GBS151-Introduction to Business

The assets of Prosian Italia, a marble and granite company, amount to $400 million, and its liabilities add up to $180 million. Based on the accounting equation, Prosian Italia's owners' equity is equal to _____.

$220 million

After working for 52 years as an accountant in a Virginia state government agency, Angela retires from her job. On retirement, she receives a sum of $63,000, which had been accumulated over the entire period of her service. In this case, the employee-contribution retirement plan that Angela benefits from is the

457 plan.

According to Maslow's hierarchy of needs theory, which of the following is most likely to satisfy the esteem needs of an employee?

A new laptop given to an employee for his or her hard work

_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period.

Budgeting

In the context of the technological environment of a business, which of the following statements is true of e-commerce?

Business-to-business selling accounts for the vast majority of total e-commerce sales.

Which of the following is most likely to take place when a company launches a new product that is lower in price than the company's current products?

Cannibalization

The Consumer Financial Protection Bureau was created by the

Dodd-Frank Act.

Who among the following is likely to enjoy job autonomy?

Esther, who has a free hand and authority in her role as project coordinator

A firm's operating budget represents the firm's overall plan of action for a specified time period.

False

Which of the following is true of financial diversification?

Investing in a large number of individual securities is more consuming than investing in exchange-traded funds.

Which of the following statements is true of loss-leader pricing?

It is closely related to high/low pricing.

Identify the true statement about the Federal Reserve.

It manages the monetary policy of the United States.

Which of the following best defines a product life cycle?

It refers to the dynamic pattern of sales and profits of a product.

Which of the following is true about new product development?

It requires an understanding of the customer base and involves creativity.

Which of the following is a difference between liquidity ratios and leverage ratios?

Liquidity ratios measure a firm's ability to pay its short-term liabilities as they come due, whereas leverage ratios measure the extent to which a firm relies on debt to meet its financing needs.

_____ refers to promoting goodwill for a company by providing information and assistance to customers.

Missionary selling

__________refers to how well a product performs its core function.

Quality level

Congress passed the _____ that banned business relationships that might create conflicts of interest between certified public accounting (CPA) firms and the companies they audit.

Sarbanes-Oxley Act of 2002

In the context of a SWOT (strengths, weaknesses, opportunities, and threats) analysis, which of the following exemplifies an external threat to a company?

Significant changes in the taxation policies implemented by the government

In the context of the history of American business, which of the following statements is true of the production era?

The assembly line became standard across major manufacturing industries.

In the context of the history of American business, which of the following statements is true of the marketing era?

The balance of power shifted away from producers and toward consumers.

Which of the following is an example of an intangible asset?

The goodwill showed by a food manufacturing company by helping its competitor at a time of crisis

__________involves determining how a product will flow through a channel from the producer to the consumer.

The physical distribution strategy

Which of the following is true of contingency planning?

The senior manager spearheads this process but with input from the other levels of management.

In the context of the history of American business, which of the following statements is true of the Industrial Revolution?

There was a loss of personal pride in the production process.

Which of the following is a similarity between socialism and communism?

They are both strongly involved with the government.

Which of the following is true of current assets?

They are resources that a firm expects to use up within a year.

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk Yu to pay the total purchase amount within a period of 6 months. Which of the following short-term financing options is being used by Duk Yu in the given scenario?

Trade credit

Rumerion Inc., a shoe manufacturing company, buys its raw materials from Coy Kaymilford. Coy Kaymilford allows Rumerion Inc. to make the payment at a later date, as opposed to immediate payment. Which of the following short-term financing options is being used by Rumerion in the given scenario?

Trade credit

__________is a spontaneous financing granted by sellers when they deliver goods and services to customers without requiring immediate payment.

Trade credit

Proleisis Corporation has 250 stockholders. Although it is owned by such a large number of stockholders, the company's major decisions are made by the 12-member board of directors. The board has enormous authority over the company, and the company functions according to the decisions of the board. Based on the given information, the company has:

a high degree of centralization.

