Exam#2 questions

What type of business organization generates the most total sales?

Corporation

What is not a way for a business to manage risks?

Get rid of all employees who knows about your potential product defects

Which of the following statements does NOT describe an advantage in equity financing?

Interest is tax-deductible.

Jim's Surf Shop operates on the Florida beaches during the tourist season. Last year, Jim sold $25,000 worth of products. His cost of goods was $7,000, and he paid himself a salary of $20,000. On an income statement, the business would have a(n):

net loss

Things of value owned by a business are called its:

assets

Clarence Danvers is buying a Cinnabon franchise at the airport in Tulsa. Danvers knows that he will get all of the following benefits EXCEPT:

assistance in personal income tax preparation

The two types of cooperatives are:

buyer and seller

Which of the following assets is NOT an example of a fixed asset for a manufacturer of road building equipment?

cans of yellow paint for refurbishing equipment

Middle managers usually:

carry out plans and policies of top management

The _____ ratio measures the relationship between the amount of debt financing and the amount of equity financing.

debt-to-equity

The major advantage of debt financing is the:

deductibility of interest expenses

Luca Villanova has a major decision to make about how to increase attendance for the professional soccer team he owns. He wants to call his players and coaches together, generate alternatives, and come up with a solution by mutual agreement and vote. His style of leadership is called:

democratic (participative)

The _____ role of a manager consists of relationships with other people as figurehead, leader, and liaison.

interpersonal

Jason's tutoring service has a debt-to-equity ratio of 120%. This means the business has:

more debt than equity

The difference between gross profit and operating expenses is _____.

net income

A tree trimming company bought a new mulching machine for $20,000 on January 1 which has a useful life of 5 years. At the end of year 1, what is the annual depreciation of the asset? What is the value of the asset on the balance sheet?

$4,000; $16,000

Jenny's Cafe has 10,000 common shares split among 4 investors. The business has current liabilities of $15,000, total liabilities of $40,000, current assets of $20,000, total assets of $60,000. The business earned $50,000 after tax in 2022. What is the EPS in 2022?

$5

Companies' accounting reports provide info on?

- current financial health - past performance - possible future performance

What is the repayment loan obligation for debt financing?

Must pay back the loan

Two co-workers at Nortel came up with an idea for renting software over the Internet. Nortel's top management liked the idea and set up a special division called Channelware devoted to taking the idea and making a new product. The establishment of a new company and assigning the employees in the division the task of making an idea a reality requires which management function?

Organizing

Accounting involves the _____ of the financial activities for firms (select 2 that are true).

- summarizing - reporting

Jenny's sporting goods company has the following in its 2017 financial statements:

0.92

Jenny's sporting goods company has the following in its 2017 financial statements:What is the current ratio of Jenny's company in 2017

1.67

ABC Company has the following revenue in 2015, 2016, 2017: 2015: $38,000 2016: $45,000 2017: $50,000 What is the revenue growth rate for ABC in 2016?

18%

Joe's Bakery has current liabilities of $15,000, total liabilities of $40,000, current assets of $20,000, and total assets of $60,000. The business earned $50,000 after tax in 2021. What is the debt-to-equity ratio?

2

Joe's Bakery has current liabilities of $15,000, total liabilities of $40,000, current assets of $30,000, total assets of $60,000 in 2022. The business earned $50,000 after tax in 2022. What is the current ratio?

2

Three major sources and uses of cash in a business include all except:

Assets

_____ is a short-term unsecured debt issued by a financially strong corporation.

Commercial paper

Elements of a legal contract include (click 4 that are valid):

Consideration, Legal, Capable parties, Offer and acceptance

IP law includes: (select 3 that are true)

Copyright law, Patent law, Trademark law

Which of the following statements about corporate culture is true? select 3 that are true.

Corporate culture can have a strong impact on a company's success, Corporate culture evolves over time, Corporate culture is based on the accumulated history of the organization

_____ ratios measure the degree and effect of the firm's use of borrowed funds to finance its operations.

Debt

Why would a company choose debt instead of equity financing?

Debt financing provides tax benefits due to the interest expenses incurred

In Whole Foods Market, every store is divided into about eight functional teams: An employee is hired provisionally to a store team. After four weeks of work, the team votes whether to hire him or her; a two-thirds yes vote is necessary to join the staff permanently. Which leadership style appears to be used by Whole Foods?

Democratic

The fact that a corporation has limited liability means:

owners' liabilities are limited to the amount invested

Dividends are:

payments to the shareholders from company earnings

When your manager compares your job performance to determine if you should get a raise, the manager is using _____ power in leadership.

reward

A(n) _____ is a summary of the cash flowing into and out of a firm.

statement of cash flows

Payments in the form of more stock to existing stockholders are called:

stock dividends

What risk listed below insurance companies do not cover:

stock market crash

The three main types of unsecured short-term loans are:

trade credit, bank loans, and commercial paper

Accountants do all of the following except _____.

competitor information

Jenny was hired for a top managerial position because she had creative ability and a good overall feel for the athletic shoe industry. Jenny is said to have good _____ skills.

conceptual

The ability to view an organization as a whole, to understand how the various parts fit together, and how it relates to other organizations is a(n) _____ skill.

conceptual

U.S. Lumber Company's purchase of EnviroPlastics, a manufacturer of plastic cutlery, is an example of a _____ merger.

conglomerate

A corporation's earnings are taxed as corporate earnings and as dividends to the stockholders. This is known as:

double taxation

The ratio of net profit to the number of shares of common stock outstanding is called the:

earnings per share

Sole proprietorships:

have unlimited liability

When John Mackey, CEO of Whole Foods Markets, hosted a fundraising event in his role as honorary chairman of the national People for the Ethical Treatment of Animals (PETA) organization, he is fulfilling his _____ managerial role.

interpersonal

Which of the following statements about a general partnership is true?

Partners in a general partnership co-own the company's assets.