Environmental of Business test 2

The first step when facing an ethical dilemma is to ask: a. "Is it legal?" b. "Is it balanced?" c. "How will it make me feel about myself?" d. "Is it ethical?"

a. "Is it legal?"

Which of the following terms describes someone who reports illegal or unethical behavior? a. whistle blower b. horn blower c. watch tower sentinel d. integrity watchdog

a. Whistle blower

Compared to a sole proprietorship, which of the following is considered an advantage of a general partnership? a. ability to pool financial resources b. unlimited liability for all owners c. division of profits among owners d. ease and flexibility in transferring shares of ownership to others

a. ability to pool financial resources

One reason limited liability companies have become so popular is that they: a. can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation. b. allow owners to sell their interests in the company without requiring approval from other owners. c. have unlimited life. d. permit owners to avoid paying self-employment taxes on the company's profits.

a. can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation

We describe charitable donations by corporations to nonprofit organizations as __________. a. corporate philanthropy b. corporate responsibility c. corporate strategy d. structural commitment

a. corporate philanthropy

____________ comprise about 20% of all businesses but account for about 81% of U.S. business receipts. a. corporations b. partnerships c. sole proprietorships d. limited liability companies

a. corporations

Which of the following statements is the most accurate? A foreign corporation: a. does business in one or more states, but is chartered in another state. b. is 50% owned by individuals or companies from another nation. c. is headquartered in another nation. d. is the same thing as a multinational corporation.

a. does business in one or more states, but is chartered in another state

After developing a code of ethics, it should be communicated to: a. everyone with whom the business has dealings. b. the Attorney General in jurisdictions where the business has operations. c. all levels of management. d. stockholders.

a. everyone with whom the business has dealings

Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Kentucky. They operated the business as a general partnership. After 11 months, the business went broke and Jamie and Maria were left with outstanding bills of $37,500, which was more than their initial investment in the company. Jamie and Maria can: a. lose their personal assets as the result of their company's financial problems. b. lose only the funds they originally invested in their company. c. lose only the total value of the assets actually used to operate the business. d. avoid any liability for these debts since a partnership is considered to be a business entity that is separate and distinct from the partners who own it.

a. lose their personal assets as the result of their company's financial problems

Business relationships often present ethical dilemmas that are: a. not easily resolved b. easily resolved by following the relevant laws c. best resolved by creating a win-lose situation d. irrelevant and therefore require no action

a. not easily resolved

A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a: a. whistle blower b. horn blower c. cheerleader d. moral policeman

a. whistle blower

Ethical behavior covers a ________ range of conduct than legal behavior. a. wider b. more limited c. smaller d. less demanding

a. wider

The majority of CEOs blame unethical employee conduct on: a. the breakdown of traditional religious institutions. b. a failure of leadership to establish ethical standards. c. the increase in lawsuits used to avoid personal responsibility. d. the nation's business schools that tolerate unethical behavior in students.

b. a failure of leadership to establish ethical standards

Ramon lives in Mexico City and is a Mexican citizen. He has several friends in the United States who own shares in an S corporation. Ramon would like to invest in this company. Ramon: a. can invest in this company, but must pay both U.S. and Mexican taxes. b. cannot become a shareholder since he is not a citizen or permanent resident of the U.S. c. can become a shareholder but cannot become a manager, and his income must be paid in pesos. d. needs approval from the Mexican government before he can invest.

b. cannot become a shareholder since he is not a citizen or permanent resident of the US

A(n) ___________________ is a state-chartered legal entity with authority to act and to have liability separate from its owners. a. limited partnership b. conventional corporation c. unlimited partnership d. nonprofit organization

b. conventional corporation

A person who buys the right to use a business name and sell a product within a given territory is called a: a. stockholder b. franchisee c. limited franchisor d. venture capitalist

b. franchisee

Insider trading involves: a. an Internet activity that establishes a barter exchange system between businesses. b. investors using private company information to further their own fortunes. c. the exchange of assets between companies in the same industry. d. a payment or reward for socially conscious behavior.

