors' ownership in the company Debt will need to be paid back, but equity investments do not need to be repaid Retained earnings cannot be considered a source of additional funds
Debt will need to be paid back, but equity investments do not need to be repaid.
Andy Martinez is the CFO of Horizon Construction Company, He is weighing the advantages and disadvantages of raising funds via debt or equity. Which of the following is a true statement? Multiple choice question. Retained earnings cannot be considered a source of additional funds Dividend payments associated with equity financing are tax deductible Additional debt can dilute existing investors' ownership in the company Debt will need to be paid back, but equity investments do not need to be repaid
Debt will need to be paid back, but equity investments do not need to be repaid.
The following are important types of cost within cost accounting
Direct costs Fixed costs Indirect costs
International licensing
Disney has international licensing. They license their intellectual property to a business, mostly in China, that will then create shirts and other products based on their characters.
An advantage associated with a franchise is the low start-up costs and fees. True or False
False
Approximately 70% of corporations in the U.S. are classified as C corporations. True or False
False
Indirect costs capture the explicit financial expenditures needed to produce a good or provide a service. True or False
False
True or false: An important disadvantage of forming a corporation is the difficulty in raising capital.
False. An important advantage, not a disadvantage, of forming a corporation is the relative ease of raising capital. Corporations can issue stock to raise funds, making it easier to attract investors and accumulate capital.
Occupational Safety and Health Admin (OSHA)
Federal agency that provides guidelines for workplace safety and enforces those regulations.
Fair Labor Standards Act (FLSA)
Federal law that establishes a minimum wage and requirements for overtime pay and child labor
Which of the following statements best describes the shareholder wealth maximization approach to financial management decisions? Financial managers should always make decisions that: Multiple choice question. Are in the best interests of the shareholders and/or owners of the firm Favor riskier projects because they offer the possibility of higher returns Focus on maximizing the short-term profitability of the firm Focus on minimizing production costs
Financial managers should always make decisions that are in the best interests of the shareholders and/or owners of the firm.
______ accounting centers on the needs of external stakeholders, while ______ accounting centers on the needs of internal stakeholders. Financial; tax Managerial; financial Financial; managerial Managerial; auditing
Financial; managerial
Which one of the following statements about intelligence tests is true?
Intelligence tests might result in adverse impact to some groups who may not perform as well as others on standardized tests.
Which of the following would NOT be a use of working capital for Valley Lawnmower Parts, inc.? Multiple choice question. Providing trade credit to their customers Financing bi-monthly payroll obligations Financing construction of a new warehouse and sales center Financing a purchase of lawnmower parts for their inventory
Financing the construction of a new warehouse and sales center Working capital is primarily used for short-term operational needs, such as covering payroll, purchasing inventory, and providing trade credit to customers. Financing long-term assets like a new warehouse would typically involve long-term financing options rather than working capital.
Title VII of the Civil Rights Act of 1964
Forbids discrimination on the basis of sex, race, color, religion, or national origin in all areas of the employment relationship
Select all that apply Which of the following statements are applicable to debt financing? Multiple select question. Ownership stake is diluted as new funds are acquired Funds must be repaid, even if the firm is not profitable Ownership control is not given up Dividend payments are not tax deductible Do not have to repay the funds if the firm is not profitable Interest payments are tax deductible
Funds must be repaid, even if the firm is not profitable Interest payments are tax deductible
Which of the following are examples of secured loans? Multiple select question. Most car loans Granted only if lender is very confident that the borrower will be able to repay Provides a back-up means of payment for lender Most credit card loans No assets pledged as collateral Assets pledged as collateral
Most car loans Assets pledged as collateral
Contract manufacturing
Nike will design their shoes and then they'll contract with a facility in another country that will make their product with the specifications they outlined.
