Test Answers on chapter 1 questions – Flashcards
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________ is money that an organization brings in through the sale of its goods and services.
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Revenue is the money a company brings in through the sale of goods and services.
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A/an ________ is a framework of how a business intends to generate revenue.
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business model Business model - A company's business model is a clear, simple outline of how the business intends to generate revenue.
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Profit refers to the money the company brings in through the sale of goods and services.
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False
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Businesses add value by transforming lower-value inputs (like paper and ink) into higher-value outputs (like textbooks).
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True
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________ is the term used to describe the difference between revenue and expenses.
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Profit Profit is the amount of money left over after all the costs involved in doing business, have been deducted from revenue.
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Just Bakes, a bakery outlet in Cincinnati, is famous for the uniqueness of its bakery items, such as the baguette supreme, made from mixed-flour dough. The outlet also has an online ordering system that offers original gift baskets. Most of its target customers find it to be more appealing. In this example, Just Bakes has a(n) ________.
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competitive advantage A competitive advantage makes a company's products or the company as a whole more appealing to its chosen customers.
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Chicago Cinema Museum houses a unique collection of artifacts, memorabilia, and equipment that preserves the history and grandeur of cinema. It is funded by the government of the United States. The museum administrators apply many of the business-management principles to operate efficiently and effectively. The museum is most likely to be a ________.
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nonprofit organization Not-for-profit organizations (also known as nonprofit organizations) such as museums, most universities, and charities do not have a profit motive.
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If individuals and companies believe they can pursue rewards without facing the risks that should be attached to those pursuits, they are more likely to engage in irresponsible and even unethical behavior. This situation is known as a(n) ________.
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moral hazard If individuals and companies believe they can pursue rewards without facing the risks that should be attached to those pursuits, they are more likely to engage in irresponsible and even unethical behavior - a situation known as moral hazard.
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Intangible products have a physical presence.
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False
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Lisa has a small language training business. She provides French and Spanish lessons to several customers in the neighborhood. What type of business does Lisa have?
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service business Service businesses create value by performing activities that deliver some benefit to the customer.
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The service sector now dominates the U.S. economy.
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True
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________ value by performing activities that deliver some benefit to the customer, such as automotive repair, banking, health care and massage therapy.
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Service businesses Service businesses create value by performing activities that deliver some benefit to the customer, such as finance, insurance, transportation, construction, utilities, wholesale and retail trade, banking, entertainment, health care, maintenance and repair, and information.
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Businesses that need very large amounts of money, equipment, land and other material resources in order to get started and continue to operate are ________ businesses.
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capital-intensive Because they require large amounts of money, equipment, land, and other resources to get started and to operate, goods-producing businesses are often capital-intensive businesses.
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A business that relies on human resources more than on buildings, machinery, material resources, and land would be a ________ business.
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labor-intensive Service businesses tend to be labor-intensive businesses, in that they rely more on human resources than buildings, machinery, and equipment to prosper
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________ refer to a resource or capability a company must have before it can start competing in a given market
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Barriers to entry Barrier to entry is a resource or capability a company must have before it can start competing in a given market.
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A firm finds it difficult to get started and establish itself in the car manufacturing industry because of high capital requirements, such as large amounts of money, manufacturing equipment, land, and a major marketing campaign. This exemplifies ________.
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barriers to entry Barrier to entry is a resource or capability a company must have before it can start competing in a given market.
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A U.S. multinational retailer corporation wants to set up a chain of large discount department stores in a developing nation. However, it is hindered by strict licensing procedures and bureaucratic delays in obtaining government approvals. In this example, the multinational corporation faces ________.
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barriers to entry Barrier to entry is a resource or capability a company must have before it can start competing in a given market.
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Population trends that change the composition of consumer markets and the workforce are a part of a company's ________ environment.
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social Every business operates within the broad social environment, the trends and forces in society at large. For instance, all companies are affected by population trends that change the composition of consumer markets and the workforce.
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All internal and external groups affected by a company's activities are referred to as its ________.
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stakeholders Stakeholders refers to the internal and external groups affected by a company's decisions and activities.
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The term stakeholders refers only to those people who have invested money in the company's stock.
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False
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A generational "bulge" in the population made up of people born between 1946 and 1964, called the Baby Boom generation, has occupied a large number of middle and upper management positions, frustrating younger professionals who would like to climb the company ladder. This is an example of the effect of ________ environment on businesses.
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social Every business operates within the broad social environment, the trends and forces in society at large. One example of this is the so-called Baby Boom generation, a generational "bulge" in the population made up of people born between 1946 and 1964. This large group of people has affected business in numerous ways.
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The legal and regulatory environment would include ________.
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the speed of obtaining licenses Every business is affected by the legal and regulatory environment, the sum of laws and regulations at the local, state, national, and even international level.