b. investors using private company information to further their own fortunes

Many Americans define ethical behavior according to the situation in which they find themselves. This suggests that there may be situations where ________ to cheat, steal, or lie. a. it is absolutely wrong b. it might be okay c. business people are expected d. capitalism forces people

b. it might be okay

Laws represent the standards of ________ behavior. a. ethical b. legal c. moral d. socially responsible

b. legal

Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business, which requires you to: a. pay income tax only one time each year. b. pay self-employment taxes. c. pay for the right to get an employee identification number. d. file an income tax return for the business.

b. pay self-employment taxes

When entering into a new partnership, a good strategy is to: a. avoid putting the agreement in writing since this would limit the flexibility of the partnership. b. put the partnership agreement in writing. c. plan to incorporate as soon as possible. d. agree to put the first year's profits back into the partnership.

b. put the partnership agreement in writing

The organizational structure of a corporation permits: a. the company management to elect the Board of Directors. b. stockholders to elect the Board of Directors. c. stockholders to elect the officers and management team. d. employees (by committee) to elect the officers of the company.

b. stockholders to elect the Board of Directors

Obeying the law is ________ ethical behavior. a. essentially the same as b. the first step toward c. the opposite of d. unlikely to lead to

b. the first step toward

One of the major disadvantages of a sole proprietorship is the: a. possibility of disagreements between owners. b. unlimited liability the owner has for the debts of the firm. c. fact that any income earned by this type of business is taxed twice. d. high cost of starting or ending the company.

b. unlimited liability the owner has for the debts of the firm

Three types of corporate mergers are: a. economic, geographic, and financial. b. vertical, horizontal, and conglomerate. c. flexible, differentiated, and conditional. d. explicit, implicit, and intrinsic.

b. vertical, horizontal, and conglomerate

The difference between a merger and an acquisition is: a. a merger does not combine the assets and liabilities of firms, whereas an acquisition combines assets and liabilities. b. a merger combines the assets of the two firms, but each company continues to assume its own liabilities, whereas an acquisition is a total buyout of one firm by another. c. a merger is the joining of resources of two companies, whereas an acquisition is a buyout of one firm by the other. The new company concerns itself with merging of resources. d. a merger is always something smaller tagging onto something larger, like a merging lane onto an interstate, whereas an acquisition is two firms that are relatively the same size agreeing to continue as one, more like two major interstates that come together and travel as one for several miles.

c. a merger is the joining of resources of two companies, whereas an acquisition is a buyout of one firm by the other. The new company concerns itself with merging of resources.

Double taxation means: a. if stockholders decide to sell their shares, they are subject to paying twice the amount of taxes on any capital gains. b. as the owner of the company, you pay twice the amount in employment taxes on yourself, as you do on your employees. c. corporations pay taxes on their profits. If they distribute after-tax profits to the stockholders, the stockholders also pay taxes on the distribution. d. if the corporation doubles its profits from the previous year, the firm's tax rate (the percentage it pays in taxes) will also double

c. corporations pay taxes on their profits. If they distribute after-tax profits to the stockholders, the stockholder also pay taxes on the distribution

A very critical last step in the process of establishing an ethics code is __________. a. middle management support b. training c. enforcement d. identification of the organizational ethics officer

c. enforcement

When Enron used intentional accounting irregularities to make the company look more profitable than it actually was, it: a. provided its stockholders profit through a tax loophole. b. acted in an acceptable business manner. c. engaged in illegal behavior. d. executed its responsibility to its owners.

c. engaged in illegal behavior

Considering the potential impact on others prior to making a decision is consistent with ________ behavior. a. legal b. anti-social c. ethical d. self-motivated

c. ethical

In a partnership, a(n) __________ partner (owner) actively manages the company and has unlimited liability for claims against the firm. a. unlimited b. limited c. general d. associate

c. general

When Angela graduated with a degree in computer science and started her software company, she posted a sign that read, "This company will always operate within the legal limits of the law." Posted where all employees could clearly see it each day, this demonstrated: a. her commitment to high ethical standards of behavior. b. her commitment to respect the law. c. her expectation that all employees follow the laws that apply to the business. d. her aversion to cheating, stealing, and dishonesty.

c. her expectation that all employees follow the laws that apply to the business.