Through the establishment of a set of generally accepted accounting principles (GAAP), the Financial Accounting Standards Board (FASB) aims to ensure that financial statements are

comparable

Instella Corp. hires Georgio for a top-level management position because he exhibits excellent skill at strategic planning. Georgio is especially seasoned in analyzing marketplace trends and long-term planning. In this case, Instella Corp. hires Georgio because he demonstrates

conceptual skills.

Pastello, a bakery in New Jersey, needs to sell all the goods in its inventory before they perish. The bakery owners, Mark and Julia, plan to use the cash received from selling the goods to open a new outlet of Pastello in a different locality. In this scenario, the goods stored in Pastello's inventory represent its _____.

current assets

Delvry Inc. is a solid fuel supplier. It supplies coal to different thermal power plants. The company takes legal possession of the coal, and it hires outside transporters to aid the delivery process. In this scenario, Delvry Inc. is a(n)

drop shipper.

The top-level managers of a soft-drink bottling company initiate the strategic planning process. They complete their first task of the process, which is to define the mission of the organization. Their next task will be to

evaluate the organization's competitive position.

Susan, the Human Resources Director at Trangend Cosmetics, is responsible for recruiting, hiring, and training employees. In the context of the given scenario, Susan is a

factor of production.

The characteristics of a product that a marketer offers are known as product

features.

Ellizon Fiber Optics, a publicly traded firm, has approximately 1,200 shareholders and $32 million in assets. Given the specifications of the company, the Securities and Exchange Commission (SEC) mandates Ellizon Fiber Optics to

file quarterly and annual financial reports with the SEC.

Jack works in a cargo shipping company as a section leader. As a part of his job, he needs to train and evaluate the employees. He also makes sure that the employees constantly remain motivated to carry out their tasks efficiently. Thus, as a section leader, he is heavily involved in the day-to-day production process of the company. In the context of the management hierarchy, Jack is a _____ manager in the company.

first-line

Kate is the head of the research department at a pharmaceutical company. Her team is in the process of developing a drug to prevent skin cancer. Kate has set the deadline for the project and has provided her team members with a set of guidelines that need to be followed. However, she has left it to them to decide how they will accomplish the goal. In this scenario, Kate is a(n)

free-rein leader.

One drawback of exchange-traded funds (ETFs) is that investors

have to pay brokerage commissions every time they buy or sell shares.

Joanne works in the marketing department of a toy manufacturing company. Her company offers discounts for soft toys but sells electronic toys at prices higher than its competitors charge. In this scenario, Joanne's company has adopted the _____ strategy.

high/low pricing

The employees of an information technology company complain that the company has been spending a lot of funds in wasteful activities, such as office renovation, instead of revising the employees' salaries. In this case, the company should hire a(n) _____ to keep a check on the company's expenses and prevent the problem from aggravating.

internal auditor

While performing a financial analysis for his organization, Morris discovers that there has been mismanagement of employee funds over the past three months. He immediately reports this to his supervisors. In this scenario, Morris is most likely a(n) _____.

internal auditor

Zollien, a manufacturer of men's shirts and jackets, has reached an agreement with Arbrada Inc. According to the agreement, Zollien will pay Arbrada a substantial fee for the right to use Arbrada's name and logo on some of its clothing lines. This type of arrangement is known as

licensing.

Operos, a laptop manufacturing company, introduces three new colors—midnight blue, aquamarine, and hot pink—in its Z Series laptops. This scenario reflects

line extension.

Unlike the early stock exchanges, the National Association of Securities Dealers Automated Quotation System (NASDAQ) has never

maintained a physical trading location where dealers meet to trade securities.

Janice is an accountant in a public relations firm. She prepares financial reports upon request by the management of the firm and does not stick to a predetermined schedule. The reports that she prepares mainly help the internal stakeholders of the firm. Given this information, it can be said that Janice performs _____.

managerial accounting

The fixed cost of Widget Corp., a keyboard manufacturing company, is $600,000 per year. The cost of equipment and labor to make one keyboard is $10. If customers pay $25 to buy one keyboard, Widget Corp. needs to sell _____ keyboards to make a profit.

more than 40,000

TrinkCan is a soda manufacturing company. People can buy the company's soda from grocery stores, restaurants, vending machines, and online. In this scenario, TrinkCan has adopted

multichannel retailing.