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Taxation, fees, efforts to coordinate multiple regulatory agencies, labor rules, environmental restrictions, protection for assets such as patents and brand names, roads and other infrastructure, and the transparency and consistency of decision making are a part of the ________ environment.
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legal and regulatory Legal and regulatory environment refers to the laws and regulations at the local, state, national, and even international level.
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Which of the following is a component of the specific market environment within which each business operates?
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competitors Every company operates within a specific market environment composed of three important groups: (1) its target customers, (2) buying influences that shape the behavior of those customers, and (3) competitors - other companies that market similar products to those customers.
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refers to a company's target customers, the buying influences that shape the behavior of those customers, and competitors that market similar products to those customers.
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Market environment Market environment refers to a company's target customers, the buying influences that shape the behavior of those customers, and competitors that market similar products to those customers.
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________ activities are intended to identify new ideas that have the potential to result in new goods and services.
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Research and development Research and development (R&D) refers to the functional area responsible for conceiving and designing new products.
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Which of the following enables companies to design new and better ways to run their operations?
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process R&D Companies can engage in process R&D to design new and better ways to run their operations.
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Mark, who works for a toy manufacturing firm, is responsible for creating a branding and marketing strategy. He is most likely to be a part of the firm's operations management team
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False
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In general, accounting managers are responsible for planning, while financial managers are responsible for monitoring and reporting.
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False
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Systems that promote communication and data usage through the company or allow it to offer new services to their customers are called ________.
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information technology (IT) Information technology (IT) systems promote communication and information usage through the company or allow companies to offer new services to their customers.
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Companies that sell shares of stock to the public are required to have their financial records audited by an outside accounting firm.
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True
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refers to the area where the company makes whatever it makes (for goods-producing businesses) or does whatever it does (for service businesses).
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Operations Variously called manufacturing, production, or operations, this area is where the company makes whatever it makes (for goods-producing businesses) or does whatever it does (for service businesses).
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The ________ function of an organization coordinates the incoming flow of materials and the outgoing flow of finished products.
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logistics Logistics involves coordinating the incoming flow of materials and the outgoing flow of finished products.
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An operations manager is most likely to be responsible for ________.
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logistics Logistics involves coordinating the incoming flow of materials and the outgoing flow of finished products.
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FinSmart, a finance company, plans to construct a new office building which would be disabled-friendly. The company also plans to make renovations to the existing office buildings to incorporate changes that would make them safer and disabled-friendly. Which of the following persons is most likely to be in charge of planning the new buildings and maintaining them?
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facilities manager Facilities management is responsible for everything from planning new buildings to maintaining them.
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Which of the following statements is true about the major functional areas in a business enterprise?
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Accounting specialists work closely with other functional areas to ensure profitable decision making. Accounting specialists work closely with other functional areas to ensure profitable decision making. For instance, accountants will coordinate with the R and production departments to estimate the manufacturing costs of a new product.
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________ audit the financial reports of public companies as required by law.
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External auditors Companies that sell shares of stock to the public are required to have their financial records audited by an outside accounting firm.
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Claire holds the position of chief information officer (CIO) position at Celera Inc., a real estate company. Her position indicates that she is responsible for the preparation of income statements and balance sheets.
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False
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An HR specialist is most likely to be responsible for which of the following activities?
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motivate and train diverse workforces HR specialists and managers plan and direct human resource activities that include recruiting, training and development, compensation and benefits, employee and labor relations, and health and safety.
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Management accountant is likely to be responsible for which of the following activities?
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assessing the manufacturing costs of new products Management accountants are responsible for collecting, analyzing, and reporting on financial matters—such as analyzing budgets, assessing the manufacturing costs of new products, and preparing state and federal tax returns.
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The manager of a firm was accused of diverting company funds for personal use. Andrew was the person responsible for reviewing his financial activities to see if any of the finances were diverted for personal use, and to determine if he had performed any financial crime. Andrew is most likely to be a(n) ________.
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forensic accountant Forensic accountants investigate financial crimes
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Which of the following positions would be responsible for establishing the long-term financial goals of the company, investing its funds and raising capital for the business?
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treasurer Treasurers and finance officers have a more strategic role, establishing long-term financial goals and budgets, investing the firm's funds, and raising capital as needed.
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Jason, a financial analyst in a computer manufacturing firm, is considered to be unprofessional by several of his co-workers and superiors. His manager feels that Jason is well meaning, however he is unable to communicate effectively. Which of the following tips is the manager most likely to give, to help Jason communicate more professionally?
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Clarify how people will benefit from responding to your messages the way you want them to. The guidelines to improve your effectiveness as a communicator includes making it clear to people how they will benefit from responding to your messages the way you want them to.
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The expected norms of behavior in a particular situation are referred to as ________.
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etiquette Etiquette refers to the expected norms of behavior in any particular situation
