FINAL EXAM REVIEW NAME __________________________

CHARACTERISTICS OF BUSINESS
1. A legal agreement to use the name and sell the products of a parent company is known as a:
a) joint venture c) quasi-public corporation
b) sole proprietorship d) franchise

2. Which type of business is taxed like a small business but can have up to 35 shareholders?
a) corporation c) franchise
b) S-corporation d) joint venture

3. Which types of businesses are operated by local, state, or federal government because their services are
necessary but not lucrative enough to make a profit?
a) S-corporation c) quasi-public corporation
b) nonprofit corporation d) agency corporation

4. When two businesses partner together to share the costs and profits of producing a good or service, it is
known as a:
a) joint venture c) cooperative
b) limited partnership d) partnership

5. Which of the following statements is true about entrepreneurs?

a) Entrepreneurs would rather work for others.
b) Entrepreneurs prefer to assign the decision-making responsibility to the employee.
c) Entrepreneurs usually work hard and for long hours.
d) Entrepreneurs usually give up quickly when their businesses are not immediately successful.

6. Once a business is established, the business structure or type of business cannot be changed.
a) True b) False

7. An example of an industrial business is a:

a) food retailer c) coal mine
b) jewelry wholesaler d) fitness center

8. Small businesses provide more than half of the jobs available in the United States.
a) True b) False

9. An advantage of corporations in relation to partnerships is that:

a) corporations have a tax advantage
b) corporations have a limited life
c) shareholders have unlimited financial liability
d) shareholders can transfer ownership easily

10. What type of business produces goods that other businesses use to make things?
a) industrial c) service
b) manufacturing d) commercial

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11. A medical office is an example of:
a) an industrial business c) a manufacturing business
b) a commercial business d) a franchise

12. Businesses that sell directly to the final consumer are:

a) wholesalers c) retailers
b) producers d) all of the above

13. Which elements of a SWOT analysis consider the internal characteristics of entrepreneurship or a business?
a) strengths & weaknesses c) opportunities & strengths
b) weaknesses & threats d) threats & opportunities

14. What is the purpose of a SWOT analysis?

a) Analyze how entrepreneurship affects the community
b) Determine how much profit a business will make
c) Identify the potential risks and rewards of entrepreneurship
d) Satisfy financial investors’ requirements

15. Which elements of a SWOT analysis consider the external influences that may affect a business?
a) strengths & weaknesses c) opportunities & strengths
b) weaknesses & threats d) threats & opportunities

RESUMES / COVER LETTERS

16. Resumes should be __________ for each position to which you apply.
a) Customized c) Updated
b) Formatted d) All of the above

17. When you send a resume electronically, you should save it as a __________ file.
a) BMP c) PDF
b) HTML d) DOC

18. A resume is a summary of personal information outlining your qualifications for a job.
a) True b) False

19. Which of the following is NOT an acceptable prefix to use in a business letter?
a) Miss c) Dr.
b) Mr. d) Ms.

20. What should stand out the most in the header section of your resume?
a) Address c) Telephone number
b) Name d) Email address

ECONOMICS / ECONOMIC SYSTEMS

21. When the supply of a product is less than the demand for it, a _____ occurs.
a) excess c) equilibrium
b) shortage d) surplus

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FINAL EXAM REVIEW NAME __________________________

22. The law of supply states that:

a) as price goes up, the quantity that consumers are willing and able to buy will also go up
b) as price goes up, the quantity that consumers are willing and able to buy will go down
c) as price goes up, the quantity that businesses are willing and able to produce will also go up
d) as price goes up, the quantity that businesses are willing and able to produce will go down

23. Figures used to measure a nation’s economic performance are called:

a) gross domestic product c) money indicators
b) financial ratios d) economic indicators

24. The law of demand states that:

a) as price goes up, the quantity that consumers are willing and able to buy will also go up
b) as price goes up, the quantity that consumers are willing and able to buy will go down
c) as price goes up, the quantity that businesses are willing and able to produce will also go up
d) as price goes up, the quantity that businesses are willing and able to produce will go down

25. When the supply of a product exceeds demand for it, a _____ occurs.
a) excess c) equilibrium
b) shortage d) surplus

26. Equilibrium is when the supply of a product is equal to the demand for it. This is significant because:
a) it represents the point of maximum profit
b) it is where the lines intersect on a graph
c) it shows that businesses are satisfying wants and needs
d) it really is not significant

27. Which of the following is the correct order of the stages of the business cycle?
a) depression, recovery, prosperity, recession c) prosperity, recession, recovery, depression
b) recession, depression, prosperity, recovery d) recovery, depression, prosperity, recession

28. Gross domestic product (GDP) measures:

a) that the cost of living is going up
b) the total sum of goods and services produced in a county in a given year
c) the number of people who are willing/able to work but cannot find a job
d) that the standard of living is declining

29. Inflation shows that:

a) the cost of living is going up
b) the country is producing more goods and services
c) not everyone in the labor force can find a job
d) that the standard of living is declining