The price at which shares of an open-end mutual fund are issued and redeemed is based on the fund's

net asset value per share.

Jose's mother, who is 83 years old, has been hospitalized for almost 4 months because of deteriorating health conditions. Thus, each month, a major portion of Jose's income is spent on paying the hospital bills as well as medical bills for diagnostic tests. In this scenario, Jose's medical expenses are an example of

nondiscretionary payments.

Flammox Growth Fund, a mutual fund, issues 200 shares in the market. However, because of a sharp demand from the investors, the fund issues 350 additional shares. In this scenario, the Flammox Growth Fund is structured as a(n)

open-end fund.

As a senior HR manager, Ramona is responsible for conducting orientation sessions for new employees in her company. In her sessions, Ramona uses a visual representation to explain the composition and structure of the company to the new employees. In this scenario, Ramona uses a(n)

organization chart.

Daquip is a baseball kit manufacturer. It sells its products to final consumers through its own stores at a huge discount. From the given scenario, it can be concluded that Daquip is a(n)

outlet store.

Lucy has constantly overstepped the credit limit on her credit card for the past 5 months. In this case, Lucy's financial advisor will most likely advise her to

place a high priority on eliminating her credit card balance as quickly as possible.

A home décor company manufactures a range of bedding products such as bedspreads, pillows, and mattresses. The range of bedding products represents the _____ of the company.

product line

Vermontz, an automobile company, pays a film studio to include its new sports car in two scenes of the studio's latest action movie. The car company feels this will help them gain maximum visibility and fans will develop a positive association with the brand when they see their favorite actor using the car. Vermontz's business deal with the film studio exemplifies

product placement.

In the context of the history of American business, during the _____ era, jobs became more specialized, increasing productivity and lowering costs and prices.

production

Glubert Corp., an adhesive manufacturing company, makes a deal with an insurance company to provide its employees with life insurance at low monthly premiums. In the context of Maslow's hierarchy of needs theory, the company is fulfilling the _____ needs of its employees.

safety

Operos, a high-end sports-equipment manufacturer, sells its products to the public at its own retail outlets. Because of the high price and limited availability of its products, the company has established its stores in only a few locations in the city of Belwick. Operos has adopted the strategy of

selective distribution.

In the context of open market operations, when inflation is a concern, the Federal Reserve _____ government securities.

sells

HealthAssure Corp. manufactures Nicoloss, a nicotine-free supplement that helps people overcome their cigarette addiction. To promote its product, the company puts up kiosks inside a college campus. However, the product gets only a mild response from the students. Consequently, the company resorts to more active and aggressive promotional activities. In this scenario, Nicoloss is an example of a(n)

specialty product.

The term _____ refers to the quantity of products that producers are willing to offer for sale at different market prices.

supply

The middle managers of a locomotive manufacturing company plan out the financial expenses of the company for a period of one year. Their planning entails allocating financial resources to the managers' individual areas of responsibility. This scenario exemplifies

tactical planning.

If Carl is a preferred stockholder at Cedia Inc., and Cedia goes out of business, Carl's claim on the firm's assets

takes precedence over common stockholders.

In the context of management skills, front-line managers must have a high degree of _____, which help them hire, train, and evaluate employees; avoid mistakes; and ensure high-quality production.

technical skills

A downside of publicity is that

the marketer has no control over how the media present the company or its products.

Paul is an employee at a marketing firm. He prefers to be instructed by his seniors and avoids taking on major responsibilities. He rarely uses his own judgment or creativity while doing a task in fear of putting things at risk. Paul's conduct in the workplace is consistent with the assumptions of

theory X.

