Introduction to Business - 2006 SLC
1) The concept that the boss does the thinking and the employee does the work is outdated. A) True B) False

2) The need for effective management decreases as the business expands. A) True B) False

3) Consumerism is built of the philosophy of “Let the Buyer Beware.” A) True B) False

4) An informal group can help or hinder the proper functioning of a business. A) True B) False

5) Consumerism is an organized movement of citizens and government agencies to improve the rights and power of sellers in relation to buyers. A) True B) False

6) A sole proprietorship is a business owned and operated by a board of directors. A) True B) False

7) As a rule, for certificates of deposit the rate of interest your money earns is higher if you agree to keep your money on deposit for a longer period of time. A) True B) False

8) The free enterprise system is a command economic system. A) True B) False

9) The Fair Labor Standards Act does not require businesses to give its employees sick leave or paid vacations. A) True B) False

10) There are restrictions on the owner’s personal liability in a sole proprietorship. A) True B) False

11) The death of a majority stockholder of a corporation results in the dissolution of the corporation. A) True B) False

12) Liability law has had an impact on business by requiring them to place warning labels on products. A) True B) False

13) One of the disadvantages of the corporate form of ownership is the limited liability of its owners. A) True B) False

14) A sole proprietorship must be registered with the state to obtain its legal charter. A) True B) False

15) Ownership in a corporation is shown by stock certificates. A) True B) False

16) Risk management and insurance management is the same thing. A) True B) False

17) Employee bonding is a commonly used protection against employee dishonesty. A) True B) False

18) Insurance is most often used to protect against loses that are unexpected. A) True B) False

19) Compounded interest means that interest is added to your balance (usually quarterly), and then the next quarter the interest is computed on your money deposited plus the last quarter interest. A) True B) False

20) Money market deposit accounts usually pay a lower rate of interest than checking accounts and require a lower minimum balance. A) True B) False

21) Today's coins and paper money (currency) are backed by the promise of the U.S. government. A) True B) False

22) Each individual customer's account is insured by the FDIC up to $1,000,000 per account ownership. A) True B) False

23) Despite labor laws, students of any age can deliver newspapers or work in movies, theatre, TV, radio; or can work in parent-owned business. A) True B) False

24) States can establish minimum wages laws, as long as the minimum wage is higher than that of the federal government. A) True B) False

25) During an interview, an employer A) can judge an applicant without any further research. B) should do most of the talking. C) should find out whether a young woman plans to stay home with her children when they are born. D) can evaluate the appearance, job knowledge, and personality of the applicant.

26) Job orientation applies most specifically to training given A) during the employment review. B) during the first few days on the job. C) during the first two years on the job. D) after selection, but prior to reporting for work.

27) All of the following are reasons companies conduct interviews, except A) to determine the applicant’s race. B) to determine the applicant’s career goals. C) to determine the applicant’s personality. D) to determine the applicant’s educational background.

28) Which of the following types of interviewing has the applicant perform a small sample of his or her potential duties? A) Traditional interviewing B) Differential interviewing C) Reactive interviewing D) Behavioral interviewing

29) All of the following are characteristics that companies look for in applicants except A) religious preference. B) problem-solving ability. C) ability to work in teams. D) communication ability.

30) _________ is the body of information applied directly to job performance. A) Competency B) Skill C) Knowledge D) Ability

32) Which of the following is not a feasible way to evaluate applicants for a position? A) Conduct an interview. B) Have them fill out an application form. C) Hire a private investigator to follow the applicant. D) Check references.

33) _________is the continuing process by which an employee begins to understand and accept the values, norms, and beliefs held by others in the organization. A) Socialization B) Evolution C) Motorization D) Randomization

34) Which of the following U.S. federal regulatory agencies handles consumer complaints? A) Office of Consumer Protection B) Environmental Protection Agency C) Office of Consumer Affairs D) Consumer Product Safety Commission

35) Companies usually explain their procedures and policies during A) orientation. B) job instruction training. C) supervisory training. D) initial training.

