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Flashcards in midterm practice test Deck (99):
1

a $100 tax credit reduces your tax more than a $100 tax deduction does

  • true
  • false

true

 

2

a(n) ____ is a short, specific written declaration of the reason a business exists and what it wants to achieve

 

  • statement of intent
  • affirmation of purpose
  • mission statement
  • declaration of principle

mission statement

3

the differences between actual and budgeted performance, called ___, allows managers to spot problems before they become serious

  • profits
  • losses
  • discrepancies
  • liabilities

discrepancies

4

a current ratio of 2:1 means that the value of current assets is twice as much as the value of current liabilities

true or false

true

5

true or false

consumers are individuals and organizations that determine what products and services will be available for sale

false

consumers decide what products and services will be bought

producers decide what will be for sale

6

which of the following is not a fundamental principle that guides the effective organization of work?

  • accountability
  • responsibility
  • authority
  • moderation

moderation

7

the ____ shows how much profit is being made by each dollar of sales for the period being analyzed

  • net income ratio
  • current ratio
  • return on equity ratio
  • debt to equity ratio

net income ratio

8

a ____ represents a unit of ownership in a corporation

  • corporate bond
  • certificate of deposit
  • share of corporate stock
  • mortgage

share of corporate stock

9

true or false

an entrepreneur is an economic resource

true

10

one important advantage of forming a partnership is that this form of business organization gives each owner sole control over the business

  • true
  • false

false

they share control over the business

11

a bond represents a debt for an organization

true or false

true

12

when the company is operating at a loss, the total expenses listed ont he income statement will be ____

  • less than the total revenue
  • more than the total revenue
  • less than the total assets
  • more than the total assets

more than the total revenue

13

each of the following is one of the three economic questions that must be answered by all nations except:

  • what goods and services will be produced
  • how will the goods and services be produced
  • who will receive the profits earned when goods and services are produced
  • what needs and wants will be satisfied with the goods and services produced

who will receive the profits earned when goods and services are produced

14

without personal savings, businesses could not carry out capital projects

true or false

false

15

which of the following is not one of the six basic activities that all businesses perform?

  • raising capital
  • buying goods and services
  • conserving resources
  • generating ideas

conserving resources

16

service businesses are the fastest growing part of the US economy

  • true
  • false

true

17

unity of command means there is _____

  • a single person in charge of a business
  • an overall plan that tells each employee what to do
  • a clear reporting relationship for all staff of a business
  • a way for ideas to flow from employees to managers

a clear reporting relationship for all staff of a business

18

true or false

deflation has occurred in the US

true

19

technology has allowed people to work fewer hours

  • true
  • false

false

20

XYZ Company produces and sells five products.  People who specialize in production and marketing are assigned to each product.  XYZ company has a ____ organization structure.

  • unity of command
  • functional
  • matrix
  • corporate

matrix

21

when you purchase a corporate bond, you become one of the corporation's ___

  • owners
  • creditors
  • equity holders
  • borrowers

creditors

22

in a ____ the resources are owned and controlled by the government

  • command economy
  • traditional economy
  • market economy
  • mixed economy

command economy

23

the ____ tells you if the business will be able to pay its debts whent hey are due

  • current ratio
  • debt to equity ratio
  • return on equity ratio
  • net income ratio

current ratio

24

jamal's family has assets of $250,000, including $160,000 of value in their home.  the family has $80,000 in liabilities.  what is the family's net worth?

  • $10,000
  • $170,000
  • $330,000
  • $490,000

$170,000

250000-80000=170000

(trick question because you don't use the 160000)

25

a mortgage or rent payment is a(n) ____

  • fixed expense
  • variable expense
  • personal asset
  • deficit

fixed expense

26

the easiest form of business to start and end is a(n) ____

  • limited liability partnership
  • S corporation
  • franchise
  • proprietorship

proprietorship

27

a ____ occurs when a government spends less than it takes in

  • budget deficit
  • budget shortage
  • budget over run
  • budget surplus

budget surplus

28

which of the following is an example of a service?

  • the shingles that are used to put a new roof on your home
  • the effort of the worker you hire to put a new roof on your home
  • the hammer that is used to install the new shingles on your home
  • the increased value of your home after a new roof is installed

the effort of the worker you hire to put a new roof on your home

29

in what type of business organization is each owner personally liable for all business debts, even if the debts were created by other owners?