Robert likes the kind of work he does in his office. He proactively seeks and accepts responsibility whenever the opportunity comes up. His firm exercise of self-control also helps him to successfully meet the company goals. This scenario reflects of the assumptions of

theory Y.

Spade Archer buys surgical knives, scissors, forceps, needle holders, and retractors from a surgical equipment manufacturer and sells them to local hospitals. In this scenario, Spade Archer is a

wholesaler.

Timini Inc., a beverage company, wants to produce a new health drink. It borrows money from Maverk Bank to finance the development. The bank mandates Timini Inc. to return the amount with interest in a regular schedule of fixed payments. Which of the following sources of long-term funds is being used by Timini Inc. in the given scenario?

A term loan

Bon Suede, a shoe manufacturing company, produces 10,000 units of shoes of a distinct design. In 2015, the company was able to sell all the units within 6 months of manufacture, prompting the company to produce an additional 10,000 units. Which of the following financial ratios has most likely been analyzed in the given scenario?

Asset management ratios

Westbro Inc., a home appliances company, wants to invest in marketing new products. To generate funds for the process, it issues its own formal IOUs and sells them to its investors. Which of the following sources of long-term funds is being used by Westbro Inc. in the given scenario?

Corporate bonds

Pro Corp. and Darths Inc. are two companies that are identical in every aspect except for the fact that Pro only uses equity financing, while Darths relies heavily on debt financing. Over the past year, the firms had identical earnings before interest and taxes. If net income for both firms is high,

Darths will report a higher return on equity than Pro.

Timoth Steels, a steel manufacturing company, wants to install a new factory in Temenia. The company decides to use funds from its own account and refrain from borrowing money from banks. Which of the following sources of long-term funds is being used by Timoth Steels in the given scenario?

Direct investments from owners

The Financial Accounting Standards Board (FASB) comprises of thirteen members elected by the Financial Accounting Foundation.

False

The direct labor method of costing is a technique to assign product costs based on links between the daily tasks of a company that drive costs and the production of specific products.

False

The income statement is also known as the statement of financial position.

False

_____ remain constant regardless of how many products are sold.

Fixed costs

Nutriman, a company manufacturing health supplements, puts its advertisements in a popular health and fitness blog. The advertisements seamlessly blend in with the overall theme of the blog and almost look like a part of the platform. Which of the following strategies has Nutriman implemented in this scenario?

Native advertising

_____ is the profit or loss a firm earns in the time period covered by the financial statement that reports the revenues and expenses.

Net income

The _____ tracks the stock prices of some of the largest and most actively traded companies listed on the Tokyo Stock Exchange.

Nikkei 225

Olivia owns convertible securities in a company that manufactures electrical appliances. If the conversion ratio for the convertible securities is 50, it means that

Olivia can exchange each convertible security that she owns for 50 shares of common stock.

Which of the following tools is most frequently used by the Federal Reserve to expand and contract the money supply in the economy?

Open market operations

Which of the following is a disadvantage of online retailing?

Product delivery takes at least a couple of days.

Alexis decides to check with his accountant as to how much money his company owes to the raw materials supplier. To determine this, Alexis should ask the accountant to provide him with the company's balance sheet.

True

Balance sheets usually classify assets into at least two major categories: current assets and property, plant, and equipment assets.

True

Inventory is an example of a current asset.

True

John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits.

True

Public accountants provide services such as tax preparation, external auditing, or management consulting to clients on a fee basis.

True

The deduction of a firm's expenses from its revenue is shown in the income statement of the firm.

True

In the context of monetary policy, which of the following statements is true of the discount rate?

When the cost of acquiring funds from the Fed is low, interest rates on bank loans tend to fall.

Fit & Flare, an online shopping portal, orders a few pieces of furniture for its head office. A representative from the furniture company comes for the delivery and even oversees the setup of the furniture. In this scenario, Fit & Flare's order for furniture is categorized as a purchase of

accessory equipment.

