Deck 1: The Foundations of Business

Question 1

The difference between the revenue that a company brings in from selling goods and services and the cost of generating this revenue is called _____.

A)profit
B)gross margin
C)accounts receivable
D)cost of goods sold

Answer 1

A

Question 2

Ultimately, the goal of any business is to satisfy the needs of its owner(s).

Answer 2

False

Question 3

Because Jenny Craig's bank provides payment services, loan and insurance products, investments, credit cards, and online banking, it is a _____ company.

A)management
B)service
C)goods
D)not-for-profit

Answer 3

B

Question 4

A business is any activity that provides goods or services to consumers for the purpose of making a profit.

Question 5

Managerial accountants prepare financial statements to help users, both inside and outside of the organization, assess its financial strengths.

Question 6

Which of the following is a characteristic of a business?

A)provides goods and/or services to customers
B)establishes goals and meets them in an efficient manner
C)provides society with social or educational services without concern for profits
D)helps the economy by employing people

Question 7

As a producer and seller of athletic shoes, apparel, and equipment, Nike sells _____.

A)supplies
B)goods
C)services
D)gross domestic products

Question 8

All the activities needed to operate a business can be divided into the three functional areas of accounting, operations, and marketing.

Question 9

Which of the following is an example of a service company?

A)lumber mill
B)insurance company
C)Nike
D)mobile home manufacturer

Question 10

While financial accountants prepare financial statements to help users both inside and outside of the organization, managerial accountants prepare reports for internal users only.

Question 11

_____ involve(s) planning, organizing, directing, and controlling a company's resources so that it can achieve its goals.

A)Human resources
B)Management
C)Economics
D)Consumerism

Question 12

A good way to accumulate profits is to supply something that can be sold for much more than it costs to produce.

Question 13

One of the primary roles of management is investing money back into the business.

Question 14

A _____ is any activity that provides goods or services to consumers for the purpose of making a profit.

A)value exchange
B)business
C)service
D)transaction

Question 15

Fast-food chains that have eliminated Styrofoam containers reflect the desire of owners to be good corporate citizens.

Question 16

This week, Billy Bob's Barbeque had sales of $4,000.Employees were paid $1,000; food costs were $1,500; and rent was $500.Profit for the week was (select one)

A)$4,000
B)$3,000
C)$2,000
D)$1,000

Question 17

External forces play a role in determining whether more people or fewer people eat at fast-food restaurants.

Question 18

As a functional area of business, _____ measures, summarizes, and communicates financial and managerial information and advises other managers on financial matters.

A)accounting
B)finance
C)operations
D)marketing

Question 19

Ultimately, the goal of any business is to satisfy the needs of its _____.

A)employee
B)customers
C)owners
D)creditors

Question 20

Museums and most colleges and universities are not-for-profit organizations.

Question 21

As part of their business plan, the Peñas identify their customers' needs, design products and services to meet those needs, and manage customer relationships.In this respect, they're engaged in _____.

A)marketing
B)finance
C)operations
D)all of these

Question 22

When they assess the success of plans and decisions and take corrective action when it's needed, managers are _______.

A)managing a business cycle
B)directing a function
C)distributing services
D)designing controls

Question 23

Scenario-Based
Soup, Salad, & Sandwich is a regional chain of restaurants in the northeast that provides dine-in, carry-out, and catering services.Owners Jesse and Mataya Peña currently operate six locations and are in the process of opening a new restaurant in another state.Their operation is quite successful and appeals to health-conscious consumers, busy moms, and executives in a hurry.Staying open longer hours, enlarging the menu, and expanding the scope of the business are among the many goals set by the Peñas.They want to follow a traditional business model in reaching their goals.
Soup, Salad, & Sandwich features all of the traditional business participants _____.

A)owners
B)employees
C)shareholders
D)customers

Question 24

Because the Peñas are following a traditional business model, they will engage which of the following functional areas?

A)investment counseling
B)marketing
C)research and development
D)focus groups

Question 25

Weight Off, a local weight-loss clinic, maintains a clientele of more than 200 busy executives who travel frequently and need specialized diet and exercise regimes.The activities needed to operate this business include all of the following _____.