The following are categories on the statement of cash flows
Operating activities Investing activities Financing activities
The following type of budget projects revenues and costs within a company: Financial budget Master budget Personal budget Operating budget
Operating budget
Which of the following statements correctly describes a difference between S corporations and C corporations? Multiple Choice Forming an S corporation has fewer restrictions than forming a C corporation. Owners of an S corporation have limited liability, while owners of a C corporation are subject to unlimited liability. An S corporation is limited to no more than 100 owners, while a C corporation may have an unlimited number of owners. A C corporation is taxed like a partnership, while an S corporation faces double taxation.
Owners of an S corporation have limited liability, while owners of a C corporation are subject to unlimited liability.
In order to improve short-term cash flow in their firm, the CFO of David's Dustcover Depot would want to do which of the following (select all that apply): Multiple select question. Collect accounts receivable sooner Pay accounts payable later Pay off long-term debt early Collect accounts receivable later Pay accounts receivable sooner
Pay accounts payable later Collect accounts receivable later
Which of the following would NOT be a strategy for improving short-term cash flow in a firm? Multiple choice question. Finding ways to save money on the materials your firm uses to produce its product Paying expenses as soon as invoices arrive in the mail Encouraging customers to pay on time or early Delaying the payment of the firm's bills as long as possible
Paying expenses as soon as invoices arrive in the mail
Which of the following is a vital role for managerial accountants? Multiple Choice Preparing budgets Calculating profitability ratios Preparing the balance sheet Adhering to U.S. government requirements
Preparing budgets.
Which of the following statements are TRUE for a CFO or CEO adhering to the shareholder wealth maximization approach to financial decision making? Multiple select question. Financial decisions should be focused primarily on increasing short-term profits The firm does not need to be concerned with its environmental impact. The financial manager must make the most efficient use of the firm's resources The firm needs to be concerned with the safety of its products.
The financial manager must make the most efficient use of the firm's resources The firm needs to be concerned with the safety of its products
Which one of the following is not a possible consequence of widespread leniency in employee appraisals? Multiple Choice The high performers are likely to become demotivated and disengaged due to a perceived inequity in the distribution of pay in the organization. The pool of pay raises will be spread out more widely to include high and low performers and all will receive relatively small raises. The low performers will receive lower raises than they deserve. The high performers may choose to exit the organization and work for a competitor.
The low performers will receive lower raises than they deserve.
Which of the following is not a key advantage of a partnership? Partners can focus on their individual business strengths. Partnerships are relatively simple to form. All partners enjoy limited liability. Partners do not face double taxation.
The option that is not a key advantage of a partnership is: All partners enjoy limited liability.
How does a partnership get the financial resources it needs to fund the start-up expenses and to expand the business when needed Multiple Choice The partners sell shares of stock. The partners sell shares of ownership to the public. The partners find venture capitalists who are willing to invest in the company. The partners pool their financial resources.
The partners pool their financial resources.
Balance of Trade
Trade surplus: exports>imports
A manager needs to ensure that the appraisal of employee's performance could be defended in a court of law. True or False
True
An employment contract details the compensation and scope of work that an employee and employer have agreed upon. True or False
True
Anyone who does business without creating a separate business organization has a sole proprietorship. True or False
True
Financial accountants prepare budgets and provide forecasts. True or False
True
To objectively assess performance, managers need to consider all aspects of an employee's performance and should ensure that performance appraisals are legally defensible. True or False
True
Family and Medical Leave Act (FMLA)
U.S act that provides employees with up to 12 weeks of unpaid leave to care for family members or because of a serious health condition of the employee.
A (blank) partner faces unlimited liability.
general partner
In a hired gun organizational environment such as stockbrokers, the pay/commitment relationship is ________. high pay and low commitment high pay and high commitment low pay and low commitment low pay and high commitment
high pay and low commitment
When two large companies in the same industry combine, the transaction often requires the approval of the U.S. Justice Department because of concerns about Multiple Choice how it will impact competition within the industry. how it will impact the profits of the combined companies. how it will impact employees of the combined companies. how it will impact the suppliers of the combined companies.
how it will impact competition within the industry.
The ________ requests information about a candidate's work experiences and education, along with a list of references. job description job application interview performance appraisal
job application