30. A market economy is characterized by:

a) private ownership, no government involvement in the marketplace
b) total government control and a distribution of wealth
c) heavy government involvement but some private ownership
d) a government whose role is to support the people

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31. A command economy is characterized by:
a) private ownership, no government involvement in the marketplace
b) total government control and a distribution of wealth
c) heavy government involvement but some private ownership
d) a government whose role is to support the people

32. An example of a capitalist country is:

a) Cuba c) Sweden
b) The United States d) Bangladesh

33. A mixed economy characterized by heavy government involvement, higher taxes, and key industries run by
the government is:
a) socialism c) communism
b) capitalism d) traditionalism

34. An example of a socialist country is:

a) Cuba c) Sweden
b) The United States d) Bangladesh

35. A mixed economy characterized by total government control in which the government provides for the basic
needs of the people is:
a) socialism c) communism
b) capitalism d) traditionalism

36. A mixed economy characterized by marketplace competition between businesses, private ownership, and
minimal government involvement is:
a) socialism c) communism
b) capitalism d) traditionalism

37. An example of a communist country is:

a) Cuba c) Sweden
b) The United States d) Bangladesh

38. What normally happens during a recession?

a) Unemployment increases, production decreases.
b) Total demand exceeds supply.
c) Total supply exceeds demand.
d) The economic growth rate increases rapidly.

SCOPE OF MANAGEMENT
39. Which management style would work best with employees who have their own specialized jobs and are
expert in them?
a) autocratic c) open
b) democratic d) powerful

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FINAL EXAM REVIEW NAME __________________________

40. The _____ function of management includes evaluating results to determine if the company’s objectives
have been accomplished as planned.
a) planning c) controlling
b) implementing d) organizing

41. Arranging resources to complete work tasks and staffing is part of the _____ function of management.
a) planning c) administering
b) implementing d) organizing

42. With autocratic leaders, employees do not generally make business decisions.
a) True b) False

43. Leadership skills and leadership styles are what motivate others to accomplish common goals.
a) True b) False

44. Which of the following is NOT a function of management?

a) planning c) administering
b) implementing d) organizing

45. Managing day-to-day activities and helping employees to work effectively is part of the _____ function of
management.
a) planning c) administering
b) implementing d) organizing

46. This leadership style is characterized by encouraging workers to share their ideas and allowing employees to
make some decisions.
a) autocratic c) open
b) democratic d) situational

47. This leadership style is characterized by giving little or no direction to the employees; employees are
empowered to decide how to accomplish tasks.
a) autocratic c) open
b) democratic d) situational

48. A mission statement is a short, specific statement that defines the purpose of the company.
a) True b) False

49. This leadership style is characterized by selecting a style that is appropriate or most effective for the
circumstances of the moment.
a) autocratic c) open
b) democratic d) situational

50. The open leadership style is characterized by giving clear and precise directions.
a) True b) False

51. A vision statement is a broad statement that provides the direction of a business.
a) True b) False

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52. Effective managers have good communication skills, human relations skills, teamwork skills, problem-solving
skills, and organizational skills.
a) True b) False

53. Skills used to motivate others to accomplish common goals are:

a) leadership skills c) boss skills
b) management skills d) business skills

54. Analyzing information and making decisions about what needs to be done is the _____ function of
management.
a) planning c) implementing
b) organizing d) controlling

FINANCIAL ACTIVITIES
55. If the assets of one partner are not enough to cover business debts, assets from other partners can be taken.
a) True b) False

56. Stockholders are involved in the day-to-day management of corporations.

a) True b) False

57. Net worth, owner’s equity, and stockholders’ equity are all terms meaning:
a) capital c) assets
b) liabilities d) inventory

58. The amount a retailer pays to a supplier for goods it then resells is called the:
a) gross profit c) current asset
b) net profit d) cost of goods sold

59. A common method used to purchase expensive equipment is with:

a) debentures c) bonds
b) term loans d) factors

60. The three factors to consider when deciding which source of funding to use are:
a) bank, credit union, loan shark
b) common stock, preferred stock, bonds
c) cost of capital, interest, power of the contributor
d) liens, mortgages, underwriters

61. Which of the following is NOT considered a cost of operation:

a) wages and salaries c) utilities
b) rent or mortgage d) taxes

62. Which financial statement shows the condition of the business at the end of the year and is based on the
accounting equation?
a) cash flow statement c) balance sheet
b) income statement d) dividends report

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FINAL EXAM REVIEW NAME __________________________

63. The point at which a business has sold enough goods or services to cover the cost of operations is
represented by:
a) the accounting equation c) the par value
b) the return on investment ratio d) the break-even analysis

64. Owner capital is also known as equity capital.

a) True b) False

65. Money that others loan to a business is called:

a) debt capital c) equity capital
b) dividends d) retained earnings

66. The owner’s or owners’ personal contributions to the business is:

a) equity capital
b) may come from personal savings or loans
c) may come from mortgaging personal property
d) all of the above