  • corporation
  • partnership
  • proprietorship
  • S corporation

partnership

30

when preparing a cash flow statement, include ____ under Cash Inflows

  • a gross pay before taxes and deductions
  • gross pay less taxes only
  • net income or take home pay
  • interest on mortgage

net income or take home pay

31

true or false

when there are many competitors in a market, individual businesses are not able to easily raise their prices

true

if one company raises the price of the item, people will buy that same item from another company

32

groups of people form consumer cooperatives to ___

  • purchase goods and services more cheaply than they could as individuals
  • reduce the amount of property taxes that each member must pay
  • generate a profit for each member of the group
  • increase their political power in their community

purchase goods and services more cheaply than they could as individuals

33

most US businesses have no employees other than the owner

  • true
  • false

true

more than 72% of US businesses employ only the owner

34

a current ratio of 1:2 represents an unhealthy business situation

true or false

true

35

an employee using direct deposit will receive a paycheck printed electronically to take to the bank

  • true
  • false

false

only recieve a paystub, do not have to take anything to the bank

36

if you want to save money at a savings institution, you would be most interested in the ____

  • prime rate
  • discount rate
  • certificate of deposit rate
  • t-bill rate

certificate of deposit rate

37

current liabilities are amounts owed by the business that will be paid off within two years

  • true
  • false

false

will be paid off within one year

38

physicians, web designers, and furniture movers are ____

  • intermediaries
  • nonprofit corporations
  • manufacturers
  • service businesses

service businesses

39

a manager who supervises inexperienced employees can have a greater span of control than one who supervise experienced employees

  • true
  • false

false

managers supervising inexperienced employees have to watch them and help them more than those whose supervise employees that are experienced

40

policies are descriptions of the way work is to be done

  • true
  • false

false

41

____ refers to the quantity of a good or service that businesses are willing and able to provide

  • supply
  • demand
  • scarcity
  • trade off

supply

42

consumer debt includes each of the following except ____

  • unspent consumer income
  • home mortgages
  • unpaid credit card balances
  • auto loans

unspent consumer income

43

gross domestic product (GDP) is the dollar value of all ____

  • final goods and services produced in a country during one year
  • goods and services produced in a country during one year
  • intermediate and final goods and services produced in a country during one year
  • final goods and services produced in, or imported to, a country during one year

final goods and services produced in a country during one year

44

all of the following can increase productivity except ____

  • improved technology
  • better training for workers
  • improved management techniques
  • increased wages for workers

increased wages for workers

45

the consumer price index (CPI) is a measure of ____

  • inflation
  • consumer debt
  • retail sales
  • interest rates

inflation

46

the right side of the balance sheet lists ____

  • liabilities
  • assets
  • owners equity
  • liabilities and owner's equity

liabilities and owners equity

47

true or false

debt is harmful to a company

false

48

in a market economy, a marketplace is always a physical location where economic transactions take place

true or false

false

think of amazon - you can't go to their physical location to buy stuff

49

____ records identify the amount assets have decreased in value due to their age and use

  • asset
  • depreciation
  • accounts receivable
  • accounts payable

depreciation

50

actual sales and expenses for a specific period are reported on the ____

  • operating budget
  • balance sheet
  • income statement
  • payroll record

income statement

51

when many more people wish to purchase a product, its price will tend to ____

  • stay the same
  • fall
  • decline only to rise again
  • increase

increase

52

the ____ is the interest rate that banks make available to their best business customers

  • discount rate
  • corporate bond rate
  • morgage rate
  • prime rate

prime rate

53

revenue minus expenses equals ____

  • total assets
  • total liabilities
  • owner's equity
  • profit or loss

profit or loss

54

on a family budget, the savings category is listed as a(n)

  • asset
  • income
  • expense
  • variable

expense

55

a business with a debt to equity ratio of 3:1  may have trouble borrowing additional funds from a bank

 

true or false

true

56

market price is determined by all of the following except

  • competition
  • opportunity cost
  • demand
  • supply

opportunity cost

57

a producer that mines coal is a(n)

  • wholesaler
  • extractor
  • manufacturer
  • retailer

extractor

58

the primary reason why businesses invest resources and take risks is to ___

  • provide jobs
  • produce goods and services
  • improve their products
  • earn a profit

earn a profit

59

a ____ must name a board of directors that will make the major policy and financial decisions for the business

  • limited liability company
  • proprietorship
  • corporation
  • limited liability partnership

corporation

60

an excise tax is a type of tax on ____

  • purchases
  • property
  • wealth
  • earnings

purchases

61

gross domestic product (GDP) per capital is calculated by ___

  • dividing GDP by the total population
  • multiplying GDP by the total population
  • dividing GDP by the Consumer Price Index
  • multiplying GDP by the Consumer Price Index

dividing GDP by the total population

62

a demand curve illustrates the relationship between quantity demanded of a product and ____

  • quantity supplied
  • price
  • profit
  • production costs

price

63

which of the following is not a principle upon which the US economic system is based?

  • private property
  • freedom of choice
  • government regulation
  • competition

government regulation

64

if owners have total equity of $1,000,000 in the business and the business has net income (profit) of $10,000, the return on equity is _____

  • 10%
  • 1%
  • 0.1%
  • 100:1

1%

10000/1000000=.01 then change to % by moving decible over 2 spots

to check: 1000000x1%=10000

65

what tool for money management is a plan for spending and saving income?