The total assets of a dairy products manufacturing company are calculated. However, a sum of $5 million from the value of the company's property, plant, and equipment assets is not taken into account as the machinery is bound to become unusable after a certain period of time. In the context of balance sheets, the amount of $5 million that is subtracted from the original value of the total assets is called _____.

accumulated depreciation

Rolette Clemens is a financial institution that provides loans to businesses. It rejects a textile company's request for a loan after it reviews the value of the company's assets, liabilities, and owners' equity and finds them to be unsatisfactory. In this scenario, Rolette Clemens most likely analyzed the company's _____ to assess its financial condition.

balance sheet

Marcus is a venture capitalist who invests in start-ups and small businesses. He is interested in investing in an online start-up company that has been in business for a year. Before making a decision, Marcus does some research on the value of the company's assets and liabilities. In this scenario, Marcus is most likely analyzing the company's:

balance sheet.

The overstating of needs or setting low budget goals by managers in a budgeting process can result in _____.

budgetary slack

Jack receives a considerable sum of money by selling his property. He decides to invest this sum in a diversified set of securities. He plans to invest in these securities and retain them for a long time. He is optimistic that eventually the overall market conditions will rise, thus giving him a high return sometime in the future. Jack is using the _____ investment strategy.

buy-and-hold

Balance sheets usually organize liabilities into two broad categories, which are

current liabilities and long-term liabilities.

Elvish Toys is a small-scale toy manufacturer. The company sells its products to customers at its own retail shops. In this scenario, Elvish Toys sells its products to its customers through a(n)

direct channel.

Bolve Technologies is a small-scale smartphone manufacturer. It advertises its phones via television commercials. Customers can buy these phones only by placing a call to the sales reps of Bolve Technologies. Bolve Technologies is engaged in

direct response retailing.

Max wants to invest in the stock market. Although he has expert knowledge of stock trading, he does not have the time to engage in these transactions and hence needs someone to buy and sell stocks on his behalf. In this case, Max should hire a(n) _____ to fulfill his requirement.

discount broker

iTem is a retailer that sells a wide range of merchandise to the public through its Web site. In this scenario, iTem is engaged in

e-tailing.

In the context of the history of American business, during the _____, businesses began to develop distinctive identities to help customers understand the differences among various products.

marketing era

The management of a sugar manufacturing company sets aside a sum of $50,000 in its budget for the purchase of new machinery that would double the production. In the given scenario, the management is in the process of planning the _____ of the company.

operating budget

George, a managerial accountant in a jute manufacturing company, is asked to calculate the total amount of money the company spends on the wages of its workers and on the payments it makes to its suppliers for raw materials. By finding out the company's total actual expenses, the management can come to a decision on whether or not the company can increase its workers' wages by at least 10%. In this scenario, George is asked to calculate the company's _____.

out-of-pocket costs

In the context of balance sheets, retained earnings are a major component of the _____ section.

owners' equity

Eula, a company that manufactures soda, offers its latest products at very low prices. Eula's strategy is based on the assumption that more customers will be willing to buy its products if they are offered at lower prices. Eula has adopted this strategy to attract a larger customer base and increase its sales volume even though it will only gain a small profit on each individual sale. In this scenario, Eula has implemented the _____ strategy.

penetration pricing

Munit Exon, an automobile company, sells 100 cars in a year. The net income earned by the company is relatively more than the amount invested by it, thereby giving larger returns to its shareholders. To reach this conclusion, Munit Exon most likely analyzed its

profitability ratios.

In the context of monetary policy, the Federal Reserve is most likely to reduce the discount rate during

recessions.

The Board of Governors of the Federal Reserve holds a meeting to discuss its concern over the decreasing gross domestic product of the country. All members agree that the situation can be brought under control and the economy can be stimulated if they use the discount rate as a tool. In this scenario, the Fed is most likely to

reduce the discount rate.

To preserve independence and impartiality, the Financial Accounting Standards Board (FASB) members are required to

sever all ties with any firms or institutions they served prior to joining the board.

Product augmentation

sharpens the competitive edge of the marketer's products.