67. Banks and other lenders usually will NOT lend to a business unless the debt capital exceeds equity capital.
a) True b) False

68. Short-term debt must be repaid within:

a) 30 days c) 90 days
b) 60 days d) One year

69. A company purchases $6,000 worth of sweatshirts on credit from the manufacturer. Until the bill is paid,
that amount is considered:
a) an asset c) capital
b) accounts receivable d) a liability

70. The basic accounting equation is:

a) capital = assets + liabilities c) liabilities = assets + capital
b) assets = capital – liabilities d) assets = liabilities + capital

71. What is interest?

a) A fee paid to a lender for issuing a loan.
b) A share in the profits of a business.
c) A payment that is declared by the board of directors of a firm.
d) A fee paid for the use of an investor’s or bank’s money.

72. Bonds and stocks are the same thing; they are just issued by different types of businesses.
a) True b) False

73. Business profits that are saved for future business operations expenses are:
a) debt capital c) equity capital
b) dividends d) retained earnings

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74. Which financial statement shows sales and expenses and is used to determine if a business is profitable?
a) cash flow statement c) balance sheet
b) income statement d) dividends report

75. Which financial statement tracks cash receipts and payments at the time that they occur (it does not
account for money owed to the business or to be paid out at a later date)?
a) cash flow statement c) balance sheet
b) income statement d) dividends report

76. People who invest in a corporation’s stocks are financially protected from liability should the business fail.
a) True b) False

COMMUNICATION
77. Communication is:
a) passing along factual data c) a two-way process of sharing information
b) sending information to another person d) shouting a request across a noisy room

78. The most dangerous approach used to resolve conflict is:

a) avoidance c) resentment
b) compromised d) win/lose

79. E-mail is a form of:

a) written communication c) culture
b) verbal communication d) nonverbal communication

80. In the workplace:

a) employees have the right to privacy, including communication
b) the employer is not allowed to monitor email
c) employees should participate in ongoing chat groups
d) employee e-mail and Internet use should be business-related

81. Around 40 percent of e-mail consists of unsolicited advertising called:

a) spam c) emoticons
b) overload d) flames

82. A closed corporate culture is characterized by:

a) problem-solving at all levels c) risk-taking
b) top-down decision making d) creativity and supportiveness

83. Formal communication in organizations flows:

a) upward c) upward and downward
b) downward d) upward, downward, and across

84. It has been estimated that 80 percent of poor management decisions can be traced to:
a) lack of experience c) corruption
b) inaccurate data d) ineffective communication

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FINAL EXAM REVIEW NAME __________________________

85. Which statement is true about conflicts?

a) Conflicts usually do not challenge employees and stimulate new ideas.
b) Conflicts can become obstacles to job performance.
c) Conflicts do not usually lead to healthy discussions.
d) Conflicts that are not resolved usually lead to long-term problems.

86. Which statement is true about e-mail?

a) It lowers communication costs. c) It slows decision making.
b) It decreases office productivity. d) It increases paper handling.

87. Ethics are:

a) laws that can be enforced c) normal behavior
b) rules for top management d) standards of moral conduct

88. An example of ethical behavior is:

a) using company resources for personal use c) keeping company information confidential
b) accepting secret business gifts d) invading employee privacy

BUSINESS OPERATIONS
89. Which of the following is NOT a type of organizational chart?
a) line c) line-and-staff
b) matrix d) webbed

90. Policies are lists of steps to be followed for performing certain work in daily operations.
a) True b) False

MARKETING ACTIVITIES
91. Introduction, growth, maturity, and decline are elements of:
a) comparative advantage c) the balance of trade
b) a product’s life cycle d) supply and demand

92. Obtaining goods to be resold is a marketing activity known as:

a) buying c) promoting
b) selling d) wholesaling

93. An example of a product in the decline stage of the life cycle is:
a) notebook computers
b) cellular telephones
c) microwave ovens
d) phonograph records

94. Which of the following is NOT an element of the marketing mix?

a) product c) place
b) price d) none of the above

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95. The place decision in the marketing mix involves determining:
a) where to manufacture the product
b) where the product will be sold
c) whether to offer credit to customers
d) where to place the brand name on the product’s package

96. The product life cycle concept suggests that:

a) there is no such thing as a new product c) profits will usually be higher than sales
b) sales of a product will continue to grow d) both sales and profits will ultimately decline

97. Companies emphasize promotion and price of their products in which stage of the life cycle?
a) Introduction c) Maturity
b) Growth d) Decline

98. The types of buyers a business wishes to attract and where those buyers are located is known as a:
a) marketing mix c) target market
b) marketing plan d) competitive advantage

99. One way that businesses respond to the maturity stage of the product life cycle is to look for:
a) less profit c) reintroduce old products
b) new markets d) help from the government

100. As a product progresses through the product life cycle, its marketing mix:
a) remains consistent c) increases
b) varies by stage d) decrease

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