36) Consumerism is one aspect of the _____________ environment. A) technological B) political/legal C) economic D) social

37) _____________, as President of the United States, in 1962 addressed Congress and defined the basic rights of consumers. A) Lyndon Johnson B) Richard Nixon C) John F. Kennedy D) Gerald Ford

38) All of the following are stages of consumer decision making except A) problem recognition. B) perceptual categorization. C) post-purchase evaluation. D) purchase decision.

39) All of the following are part of the consumer’s protective shield except A) federal regulatory agencies. B) international regulatory agencies. C) the U.S. legal system. D) state regulatory agencies.

40) According to the consumer information processing theory, _______ is the final stage through which consumers progress. A) post-purchase dissonance B) purchase decision C) cognitive decision D) evaluative categorization

41) Many customer service problems are identified by A) outside consultants. B) customer complaints. C) personal evaluation. D) entries in a suggestion box.

42) The tension that occurs immediately following a purchase is referred to as A) post-purchase satisfaction. B) post-decision distress. C) cognitive assessment. D) cognitive dissonance.

43) ______________ are a division in society with different levels of social prestige. A) Social classes B) Cultures C) Reference groups D) Cognitive categories

44) Eric Keay, a typical consumer, often purchases goods and services because he feels his coworkers will approve of these items. Eric’s coworkers could be considered a(n) A) referral group. B) reference group. C) associate group. D) perceptual group.

45) A heavily promoted brand of aspirin sells for much more than a virtually identical nonbranded or store-branded product because promotion adds ________ value to the product. A) inspirational B) functional C) political D) psychological

46) A computer company developed a printer that would wear itself out within two years of purchase, forcing consumers to buy a replacement. One might criticize this computer company because A) of the poor service they offered to customers. B) of the high price they charged for the printer. C) they planned to make their printer obsolete. D) their product was unsafe.

47) High prices are often caused by A) excessive markups. B) lowering the promotion costs. C) inexpensive labor. D) free publicity.

48) A company that makes roofing shingles claims that their shingles “will last longer than you or your money back.” Because this is a clear overstatement of their product’s performance, they are engaging in A) deceptive pricing. B) deceptive packaging. C) bad promotions. D) deceptive promotion.

49) Which of the following can reduce competition? A) An increased number of competitors B) Balanced marketing practices C) Acquisition of competitors D) Marketing prices eliminate barriers to entry

50) The practice of businesses refusing to serve specific geographic areas is known as A) boycotting. B) pipelining. C) restrictive marketing. D) redlining.

51) Which of the following is an aspect of the free enterprise system? A) The government decides what to produce. B) Decisions are made by individuals rather than the government. C) The government establishes fair prices. D) The government owns the means of production.

52) Competition is thought to encourage businesses to A) sell products of low quality. B) produce new products. C) keep prices extremely high. D) offer services of low quality.

53) In a mixed economic system most decisions are left to _______________, but some decisions are left to___________________. A) government; individuals B) government; business C) individuals; government D) monopolies; government

54) Socialism is most closely associated with A) capitalistic economic systems. B) command economic systems. C) free enterprise economic systems. D) mixed economic systems.

55) Which of the following would assume all losses of a business? A) The owner of a sole proprietorship B) A limited partner C) A stockholder D) The CEO of a corporation

56) Most businesses are A) limited partnerships. B) corporations. C) general partnerships. D) sole proprietorships.

57) A key characteristic of a partnership is that each partner A) is capable of legally contracting. B) must manage the business. C) shares in company assets when the business dissolves. D) must contribute capital to the business.

58) A corporate charter should A) follow state guidelines. B) include an organizational chart. C) be over 100 pages in length. D) be very similar to a prospectus.

59) A corporation is chartered under A) international law. B) state law. C) local law. D) federal law.

60) A disadvantage of a sole proprietorship is A) the cost of starting the business. B) the lack of limits on personal liability. C) the complexity of the organizational hierarchy. D) the difficulty of dissolution.

61) Which of the following legal forms of organization allows owners to contribute no capital but still play a part in managing the business and sharing the profits? A) Partnership B) Corporation C) S corporation D) Sole proprietorship

62) Which of the following statements is true? A) Partners always split profits in half. B) Partners are always equally liable. C) Partners always divide workload in half D) Partners are never equally liable.

