Finance Certification Test

B Pie chart. If Alma wants to illustrate her budget by showing parts in relation to the whole, she should use a pie chart. A table is a visual way of displaying information in rows and columns. A bar graph shows values across categories. Line graphs usually depict information over time. Although Alma might want to use these types of graphics for other parts of her presentation, the pie chart is the best way to show how the parts of her budget add up to form the whole.

Alma is preparing a presentation about her department's budget to make to the company president. She wants to use a visual representation of the budget that shows parts in relation to the whole. Alma should consider using a A. table. B. pie chart. C. line graph. D. bar graph.

D A lower rate of inflation. When a lot of people are out of work, they lose their buying power, which means less money is in circulation. Because unemployed people have less disposable income, the demand for goods and services is low, which tends to slow or lower the rate of inflation (rise in prices). The amount of monetary policies that the government establishes does not affect unemployment rates. When the GDP grows, an economic expansion is occurring, which indicates that people and businesses are spending money and the unemployment levels are low.

An economy with a high unemployment level tends to have A. rapid GDP growth. B. a high supply of money. C. fewer monetary policies. D. a lower rate of inflation.

C Find out what other people in the group know about the product. Starting a meeting by learning about others' knowledge of the subject identifies what your team knows—as well as areas where more work will be needed. Some ground rules are needed to let everyone know how the group operates. Otherwise, unacceptable behavior may occur. Unusual ideas should not be avoided. Often these are the breakthroughs that lead to success. Bob should use good listening skills, including making eye contact and using other nonverbal cues, to let others in the group know he is listening.

At work, Bob is assigned to be on a team of five people that will create a new product. Which action can Bob take to participate in the team in a useful way? A. Keep the group on track by stopping others from offering unusual ideas B. Encourage the team to avoid setting ground rules C. Find out what other people in the group know about the product D. Walk around the room during discussions to keep energy in the group

B Culture. The customs, habits, and traditions of a particular group of people are known as their culture. Stereotypes are set images or assumptions about people or things. Diversity is all the ways in which people differ. Religion is a fundamental set of beliefs.

Barry's family is originally from Ireland. Their customs, habits, and traditions are known as their A. stereotype. B. culture. C. diversity. D. religion

B Supporting ideas with evidence. Ideas that are evidence-based are more easily accepted than those that are not. Primary information is new information collected for the issue at hand. DiAnn is collecting secondary information, which involves obtaining information that has already been collected by others. The evidence does not create alternative ideas. It is meant to add validation to the original idea. Clarifying an idea involves explaining it in more detail.

Before DiAnn presents her new idea to her boss, she searches the Internet and jots down two statistics that reinforce the idea. This is an example of A. obtaining primary information. B. supporting ideas with evidence. C. giving alternative ideas. D. clarifying a new idea.

C Complete a data cleansing of the erroneous entries. One of the quickest ways for a business to upset its customers is to accuse them of failing to pay their bills—especially when the business has already received payment from them. To ensure that these customers do not receive more erroneous collection letters in the future, Beverly should complete a data cleansing of the erroneous entries, removing them from the system. Completing an accounting software update isn't likely to have an effect on the erroneous entries. While it might be helpful to contact each customer by phone and apologize, Beverly needs to do more than that to ensure that the customers are not bothered in the future. The $25,628 is not a debt. It is the sum total of all the erroneous duplicate entries in the accounts receivable account.

Beverly, the new office manager, just completed a review of the last two years of accounts receivable data. In doing so, she discovered that there are erroneous duplicate entries totaling $25,628 in the system. Unfortunately, due to these duplicate entries, collection letters were sent to many customers who had already paid in full—customers who are angry with the company for sending them the letters. What should Beverly do to try to save these customer relationships and ensure that these customers are not bothered in the future? A. Contact each customer by phone and apologize B. Complete an accounting software update C. Complete a data cleansing of the erroneous entries D. Use funds from the accounts payable account to pay the debt

D Pump and dump. Pump and dump is an investment scam that takes place mostly online. It typically involves scammers who buy a small stock and then hype it up to other investors, causing its price to rise. The scammers sell when the price is high, leaving the victims to deal with the rapid price decline afterwards. A pyramid scheme is an illegal form of multi-level marketing in which emphasis is placed on collecting initial fees from as many people as possible. A Ponzi scheme is an investment scam that lures in new investors by promising high rates of return with little to no risk. Phishing is an online identity-theft scam that fools its victims into believing they are submitting sensitive, personal information (such as credit card numbers or bank passwords) to a legitimate website.

Chris purchased 500 shares of microcap HRR stock. Then, he posted false information about HRR on several investment websites to hype up the stock. After driving up the price of HRR stock, Chris quickly sold all of his stock in the company and earned a large profit. The price of the stock then fell, leaving HRR investors with worthless stock. What type of investment scam did Chris commit? A. Phishing B. Pyramid scheme C. Ponzi scheme D. Pump and dump

D Listening. Coaching is mostly about listening. It isn't really about talking or instructing. Listening is important because coaches must truly understand what the other person is saying and where s/he's coming from. Although organization is certainly helpful, it is not the most important skill in coaching

Coaching is mostly about A. talking. B. organizing. C. instructing. D. listening

D Tentative agreement. Tentative agreement is the stage at which union and management have agreed on the terms of a contract but still need union members to approve or reject the contract. Preparation and research occur before labor negotiations begin. A ratified contract is one that union members have approved. Contract settlement occurs when a ratified contract has been signed by union and management.

Colleen will vote next week on the new contract that her union has negotiated with management. Union and management are in the __________ stage of the collective-bargaining process. A. contract settlement B. ratification of contract C. preparation and research D. tentative agreement

B Regulatory guidelines. Financial institutions are required to follow governmental rules and regulations. Following these regulatory guidelines is the process of compliance. The purpose of compliance is to make the industry safe for consumers and to maintain the stability of the financial system. Compliance does not involve operating within specific territories, organization plans, or different relationships.

Compliance in the finance industry involves financial institutions operating within A. specific territories. B. regulatory guidelines. C. organizational plans. D. different relationships.

D Marketing. Marketing is a primary business activity that involves creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders. Marketing is an important business activity because it identifies what consumers want and plans how to promote and sell those goods and services to the consumers. Management is the process of planning, organizing, directing, and controlling business activities to achieve objectives. Production is the process or activity of producing goods and services wanted by consumers. Risk management is the business activity that involves the planning, controlling, preventing, and procedures involved in limiting business losses. It optimizes the relationship of potential loss to gain.

Determining what consumers want in order to promote and sell those goods and services is a function of the business activity of A. risk management. B. quality management. C. production. D. marketing.

D Realize what it takes to get the things you really want. Financial planning is a good way to realize what it takes to get the things you really want. It is not a method for stopping all impulsive purchases nor is it a way to achieve your professional goals. And, even the best financial planning can't guarantee you'll retire with a substantial amount of money in the bank.

Financial planning can be described as a way to A. retire with a substantial amount of money in the bank. B. stop all impulsive purchases. C. achieve your professional goals. D. realize what it takes to get the things you really want.

C Credibility. Credibility is achieved when the audience has confidence in the persuader. In this case, Dr. Browne's prestigious job title and degree lead the audience to believe she is a credible source. Reason is when logic is used to persuade someone to do something. It often involves solid facts and statistics. An emotional appeal affects the audience's feelings, such as sympathy or love. An appeal that uses shock value is a form of an emotional appeal that includes information that the audience would find shocking.

Identify the type of appeal used in the following persuasive message: "This new book is written by Dr. Juliet Browne, who holds a doctorate from the Harvard School of Medicine and is the Chair of the World Health Organization." A. Emotions B. Reason C. Credibility D. Shock value

A Reporting requirements. Demand for governance, risk, and compliance (GRC) software systems has grown significantly in recent years. Although GRC software can be customized to better meet individual business needs, it serves four basic functions. It identifies and measures corporate risk levels; monitors the risk-management system; checks to see that employees are adhering to company-wide policies; and ensures compliance with reporting requirements enforced by federal and state government agencies and other regulatory commissions. It is not designed to ensure compliance with union demands, product standards, or contingency plans.

