question

__________ includes anything that people generally accept as payment for goods and services

answer

money

question

__________ occurs when goods are traded directly for other goods

answer

barter

question

The redesign of and new colors added to U.S. paper money are intended to

answer

make it more difficult to counterfeit

question

The Fed Chairman is in control of

answer

the U.S. money supply

question

The ______ category of money supply includes money that is quickly and easily accessed

answer

M1

question

__________ represents the most commonly used category of the money supply

answer

M2

question

The Federal Reserve System consists of ________ Federal Reserve banks

answer

12

question

The ___________ represents one of the Fed's most powerful monetary policy tools

answer

reserve requirement

question

The Functions of the Federal Reserve Board

answer

o To control the money supply with monetary policy o To regulate financial institutions o To manage regional and national check-clearing procedures o To supervise the federal deposit insurance of commercial banks in the Federal Reserve System

question

Open Market Operations

answer

Fed reserves monetary policy, the decision to buy or sell U.S. Treasury bills, which are short term debt issued by the U.S. Government, and other investments in the open market. Buy government securities The money supply increases; economic activity increases. Sell government securities The money supply decreases; economic activity slows down

question

Reserve Requirements

answer

the percentage of deposits that banking institutions must hold in reserve, these funds are not available for lending Increase reserve requirements, economic activity slows down. Decrease reserve requirements economic activity increases.

question

Discount Rate

answer

the rate of interest the Fed charges to loan money to any banking institution Raise discount rate, economic activity slows down. Lower discount rate money supply increases; economic activity increases

question

Credit Controls

answer

Relax credit controls More people are encouraged to make major purchases, increasing economic activity. Restrict credit controls People are discouraged from making major purchases, decreasing economic activity

question

A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans

answer

commercial bank

question

Commercial banks primarily serve two types of customers

answer

depositors and borrowers

question

A(n) __________ accepts savings and checking account deposits and provides home mortgage loans

answer

savings and loans association

question

__________ are nonprofit, member-owned financial cooperatives that offer a full variety of banking services such as accepting deposits and making loans

answer

credit unions

question

Traditionally, life insurance companies, pension funds, and brokerage firms are known as _________

answer

non banks

question

Which of the following represent an independent agency of the U.S. government that insures bank deposits

answer

Federal Deposit Insurance Corporation

question

Throughout history an investment in ________ has yielded an excellent return, regardless of the state of the economy or political changes

answer

a good education

question

Budgets are

answer

a financial plan of projected revenues and expenses

question

The best way to save money is to

answer

pay yourself first by taking out money for savings from each paycheck before deciding what to do with the remaining money

question

________ life insurance offers pure insurance protection for a given period of time

answer

term

question

A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n)

answer

annuity

question

The tax-sheltered program to encourage self-employed people to accumulate retirement funds is called a(n)

answer

Keogh plan

question

To effectively run a business, it is necessary to

answer

understand and use accounting information

question

Although accounting has several specific uses, the overall purpose of accounting can be summarized as

answer

to provide financial information that is useful to decision makers

question

Accountants record, classify, and ____________ the results of the financial information they gather

answer

interpret

question

The accounting profession is divided into 5 key working areas, two of which are

answer

auditing and managerial accounting

question

A(n) __________ provides accounting services to individuals or firms on a fee basis

answer

public accountant

question

An accountant who works for a single business or government agency is referred to as a

answer

private accountant

question

__________ involves the review and evaluation of the records that are used to prepare the organization's financial statements

answer

auditing

question

As a first step in the accounting cycle, _________ involves the recording of business transactions

answer

bookkeeping

question

A bookkeeper's first task is to:

answer

separate all of the firm's transactions into meaningful categories

question

The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements

answer

accounting cycle

question

One of the key financial statements prepared in the fifth step of the accounting cycle is:

answer

statement of cash flows

question

The Balance Sheet, the Statement of Cash Flows, and the ______________ are three key financial statements prepared by accountants

answer

income statements

question

________ examine the data prepared by ________ and then make recommendations to top management regarding strategies for improving the firm.

answer

Financial managers; accountants

question

_____________ is the function in business that is responsible for acquiring funds for the firm, and managing funds within the firm

answer

finance

question

A(n) _____________ job includes forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management.

answer

financial managers

question

The overall objective of financial planning is to

answer

optimize the firm's profitability

question

The first step in the financial planning process is

answer

forecasting financial needs

question

A _________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less

answer

short term

question

Acquiring funds through borrowing represents

answer

debt financing

question

Which of the following commonly results in the financial failure of a firm?

answer

Undercapitalization

question

A(n) ________ refers to the first public offering of a corporation's stock.

answer

initial public offering (IPO)

question

_________ represent a powerful force in the buying and selling of corporate securities

answer

Institutional investors

question

An organization whose members can buy and sell securities for companies and investors is known as a

answer

stock echange

question

The ________ is a large national electronic stock trading market.

answer

NASDAQ

question

Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?

answer

SEC

question

Two kinds of equity financing are

answer

common and preferred

question

A ________ certificate provides evidence of ownership in a specific corporation

answer

stock

question

a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

answer

Preferred stock

question

a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently in other parts of the world; "common stock" being primarily used in the United States.

answer

Common stock

question

___________ are the firm's after tax profits that are distributed to stockholders

answer

dividens

question

Dividends are paid out of a corporation's

answer

profit after taxes

question

A bond's face value is the same as its:

answer

principle

question

A ________ is a registered representative acting as an intermediary to buy and sell securities for clients

answer

stockbroker

question

Creating a portfolio by buying several different types of investments to spread the risk of investing is called _______________

answer

diversification

question

Economics is the study of how a society _________________.

answer

mploys resources to produce goods and services and distribute them among competing groups and individuals.

question

___________ studies the operation of a nation's economy as a whole.

answer

macroeconomics

question

____________ looks at the behavior of individual people and organizations in specific markets.

answer

microeconomics

question

_________ is the name of a free-market economic system in which most of the factors of production and distribution - such as land, factories, railroads, and stores - are owned by individuals

answer

capitalism

question

A(n) _____________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

answer

demand

question

A major premise of a socialist system is:

answer

to reduce the inequality in the distribution of wealth

question

Communism is an economic system in which:

answer

the government makes almost all of the major economic decisions.

question

Three important economic indicators of the United States are the unemployment rate, the price indices, and the

answer

gross domestic product (GDP

question

GDP

answer

gross domestic product, the total value of goods produced and services provided in a country during one year

question

Supply curve

answer

Producers sell process at a higher price depending on the supply of the product upward sloping

Business Exam 1 review

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards