BA 101 2nd Midterm – Flashcards
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Which of the following is not a source of funds for a sole proprietorship?
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Selling stock or issuing bonds
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When are limited partnerships generally used?
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When the project is risky and the chance of loss is great
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All of the following are advantages of a sole proprietorship except
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unlimited liability.
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Which stockholders usually have the right to vote and control the board of directors?
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Common
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The organizational form that many consider to be a blend of the best characteristics of corporations, partnerships, and sole proprietorships is the
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Limited Liability Company (LLC)
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The type of ownership that has the ability to raise capital most easily is a
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public corporation
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S Corporations, unlike standard corporations ("C corporations"), and are not double taxed.
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True
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An acquisition occurs when two companies (usually corporations) combine to form a new company.
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False
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From "Rethinking the Boosterism About Small Business": The author claims government programs and policies aimed at small business usually help the wrong kinds of businesses (i.e. those that never intend to generate employment except for their founders). As an example of this misguided effort he cites
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the home office tax deduction
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If you want to go into business for yourself, the easiest way is a sole proprietorship
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True
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An important advantage to the corporate form of business (both normal or C corporations as well as S Corporations) is what?
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limited liability
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Corporations distribute profits to their owners in the form of
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Dividends
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When a group of investors borrows money to buy a company or division, using the company's assets to guarantee the loan, it is called a(n)
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leveraged buyout
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From "Rethinking the Boosterism About Small Business": Large companies (over 2,500) tend to pay less per hour, but offer better benefits and insurance.
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False-They pay better AND offer better benefits. "Hourly wages at the largest companies, those with more than 2,500 employees, average around $27, compared with $16 in companies with payrolls of fewer than 100. Companies with more than 100 workers are almost twice as likely to offer retirement benefits and insurance, and considerably more likely to offer health care."
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From "Rethinking the Boosterism About Small Business": According to the article _____% of small companies that remained in business from 2000-2003 didn't add a single employee.
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80%
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On the balance sheet a company's assets that can be easily converted into cash are called
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current assets
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Which of the following equations is equivalent to the accounting equation?
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Owners' equity = assets - liabilities
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From Shape Shifters: The article noted that his act, while limiting some types of non-audit services American accounting firms can offer, did not forbid them all. What act was this?
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Sarbanes-Oxley
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Bookkeeping is only one aspect of accounting and involves the recording of routine, day-to-day business transactions.
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True
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When an accountant allocates the cost of a piece of equipment over a period of time, this is called
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Depreciation
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The debts Anna's Flowers owes to the Small Business Administration and her company's suppliers represent which of the following?
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Liabilities
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According to the text, a financial managers' greatest concern is probably
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Cash Flow
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From Marketplace Whiteboard Video: When a company records the value of its assets on its balance sheet at market value it is employing the____________ method of asset valuation.
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Mark to Market
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The financial document that has been likened to a snapshot of how the company's finances are doing at that moment is called a(n)
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Balance Sheet
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Assets are a firm's economic resources.
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True
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From Shape Shifters: The article states some lawmakers are worried that the Big 4's consulting and tax advisory is a conflict with what?
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Their Auditing
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Accounting
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records, measures, and interprets financial data.
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Liquidity is judged by how easily an asset can be turned into cash.
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True : an asset that is quickly turned into cash (e.g. accounts receivable) is considered "more liquid" than an asset that cannot be quickly turned into cash (e.g. equipment, land, etc.). Assets are listed in order of liquidity on a balance sheet - with the most liquid asset (cash) at the top and the least liquid at the bottom
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An income statement shows
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revenues, expenses, and net income over a period of time.
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Information found on the company's income statement and balance sheet is extracted from these documents and examined more closely through the use of
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Ratio Analysis
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If a boat manufacturer orders 50 units of fiberglass material and promises to pay the supplier at a later date, the manufacturer will record the amount to be paid as a(n)
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Accounts Payable
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In the area of short-term assets and liabilities, a word that is synonymous with "short term" is
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Current
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The last in line for the payment of profits are the
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Common Stockholders
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Product Placement
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A business pays a media (such as a movie) to have the character holding/using/owning their product.
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Reverse Product Placement
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placing the show in their ad.
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Dan bought three new trucks with money borrowed from the First National Bank. If he fails to repay the loan, the bank will repossess the trucks. The trucks are
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collateral
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The only long-term funds that a company can generate internally are
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retained earnings
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When a company invests a lot of money in a particular project, it is concerned about the amount of risk involved. In general, the longer the expected life of a project or asset, the potential risk is
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greater
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Which of the following capital budgeting projects is the most risky?