In general, a governance, risk, and compliance (GRC) software system identifies and measures risk; monitors the risk-management system; routinely checks adherence to company-wide policies; and ensures compliance with A. reporting requirements. B. union demands. C. product standards. D. contingency plans

A Damage their relationships. Insecure people are often anxious about their interpersonal relationships. They are afraid if they become assertive, they may ruin a friendship or end a relationship. Assertiveness is a risk they are unwilling to take. These people are dependent rather than independent and may already be considered childish because of their passive behavior that focuses on pleasing others.

Insecure people are often afraid to become assertive because they think they will A. damage their relationships. B. have to please others. C. be considered childish. D. lose their independence

D Gender. A stereotype is a set image or assumption about a person or thing. When people stereotype others, they tend to classify certain people as a group that possesses certain characteristics. These characteristics are often based on distorted beliefs or unreliable information. A person who stereotypes others often fails to see an individual who possesses unique skills, values, and attitudes. Gender is one characteristic by which people often stereotype others. Assuming men are more assertive than women in business situations is a distorted belief. In fact, many women are very assertive in business situations. Ethnic stereotyping involves having false beliefs about a person on the basis of his/her race or culture. Stereotypes about religion involve having distorted beliefs about a person's spiritual practices. An individual who stereotypes by age might feel that younger people do not possess needed knowledge or that older people are feeble and lack adaptability

Jon decided to promote Bill instead of Maggie to regional manager because he thinks that women aren't assertive enough in business situations. Jon is stereotyping on the basis of A. age. B. ethnicity. C. religion. D. gender.

A Results. Keeping the end goal in mind refers to being results-oriented, a characteristic of achievement-oriented people. They like being able to objectively evaluate their successes. They also value improvement, trying something new, and competition; however, these standards don't necessarily relate to keeping the end goal in mind

Keeping the end goal in mind refers to which standard of excellence that achievement-oriented people set? A. Results B. Improvement C. Trying something new D. Competition

D It prevents Maureen from hearing the criticism clearly. Defensiveness raises a barrier between you and the speaker. Most of us feel angry or resentful when we are criticized, especially when the criticism is unjust. However, we cannot afford to exhibit this kind of attitude on the job. If Maureen listened with an open mind to the supervisor, she might learn not only how to correct her mistakes but how to avoid the mistakes in the future. Maureen's attitude indicates immaturity rather than a desire to call attention to herself.

Maureen becomes angry and defensive whenever her supervisor asks Maureen to correct mistakes. Maureen's attitude is not a good response to criticism because A. it indicates that Maureen wants to call attention to herself. B. there is no reason to be angry about criticism. C. Maureen has no right to be angry on the job. D. it prevents Maureen from hearing the criticism clearly.

D Explaining how they will benefit. People tend to work harder to achieve a vision or goal if they understand how they will benefit. Therefore, a leader should explain the benefits they will receive so employees will be encouraged to work toward a shared vision. Simply describing the objective or reviewing the new assignment will not encourage employees to work unless they also understand how they will benefit. Generating a profit is a benefit to the business that will not necessarily encourage employees to work unless they will share in the profit.

One way a leader can encourage others to work toward a shared vision is by A. guaranteeing a profit for the business. B. describing the objective. C. reviewing the new assignment. D. explaining how they will benefit

B Enthusiastic. Self-confidence is a positive belief in your own talents, skills, and objectives. When people are positive and believe in themselves, they usually are enthusiastic and display great interest or excitement in what they do. Confident people have a good attitude and display that attitude by being enthusiastic. Individuals do not necessarily exhibit self-confidence by being creative, emotional, or reserved.

One way that individuals exhibit self-confidence is by being A. creative. B. enthusiastic. C. emotional. D. reserved.

A Systems thinking. Systems thinking is an organizational learning concept that focuses on the big picture rather than seeing smaller, individual parts. Team learning means thinking and working together as a group. Shared organizational vision refers to sharing a mutual commitment to the future the firm seeks to create. Personal mastery is striving for individual learning as a means of advancing the organization.

Seeing the big picture instead of smaller, individual parts is an organizational learning concept known as A. systems thinking. B. team learning. C. shared organizational vision. D. personal mastery.

A Level of productivity. The general economic growth of a country depends upon its level of productivity. For example, the level of productivity in the United States has given the country a wealth of goods and services which allows its citizens to reach a certain standard of living. Gross domestic product is the final, total value of all goods and services produced within a country's geographic boundaries during a year's time. GDP serves as a measure of economic growth.

The general economic growth of a country is supported by its A. level of productivity. B. standard of living. C. gross domestic product. D. wealth of goods and services.

C How long your money is invested. The most important factors to consider in compounding growth are how much money you invest, how much your investment grows each year, and how long your money is invested. Investing is using money to make money, which means that if you invest money in the stock market, for example, you are likely to make an average of 10 percent each year. As the years pass, your investment will grow tremendously because you will be earning interest on interest. So, it is beneficial to invest for as long as possible to earn the largest amount of compound interest as possible. How you earn the money that you invest, your educational background and career, and your mutual fund manager's education have a much smaller impact on compounding growth than time does.

The key factors involved in compounding growth are the amount of money you invest, how much your investment grows each year, and A. your educational background and career. B. how you earn the money that you invest. C. how long your money is invested. D. your mutual fund manager's education.

B Consumption. Everyone consumes goods and services to satisfy unlimited wants. Production, exchange, and distribution are other economic activities. Production is the making or producing of goods and services. Exchange involves the exchange of money payments between producers and the owners of resources. Distribution examines how money payments are divided or distributed between resource owners and producers.

The process or activity of using goods is called A. production. B. consumption. C. exchange. D. distribution.

C Grapevine. Grapevine is an oral communication method in which information is passed around the company but not formally announced or verified. Coworkers frequently discuss company issues and pass on information from one department to another through the grapevine. Employees often obtain information and communicate it to others through the grapevine before management makes an official announcement. Feedback is evaluative information given by supervisors to employees. Network is a system of contacts within and outside the organization. Structured is formal communication.

What is a type of informal communication that coworkers often use to communicate with each other? A. Network B. Feedback C. Grapevine D. Structured

D Aligning business activities with customer needs. A customer-centric business focuses on customer needs and wants. To focus on the customers' needs and wants, the business must ensure that its business objectives and activities align with its customers' needs and wants. A customer-centric business must continuously improve its processes and products to accommodate its customers' changing needs and wants. The business cannot be satisfied with the status quo. A customer-centric business allows its employees to provide input and make decisions in relation to customer relationships. Touch points are all of the opportunities that businesses have to connect with customers and reinforce their brand value. A customer-centric business is not likely to reduce the number of customer touch points.

What is an important aspect of a customer-centric business? A. Reducing the number of touch points with customers B. Limiting the employees' decision making C. Being satisfied with the status quo D. Aligning business activities with customer needs

C Builds positive relationships with customers. A service orientation is the business philosophy of providing quality service. One way to do this is to communicate effectively with customers so they trust the business. The benefit of creating trust by providing accurate and credible information is that it tends to build positive relationships with customers. Customers often remain loyal to a business if they have confidence that the business will treat them well and provide quality service. The purpose of reinforcing service orientation through communication is not to promote the sale of new products, reward customers for their support, or encourage employees to be aggressive.

What is one of the benefits to a business of reinforcing service orientation through communication? A. Rewards customers for their support B. Promotes the sale of new products C. Builds positive relationships with customers D. Encourages employees to be aggressive

D Transmittal. A transmittal letter should always accompany important business papers, such as contracts, that are sent by mail. The purpose of the transmittal letter is to let the recipient know exactly what should be contained in the package and if the recipient needs to take any action. A transmittal letter accompanying contracts should indicate how many copies are included and if the recipient needs to sign and return a copy. An acknowledgment letter acknowledges the receipt of business papers. A claim letter requests a solution to a problem. A request letter asks for information.