63) Gil has decided he wants to start a business, but he does not want to be required to file paperwork with numerous government agencies or sell stock in his business to the public. He also wants to maintain all decision-making power. Gil should probably start A) a general partnership. B) a sole proprietorship. C) a partnership. D) a corporation.

64) In a limited partnership, which of the following remains bound by all debts of the business? A) The partner with the least capital investment B) Limited partner C) Special partner D) General partner

65) The legal agreement that partners agree to before the business is established is known as A) the business initiative. B) the business charter. C) the partnership agreement. D) the partnership charter.

66) Carla is a common stockholder in Corporation Y. Because of this, Carla would A) be required to declare dividends at stockholders’ meetings. B) be a member of the board of directors. C) not be able to vote at stockholders’ meetings. D) be able to cast one vote per share at stockholders’ meetings.

67) An advantage of a sole proprietorship is A) unlimited life of business. B) profits are spread evenly amongst employees. C) ease of filing taxes and reporting earned income. D) unlimited liability.

68) Rebecca recently decided to start a business. She is most concerned about limiting her financial liability. Rebecca would most likely start A) a corporation. B) a sole proprietorship. C) a general partnership. D) a limited partnership.

69) You could insure against all of the following except A) fire. B) an accident in the company vehicle. C) your partner becoming ill. D) your product losing its market share.

70) Saving money to cover possible losses in the future is also known as A) a customer-oriented liability. B) legal insurance. C) self-insurance. D) Premiums.

71) One of the most important means of sharing business risks is A) a system of checks and balances. B) good marketing. C) preventative maintenance. D) Insurance.

72) Tara Cannon is the CEO of a large corporation. Last week the company decided to take out a life insurance policy in case of her death. This is also known as A) risky health assurance. B) vital member policy. C) a key-person policy. D) life or death annuity.

73) Insurance is a legal contract that transfers _______ from a policyholder to an insurance company in exchange for ___________ A) premiums; liability B) premiums; risk C) risk; premiums D) risk; liability

74) In regards to insurance, risk is also known as A) likelihood of emotional loss. B) the possibility of financial loss. C) the chance of financial gain. D) the chance of psychological damage.

75) The greater your ___________, the more your insurance policy will cost. A) plausibility B) risk C) reluctance D) liability

76) Business interruption insurance covers A) debts to suppliers. B) lost income. C) shoplifting. D) defective products.

77) ____________ were started by people who shared a common bond such as working at the same factory, belonging to the same house of worship, or farming in the same community. A) Commercial banks B) Savings and loan banks C) Cooperative banks D) Credit unions

78) What is the central banking system of the United States? A) The Unionized Central Banking System B) The Federal Reserve C) The Federal Union D) The Bank of the U.S.

79) Where is the headquarters for the Federal Reserve Bank? A) Washington D.C. B) New York City C) Los Angeles D) Chicago

Use for the next 3 questions.
Rita Verracruse is saving money for a new truck. She worked 16 weeks during the summer for a dog-walking company. Her take-home pay was $275 a week.

80) How much money did Rita earn during the summer? A) $4,250 B) $4,400 C) $3,750 D) $4,750

81) If Rita put half of the money she earned in a savings account and the simple interest rate was 3.5%, how much money would she have in one year? A) $2,250 B) $2,284 C) $2,456 D) $2,277

82) How much money would Rita have at the end of three years, assuming she did not take any money out of the account (rounded to the nearest cent)? A) $2,645.71 B) $2,634.54 C) $2,439.18 D) $2,517.84

83) Rita placed the other half of her money in a certificate of deposit. It is most likely that her money earned _________ interest rate as the savings account. A) a higher B) the same C) a more volatile D) a lower

84) When compared to a traditional savings account, a certificate of deposit is A) more dynamic. B) more liquid. C) equally liquid. D) less liquid.

85) When someone enters into a mortgage agreement, the house serves as which one of the five “C’s” of credit? A) Critique B) Capacity C) Character D) Collateral

86) A mortgage company requires a credit check and pay stubs before running a loan application. It does this because it wants to determine the potential borrower’s A) capacity. B) collateral. C) critique. D) character.