Which of the following questions can help us avoid a decision that would injure our self-esteem? a. is it legal? b. is it balanced? c. how will it make you feel about myself? d. how can I avoid taking the blame?

c. how will it make you feel about myself

A significant disadvantage of owning a sole proprietorship is the: a. possibility of limited liability. b. heavy tax liability that must be assumed. c. overwhelming time commitment often required of the owner. d. lack of incentives to motivate the owner.

c. overwhelming time commitment often required of the owner

Companies are using _____________ to communicate their corporate social responsibility actions to their customers. a. sales promotion b. traditional advertising on television and radio c. social media d. their employees, word of mouth

c. social media

Which of the following statements describes ethical behavior in the U.S.? a. Due to the diverse cultures that make up the U.S. it is difficult to identify common standards of ethical behavior. b. The only common standards of ethical behavior in the U.S. are reflected in religious teachings. c. We can find common moral values that many Americans uphold, including respect for human life, self-control, honesty, integrity, and courage. c. Americans will generally describe the golden rule as the only statement of value that they uphold.

c. we can find common moral values that many Americans uphold, including respect for human life, self control, honesty, integrity, and courage.

A(n) _________ occurs when one company buys the property and obligations of another company. a. cooperative b. hostile takeover c. leveraged buyout d. acquisition

d. acquisition

A major advantage of S corporations is that they: a. can have more stockholders than a C corporation. b. can operate in foreign nations as if they were domestic corporations. c. require less paperwork to set up than a C corporation does. d. avoid the problem of double taxation associated with conventional corporations.

d. avoid the problem of double taxation associated with conventional corporations

Corporate social responsibility describes the firm's: a. exclusive responsibility to its stockholders. b. ability to plan for the unexpected. c. commitment to a management training program. d. concern for the welfare of society.

d. concern for the welfare of the society

A ___________ is an organization that is owned and controlled by the people who use it—producers, consumers and workers with similar needs pool their resources for mutual gain. a. corporation b. limited partnership c. mutual fund d. cooperative

d. cooperative

In recent years, progressive firms have embarked upon ____________, where they will commit company resources and expertise toward helping out in emergency type situations. a. corporate philanthropy b. corporal social activism c. social civility d. corporate social initiatives

d. corporate social initiatives

When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with ___________________. a. schools b. religious institutions c. law enforcement officers d. each of us

d. each of us

________ refers to standards of moral behavior. a. legality b. responsibility c. integrity d. ethics

d. ethics

A(n) _____________ is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory. a. intrapreneur b. franchisee c. limited partner d. franchisor

d. franchisor

One difference between partnerships and sole proprietorships is that partnerships: a. take less work to form. b. are managed by an elected board of directors. c. have the advantage of limited liability. d. have a greater chance of long-term survival due to the accountability of each partner to the other.

d. have a greater chance of long-term survival due to the accountability of each partner to the other

Going green means: a. increased global warming b. increasing one's bottom line, before any other social considerations c. increasing one's carbon footprint d. increasing one's initiatives toward a concern for the environment

d. increasing one's initiatives toward a concern for the environment

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships? a. ease of formation b. lower taxes c. simplified paperwork d. limited liability of owners

d. limited liability of owners

Ethical behavior at work is learned by: a. attending corporate responsibility seminars. b. tracking the failures of those who are caught in business scandals. c. reading about why others were fired from the job. d. observing the actions of others.

d. observing the actions of others

The __________ is the most common form of business ownership. a. partnership b. corporation c. joint venture d. sole proprietorship

d. sole proprietorship

To many businesspeople, one of the major attractions of a sole proprietorship is: a. the ability to obtain additional financial resources b. the protection of limited liability c. an unlimited life span d. the chance to be their own boss

d. the chance to be their own boss