What type of letter should a business include when sending copies of a contract to a vendor? A. Request B. Acknowledgment C. Claim D. Transmittal

C Providing efficient follow-up. Customers often base their impressions of a business on the interactions they have with the business's employees. In the situation provided, Karl worked quickly to find out the status of the order and immediately called Mr. Schwarz with specific information about where the order was and when to expect delivery. This is an example of efficient follow-up. By providing efficient service, Karl is building favorable relationships with customers. There is not enough information provided to determine if Karl delegated work tasks to facilitate his follow-up activities or if he complimented Mr. Schwarz.

When Mr. Schwarz's order did not arrive at the expected time, he called Karl, the salesperson with whom he had placed his order. Karl apologized for the delay and told Mr. Schwarz that he would check into the issue. After Karl talked with the transportation company, he immediately called Mr. Schwarz to let him know where the order was and when to expect delivery. Mr. Schwarz thanked Karl for getting back with him so quickly. In this situation, Karl reinforced the company's image by A. delegating work tasks. B. giving vague answers. C. providing efficient follow-up. D. complimenting the customer.

B Breached the duty of care. The duty of care is the basic principle that expects all individuals and businesses to exhibit socially responsible behavior by using caution to prevent harm and by watching out for one another. A tort is a private wrongdoing that potentially harms another person or entity. If a business or one of its employees breaches the duty of care, the business may be held liable for the tort. However, the plaintiff must have grounds or proof that establishes that the business or its employee (defendant) has committed a wrongful act, thereby breaching the duty of care. Intentional damage and conspiring with a competitor (collusion) are types of torts. The doctrine of sovereign immunity is the universally accepted principle that each nation has the right to manage its own government and develop its own laws

When filing a tort against a business, the plaintiff must establish that the defendant A. damaged property intentionally. B. breached the duty of care. C. conspired with a competitor. D. violated the doctrine of sovereign immunity.

D Simple explanations. When providing product information to clients, finance professionals should keep the clients' point of view in mind. Clients may not be familiar with finance industry jargon, technical terms, or acronyms. Therefore, finance professionals should use simple, clear language that clients understand. While standard responses are sometimes helpful to finance professionals, it is usually better to keep individual clients in mind when providing product information since different clients are likely to have different knowledge bases.

When providing product information to clients, finance professionals should use A. standard responses. B. technical terms. C. financial acronyms. D. simple explanations.

B Prompt Payment Act. When the U.S. federal government owes money to a contracted employee or business, the government must pay the employee or business according to the Prompt Payment Act. There are no U.S. legal requirements for financial exchange called "Early Bird," "Secure Contracting," or "Government Guidelines."

When the U.S. federal government owes money to a contracted employee or business, the government must pay the employee or business according to the A. Early Bird Act. B. Prompt Payment Act. C. Secure Contracting Act. D. Government Guidelines Act

A It is a combination of two other organizational structures. The matrix organizational structure is a combination of the functional structure and the divisional structure. It includes traditional departments, but it is also broken down by division (including, but not limited to, product lines). As organizational design goes, it is a newer, rather than older, structure.

Which of the following describes the matrix organizational structure: A. It is a combination of two other organizational structures. B. It includes only traditional departments, such as sales and marketing. C. It is separated by product lines. D. It is the oldest organizational structure being used.

D Trademark. A trademark is a symbol, design, or word used by a business to identify a good or service and is registered with the government to prevent its use by others. A trademark is an example of intangible business property. Federal law protects a business's intangible property from being used by competitors. A business's inventory, acreage, and equipment are types of tangible property.

Which of the following is a type of intangible business property that is protected by law: A. Equipment B. Inventory C. Acreage D. Trademark

B Red apples @ $0.90 per pound; green apples @ $0.80 per pound. This is the only combination that resulted in a change in the relative price ratio. When red apples sold for $0.30 per pound and green apples for $0.40 per pound, the price of each was cut in half, and the ratio remained the same. When red apples sold for $1.20 per pound and green apples for $1.60 per pound, the price of each was doubled and the ratio remained the same. When red apples sold for $0.45 per pound and green apples for $0.60, the price of each was cut one-fourth, and the ratio remained the same.