A)research and development
B)management
C)marketing
D)finance

Question 26

Asset-producing resources are the outputs used to produce inputs in a business.

Question 27

All of the following are categorized as _____: Harvard University, the American Red Cross and American Institute of Certified Public Accountants.

A)natural monopolies
B)nonprofits
C)intermediaries
D)cultural institutions

Question 28

When a fast-food chain responds to environmental concerns by eliminating Styrofoam containers, it shows a desire to be a ______.

A)resource manager
B)free enterprise producer
C)good corporate citizen
D)consumer advocate

Question 29

Mataya is good at summarizing and communicating financial and other information to Jesse and the other restaurant managers.Which functional area is her specialty?

A)accounting
B)finance
C)marketing
D)operations

Question 30

_____ involve(s) the design and management of the processes that transform resources into goods or services.

A)Marketing
B)Operations
C)Finance
D)Ownership

Question 31

Every business must have one ____, whose primary role is to infuse money into the business.

A)owner
B)employee
C)supplier
D)customer

Question 32

Generally speaking, economic systems can be divided into planned and free market systems.

Question 33

Businesses such as hospitals, insurance companies, financial institutions, and attorneys convert resources into _____ products.

A)tangible
B)secondary
C)intangible
D)operational

Question 34

The Peñas hire a manager for each restaurant and assign specific goals and responsibilities.Each manager will perform each of the traditional management functions _____.

A)staffing
B)organizing
C)directing
D)auditing

Question 35

What are the external forces that influence business activities?

Question 36

Good _____ management is particularly important when a company is first formed because new businesses usually need to borrow start-up money.

A)financial
B)accounting
C)operations
D)marketing

Question 37

When people have more discretionary money to eat out at restaurants and cafeterias, it's a sign that the _____ is strong.

A)gross domestic product
B)supply chain
C)economy
D)government

Question 38

As a functional area of business, what value does the accounting group provide?

Question 39

The activities needed to operate a business can be divided into a number of _____.

A)fiscal policies
B)economic indicators
C)functional areas
D)business cycles

Question 40

A _____ accountant prepares information, such as reports on the cost of materials used in the production process, for internal use only.

A)financial
B)marketing
C)managerial
D)staff

Question 41

In theory, a _____ economy is one in which the government owns all or most enterprises.

A)free market
B)communist
C)financial
D)socialist

Question 42

The free market system was espoused by _____ in his book The Wealth of Nations.

A)Joseph Smith
B)Eli Whitney
C)Benjamin Franklin
D)Adam Smith

Question 43

Previously communist economies, such as those of Eastern Europe, are becoming more mixed as they adopt capitalist characteristics and convert previously government-owned businesses to private ownership.

Question 44

Under a socialist economic system, the government owns all or most businesses.

Question 45

A mixed market economy is one that relies on both goods? and service?producing businesses and is largely controlled by the government.

Question 46

_____ is the study of the production, distribution and consumption of goods and services.

A)Marketing
B)Economics
C)Inflation
D)Consumerism

Question 47

_____ allocates the goods and services produced by government-run industries and tries to ensure that the resulting wealth is distributed equally.

A)Fiscal policy
B)Monetary policy
C)Free enterprise
D)Central planning

Question 48

Among free market theorists, the principle of laissez-faire means _____.

A)leaving things alone
B)equalizing resources
C)forming natural monopolies
D)lengthening supply chains

Question 49

When government-owned businesses convert to private ownership, they go through a process called _____.

A)privatization
B)consumerization
C)socialization
D)domestication

Question 50

Among free market theorists, the principle of laissez-faire calls for government intervention to equalize the distribution of resources.

Question 51

Which of the following question(s) does an economist attempt to answer?

A)How should goods and services be produced
B)How much money will it take to produce these products
C)How many products can we produce in one week
D)All of these.

Question 52

The term laissez-faire means that:

A)the government should regulate industries.
B)key industries should be owned by the government.
C)there should be limited intervention by the government in business activity.
D)the government should leave business activities to function according to the laws of economics.

Question 53

The economic system of a country is the means by which a society makes decisions about allocating resources to produce and distribute products.

Question 54

The economic system with the highest level of government control is communism.

Question 55

Generally speaking, economic systems can be divided into _____ and _____ systems.