87) The current hourly minimum wage set by the U.S. Department of Labor is A) $5.15. B) $5.00. C) $4.75. D) $5.25.

88) The owner of a small motorcycle garage uses an application form in evaluating applicants. This is useful in discovering A) general background information. B) arrest records. C) physical disabilities. D) religious orientation.

89) Grace is developing a business plan and wants to show the cost of fringe benefits as a percentage of payroll costs. She should use the following percentage A) 40% B) 50% C) 25% D) 30%

90) Mac is worried about the increase in the number of subordinates he supervises; therefore, he is concerned about his A) chain of command. B) organizational structure. C) informal organization. D) span of control.

91) An example of an informal organization is A) an engineering team. B) an accounting office. C) a car pool. D) a marketing department.

92) Jose wanted to make sure that his new business is a line organization; therefore, he would develop policies so each employee has A) two supervisors. B) three supervisors. C) four or more supervisors. D) one supervisor.

93) Tracy, who runs a carpet cleaning business, has a group of employees who work in production and in installation. If she decides to use work teams as part of her leadership approach, she must increase A) quality. B) supervision. C) independence. D) compensation.

94) Some companies attempt to determine a customer’s worth before doing business with that person. This practice is known as A) weblining. B) price gouging. C) webbing. D) exception.

95) How do individuals in a partnership pay taxes? A) They pay taxes as a partnership. B) They do not pay taxes; the business does. C) They only pay taxes if they are shareholders. D) The individuals each pay taxes on the total income.

96) Subchapter “S” corporations are taxed as A) partnerships. B) subchapter “C” corporations. C) proprietorships. D) multinational corporations.

97) Corporation “X” has gone into debt. Which of the following would be liable for that debt? A) Jack, the corporation’s CEO B) Jose, a common stockholder C) All of the answers are correct D) Lily, a member of the board of directors

98) Permission to incorporate a business comes from the A) Department of Labor. B) Secretary of Commerce. C) each state’s Secretary of State. D) IRS.

99) Toyota recently sent a letter to everyone who purchased a 1999 Tacoma. The letter states that there is a problem with the suspension and provides information about getting it fixed at local dealerships for free. This is an example of A) a product recall. B) a product recoil. C) an automatic reliability. D) a product reinforcement.

100) There are _______ Federal Reserve Banks and ________ branches to those banks. A) 2; 25 B) 50; 250 C) 12; 25 D) 100; 500

|1) |A |
|2) |B |
|3) |B |
|4) |A |
|5) |B |
|6) |B |
|7) |A |
|8) |B |
|9) |A |
|10) |B |
|11) |B |
|12) |A |
|13) |B |
|14) |B |
|15) |A |
|16) |B |
|17) |A |
|18) |B |
|19) |A |
|20) |B |
|21) |A |
|22) |B |
|23) |A |
|24) |A |
|25) |D |
|26) |B |
|27) |A |
|28) |D |
|29) |A |
|30) |C |
|31) | |
|32) |C |
|33) |D |
|34) |C |
|35) |A |
|36) |B |
|37) |C |
|38) |B |
|39) |D |
|40) |A |
|41) |B |
|42) |D |
|43) |A |
|44) |B |
|45) |D |
|46) |C |
|47) |A |
|48) |D |
|49) |C |
|50) |D |
|51) |B |
|52) |B |
|53) |C |
|54) |B |
|55) |A |
|56) |D |
|57) |A |
|58) |A |
|59) |B |
|60) |B |
|61) |A |
|62) |C |
|63) |B |
|64) |D |
|65) |C |
|66) |D |
|67) |C |
|68) |A |
|69) |D |
|70) |C |
|71) |D |
|72) |C |
|73) |C |
|74) |B |
|75) |B |
|76) |B |
|77) |D |
|78) |B |
|79) |A |
|80) |B |
|81) |D |
|82) |B |
|83) |A |
|84) |D |
|85) |D |
|86) |A |
|87) |A |
|88) |A |
|89) |A |
|90) |D |
|91) |C |
|92) |D |
|93) |C |
|94) |A |
|95) |D |
|96) |A |
|97) |C |
|98) |B |
|99) |B |
|100) |C |