Which of the following is an example of a change in the relative price ratio when the original price of red apples is $0.60 per pound and the original price of green apples is $0.80 per pound: A. Red apples @ $0.30 per pound; green apples @ $0.40 per pound B. Red apples @ $0.90 per pound; green apples @ $0.80 per pound C. Red apples @ $0.45 per pound; green apples @ $0.60 per pound D. Red apples @ $1.20 per pound; green apples @ $1.60 per pound

C Obtaining a loan from a bank. The debtor is the individual or business that owes money to another individual or business, which is the creditor. A business that obtains a loan from a bank is entering into a voluntary debtor-creditor relationship. It is voluntary because the business (debtor) is seeking to obtain funds from the bank (creditor) by going through a loan-application process. A monetary gift is given without expectations of repayment. A monetary gift and a request for information are not examples of debtor-creditor relationships. In tort cases, the court can order one party to pay punitive damages to the other party. This is an example of an involuntary debtor-creditor relationship

Which of the following is an example of a voluntary debtor-creditor relationship: A. Requiring specific information B. Receiving a monetary gift C. Obtaining a loan from a bank D. Owing punitive damages

B Leaving the room when a salesperson takes a telephone call. Successful employees realize the importance of respecting others' privacy in the workplace. When employees respect others' privacy, they are likely to gain the trust and respect of coworkers and managers. An employee who respects others' privacy would leave the room when a coworker (e.g., salesperson) takes a telephone call. Speaking up for a coworker, providing feedback, and answering a coworker's phone call are not necessarily situations in which privacy is being violated; there is not enough information provided to determine if intervention was requested.

Which of the following is an example of an employee respecting the privacy of a coworker: A. Speaking up for a coworker who is being unfairly criticized B. Leaving the room when a salesperson takes a telephone call C. Giving feedback about a project to a coworker or manager D. Answering a coworker's telephone when s/he is at lunch

C A risk-taker who has a strong work ethic. Entrepreneurship requires risk-taking, a strong work ethic, and self-confidence. It often requires working much longer hours than 9-to-5. Entrepreneurs must work hard, but they are also in charge of protecting their own health. Getting sick means missing work and losing money.

Which of the following people would make the best entrepreneur: A. A risk-averse person who wants to work 9-to-5 B. A person who lacks self-confidence C. A risk-taker who has a strong work ethic D. A person who often works so hard she makes herself sick

C Contributions are taxed, but withdrawals during retirement are not. Contributions paid into Roth Individual Retirement Accounts (IRAs) are taxed. But, earnings on the growing funds in the account and withdrawals during retirement are tax-free. Unlike Roth IRAs, contributions to traditional IRAs are tax deductible, but investors must pay taxes on the withdrawals they make from these accounts during retirement.

Which of the following statements best describes the taxation of Roth IRAs: A. Contributions and withdrawals during retirement are both taxed. B. Contributions are tax deductible, but withdrawals during retirement are taxed. C. Contributions are taxed, but withdrawals during retirement are not. D. Contributions and withdrawals during retirement are tax deductible.

A Distracted. Nonverbal cues are the elements of communication that involve gestures and facial expressions rather than words. Nonverbal cues often express what the senders and recipients think about their messages. If Colin was interested in the meeting topic or was listening to the speaker, he would be directing his attention to the speaker. Since Colin was looking at his phone and texting, he was distracted and was probably not paying attention to what the speaker was saying. The speaker likely felt that Colin's nonverbal behavior was rude and inconsiderate. There is not enough information to determine if Colin was annoyed.

While conducting a staff meeting, the speaker noticed that Colin was texting on his smartphone. Colin's nonverbal behavior indicates that he was A. distracted. B. annoyed. C. listening to the speaker. D. interested in the topic.