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Introducing a new product in a foreign market
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A marketable security is a temporary investment of cash.
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True
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Stockholders who get preference in the distribution of the company's profits but cannot vote are called
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Preferred stockholders
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If a financial manager focuses on monitoring and influencing the company's current assets and liabilities, he or she is involved with
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working capital
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Capital budgeting is the process of analyzing business needs and the selection of assets that will maximize the value of the business.
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True
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Short-term debt obligations that must be repaid within a year are
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Current Liabilities
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If a company retains all of its earnings, then it will not pay
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Dividends
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Overall, financial management primarily involves acquiring and managin
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funds
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Because having idle cash on hand is undesirable, a manager may choose to invest in
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marketable securities
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When the Fed buys securities, it decreases the money in circulation.
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False
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From "The Paradox of Corporate Taxes": Airlines buying more planes than they need, energy companies drilling more holes, and drug companies conducting research with only a marginal prospect of success are examples of how the current tax system
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distorts incentives - Decisions that are made based on the tax implications are not necessarily efficient ones for the company.
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When the Fed lowers the discount rate, it
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increases the money supply
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Data Mining
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the process for identifying patterns and relationships within customer and survey data-gathered from online actions, purchasing, user feedback and such-taht can be then used to improve marketing activities
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If the Fed lowers the reserve requirement for banks this will decrease the supply of money.
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False
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From "Commitment Guaranteed": The article quoted one bank president as saying that personal guarantees are often requested from family businesses because family businesses tend to not have much net worth. He attributed this to:
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In an effort to minimize taxes family businesses tend not to leave much profit in the company
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This Act prohibited commercial banks from being in the insurance and investment banking business.
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Glass Stegal
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Money market funds are a form of mutual fund that
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invests in short-term debt securities issued by governments and corporations.-These were the funds that pulled their money out of the commercial paper market creating a credit freeze.
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The Federal Reserve System is responsible for
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creating a stable environment for economic growth.
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From "The Paradox of Corporate Taxes": What is the much quoted corporate tax rate?
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35%
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The Securities and Exchange Commission (SEC) insures individual bank accounts., not in accordance with the fact or reality or actuality
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False-The FDIC insures accounts.
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From "Commitment Guaranteed": Critics of personal loan guarantees say:
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All of the above
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From "The Paradox of Corporate Taxes": Because the official tax rate is higher than in almost any other country, companies devote enormous time and effort to
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Finding loopholes
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From "The Paradox of Corporate Taxes": The article noted that 115 of the S;P 500 firms had paid a total corporate tax rate of less than _______% in taxes over the last five years.
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20%
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From "Commitment Guaranteed": Ned Smith's company - ABC Realty - just filed bankruptcy. This automatically releases Ned from the personal guarantees he made.
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False
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To carry out its function of controlling the supply of money, the Federal Reserve Board
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uses monetary policy.
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Viral Marketing
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Marketing phenomenon that facilitates and encourages people to pass along a marketing message.
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Which of the following statements explains the difference between profit and cash.
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Cash tells us how much money is in our bank account and profit tells us how much revenue has exceeded costs during a specific period of time.
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If someone asks you to better manage accounts receivable and inventory, the objective is to improve
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cash flow
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Which of the following is most important to the daily operations of a business?
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cash
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Cost Based Pricing
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cost+desired profit
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Demand based pricing
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Target costing pricing-what price will the market pay? Deduct my desired profit and build it for this amount.
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Competition based pricing
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What are my competitors charging? Base my pricing on this.
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Marketing channel(channel of distribution)
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A group of organizations that moves products from producers to customers.
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Channel Conflict
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Situation when a producer or supplier bypasses the normal channel of distribution and sells directly to the end user.
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Product Placement
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Putting products into TV shows and movies where they will be seen. Typically paid for by the business.
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Behavioral Targeting
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Track a person's behavior (online, shopping, etc.) and make inferences about what they like and who they are. Target ads based on these inferences.
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Geographic Targeting
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Track where people are (through digital devices primarily) and make offers from local businesses.
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Viral Marketing
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Marketing phenomenon that facilitates and encourages people to pass along a marketing message. (Viral marketing depends on a high pass-along rate from person to person. If a large percentage of recipients forward something to a large number of friends, the overall growth snowballs very quickly.)
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Owners Equity
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All the money that has ever been contributed to the company that never has to be paid back.
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Owners Equity
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All the money that has ever been contributed to the company that never has to be paid back.
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Owners Equity
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All the money that has ever been contributed to the company that never has to be paid back.