  • balance sheet
  • budget
  • cash flow statement
  • financial plan

budget

66

on a balance sheet, the value of your home is listed under ____, while the amount you still owe on your home mortgage is listed under ____

  • assets; liabilities
  • liabilities; assets
  • net worth; liabilities
  • liabilities; net worth

assets; liabilities

67

a functional organizational structure is a diagram that shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications

  • true
  • false

false

68

examples of long term assets are ____

  • inventory and accounts receivable
  • buildings and equipment
  • mortgage debt and accounts payable
  • none of these choices

buildings and equipment

69

financing requirements for a major business expansion are based on the ____ budget

  • start up
  • operating
  • cahs
  • business

start up

70

over the past 50 years, the proportion of women who work outside the home has ____

  • stayed almost the same
  • grown very slowly
  • declined slightly
  • grown significantly

grown significantly

71

true or false

the US is the largest producer of goods and services int he world

true

72

most disability income insurance will pay ___

  • 80 - 90% of your salary
  • 60-70% of your salary
  • 100% of your salary
  • 100% of your salary plus all medical expenses related to your disability

60-70% of your salary

73

the amount of social security benefits a retiree receives each month depends on ___

  • how much the retiree saved while employed
  • how much the retiree earned while employed
  • the retiree's need
  • the amount of the retiree's pension

how much the retiree earned while employed

74

the recurring ups and downs of gross domestic product (GDP) in an economy is called the _____

  • stock market
  • bond market
  • money cycle
  • business cycle

business cycle

75

economic decision making is the process of deciding _____

  • how to spend your time
  • how to use your income
  • which needs and wants will be satisfied
  • whether to buy products now or later

which needs and wants will be satisfied

76

money management means never spending, doing without things, and not having any fun

  • true
  • false

false

 

77

an estate tax is paid ____

  • at the time of purchase
  • on a specific due date
  • when a person dies
  • once or twice a year

when a person dies

78

if you want to itemize deductions, you must use Form ____

  • 1040A
  • W-2
  • 1040
  • 1040EZ

1040

79

sources of information to help build a budget for a new business include all except ____

  • past financial records
  • the small business administration (SBA)
  • published financial information on similar businesses
  • professional associations

past financial records

80

what is the formula for calculating owner's equity?

  • total assets minus total liabilities
  • total revenue plus total assets
  • current assets plus long term assets
  • total revenue minus total expenses

total assets minus total liabilities

81

if intermediate goods were counted as a part of gross domestic product (GDP), the value of these goods would be counted twice

 

true or false

true

82

FICA refers to ____

  • unemployment taxes
  • social security and medicare taxes
  • income taxes
  • payroll taxes

social security and medicare taxes

83

all people above 16 who are actively working or seeking work make up the ____

  • unemployment rate
  • creditor pool
  • labor force
  • labor organization

labor force

84

most nations of the world can be classified as having a ____

  • command economy
  • market economy
  • traditional economy
  • mixed economy

mixed economy

85

in preparing your income tax return, you may itemize deductions and take a standard deduction

  • true
  • false

false

 

you can only take one or the other - so take either the deductions on what you itemize or the standard deduction

86

the first step in the decision making process is to _____

  • identify the choices
  • define the problem
  • evaluate advantages and disadvantages of each choice
  • review your decision

define the problem

87

with a traditional individual retirement account (IRA)

  • contributions are tax deductible
  • investment gains are tax deferred
  • funds may be withdrawn without penalty after age 59-1/2
  • all of these choices

all of these choices

88

you do not have to pay tax on ____ income

  • tax deferred
  • earned
  • tax exempt
  • investment

tax exempt

89

____ are precise statements of results a business expects to achieve

  • goals
  • policies
  • strategies
  • articles of incorporation

goals

90

if you are an employee of a company, your net pay is ____

  • the same as your gross pay
  • your gross pay minus deductions
  • your gross pay  minus deductions minus tax withholding
  • your gross pay minus deductions minus tax withholding minus direct deposit

your gross pay minus deductions minus tax withholding

91

suppose you are preparing your federal income tax return for the year 2012.  what is deadline for filing this return?

  • january 1, 2012
  • january 1, 2013
  • april 15, 2012
  • april 15, 2013

april 15, 2013

92

true or false

the basic economic problem results from scarcity

true

93

____ include tools and equipment used to produce goods and services

  • natural resources
  • human resources
  • capital resources
  • consumer resources

capital resources

94

your checkbook and bank statements are an effective budgeting system

  • true
  • false

false

95

true or false

there has never been a true depression in the US

false

96

____ is a period in which demand begins to decrease, businesses lower production, unemployment begins to rise, and GDP growth slows for two or more quarters of the calendar year

  • depression
  • deflation
  • recession
  • recovery

recession

97

true or false

things that are required in order to live are wants

false

they are needs

98

a budget variance

  • is a difference between budgeted and actual spending
  • may be a deficit
  • may be a surplus
  • all of these

all of these

99

the process of good money management should start with knowing your current financial status

  • true
  • false

true