A)management / service
B)financial / entrepreneurial
C)profit / nonprofit
D)planned / free market

Question 56

As factors of production -- equipment, buildings, vehicles, and cash are considered _____.

A)output
B)capital
C)consumer goods
D)operations

Question 57

Economists study the interactions between households and businesses and look at the ways in which the factors of production are combined to produce the goods and services that people need.

Question 58

_____ not only provide factors of production (or resources) but also consume goods and services.

A)Households
B)Suppliers
C)Nonprofits
D)Entrepreneurs

Question 59

In a _____ economy, the government controls selected major industries, such as transportation and health care, while allowing individual ownership of other industries.

A)free market
B)centrally planned
C)fiscally sound
D)mixed market

Question 60

_____ study the interactions between households and businesses and the ways in which the factors of production are combined to produce goods and services.

A)Marketers
B)Economists
C)Accountants
D)Entrepreneurs

Question 61

The equilibrium price is a point at which buyers' demand for a product and sellers' supply of it are in balance.

Question 62

If the quantity demanded for cars is lower than the quantity supplied, we can expect that:

A)the price of cars will increase.
B)the price of cars will not change.
C)car manufacturers will increase their production of cars.
D)the price of cars will decrease.

Question 63

A demand curve shows the relationship between the:

A)price of a product and the quantity that producers are willing to sell.
B)price of a product and the quantity that consumers are willing to buy.
C)income of consumers and the quantity of a product that consumers are willing to buy.
D)income of consumers and the quantity of a product that producers are willing to sell.

Question 64

In marketing, supply and demand interact to create a(n) _____price-the price at which buyers are willing to purchase the amount that sellers are willing to sell.

A)gross domestic
B)optimal
C)equilibrium
D)consumer

Question 65

What is the free market system?

Question 66

When we plot a supply curve and a demand curve for apples on one graph, the point at which the two points intersect is the _____.

A)stable price
B)consumer price index
C)equilibrium price
D)gross product

Question 67

Supply is the quantity of a product that sellers are willing to sell at various prices.

Question 68

Generally speaking, we find products more attractive at higher prices because we believe that other people find value in them.

Question 69

When sellers supply more of the product than buyers are willing to purchase, a shortage is created.

Question 70

A demand curve shows the _____ of a product that will be demanded at different prices.

A)quality
B)output
C)quantity
D)scarcity

Question 71

_____ refers to the quantity of a product that buyers are willing to purchase at various prices.

A)equilibrium
B)supply
C)competition
D)demand

Question 72

When sellers supply more of the product than buyers are willing to purchase, a ______ is created.

A)shortage
B)surplus
C)supply and demand schedule
D)demand

Question 73

Scalpers sell tickets for such events as the World Series and the Super bowl for prices many times the amount printed on the tickets.This situation is an example of which of the following conditions?

A)Market in equilibrium
B)Surplus causing an increase in market price
C)Shortage causing an increase in market price
D)Market in which the quantity demanded is less than the quantity supplied

Question 74

How do economists study the interactions between households and businesses?

Question 75

_____ refers to the quantity of a product that sellers are willing to sell at various prices

A)supply
B)demand
C)equilibrium
D)competition

Question 76

A supply curve shows the relationship between the price of a product and the quantity that consumers are willing to buy.

Question 77

Businesses are more willing to sell a product when the price _____ and less willing to sell it when prices _____.

A)rises / fall
B)rises / rise
C)falls / rise
D)falls / fall

Question 78

Scenario-Based
New Age Pharmaceuticals Inc.produces two limited lines of drugs-one for common maladies and one for rarer conditions and diseases.The majority of its business comes from the tried-and-true drugs that most Americans have been using for many years, but the new growth area in the pharmaceutical industry is in high-priced new drugs.New Age management believes that the company's research-and-development operations are sufficiently effective and efficient enough to develop six new prescription drugs that will start showing a profit within 12 months of their roll-outs.Currently more than 4 million people use New Age products.
New Age will be more willing to develop new products when prices are on the rise and less willing when they're coming down.

Question 79

In researching the quantity of medicines that customers are willing to purchase at various prices, New Age management will actually be researching demand.

Question 80

Demand is the quantity of product that buyers are willing to purchase at various prices.