Business final

The basic factors of production

land, labor, capital, entrepreneurship

When the production of natural goods decrease

Capital goods increase

Machines used to make automobiles are classified as

capital goods

In which type of economy do individual buying decisions in the marketplace together determine what, how and for whom goods and services will be produced

Command

Term that best describes our present economic/political system

Capitalism

Prices are determined by the forces of

supply and demand

Economic growth occurs when a country produces goods and services at

a faster rate than the population is increasing

Is "economics" the body of knowledge that relates to producing and using goods and services to satisfy human wants?

TRUE

Do consumers help decide what will be produced as well as how much will be produced?

TRUE

Does inflation result in a decline in the purchasing power of money

TRUE

New businesses mainly fail because

owners lack financial resources

Which statement is true about successful entrepreneurs

Most successful entrepreneurs learned from their mistakes during unsuccessful startups and started over

To start your own business, you need

adequate funds, a general knowledge about business, some work experience, and a business opportunity

The form of ownership selected depend on

Both a and b

The terms capital, net worth, and equity are

interchangeable and defined as assets less liabilities

If a balance sheet shows cash as $118,000 liabilities as $115,000 and capital as $125,000, how much would the noncash assets be worth

$122,000

Approximately how many businesses are formed as proprietorships

three out of four

Which statement is true about proprietorships

The owner pays less income tax than corporations

If one partner makes a contract that the other partners do not like

all partners are bound by it

The trade name of a business

does not reduce the owners' liability to creditors

Do most businesses start with several owners?

No

Is it typical for months and years to pass before a new business earns a profit

Yes

Do new businesses often fail for financial reasons?

Yes

Do typical entrepreneurs give up quickly when they are not immediately successful?

No

In recent years, have an increasing number of women opened their own buisness

Yes

Is the legal form of ownership one of the first decisions that a new owner must make?

Yes

Does the form of ownership selected depend upon the financial responsibility the owner is willing to assume

Yes

Should the entrepreneur write a business plan soon after launching the business

No

Is the corporation the most common form of ownership

No

Can as few as two people form a sole proprietorship?

No

Does it usually take less time for decisions to be made in a proprietorship than in other forms of business ownership?

Yes

Can a sole proprietor be forced to use personal possessions to pay off debts if the business fails?

Yes

Is a business that provides personal services well suited to the proprietorship form of organization

Yes

Is a partnership limited to a maximum of six partners?

No

Can a partnership usually borrow money more readily than a sole proprietorships

Yes

If one person in a partnership is unable to pay business debts, are all other partners responsible for paying those debts?

Yes

Is it true that a partner can lose only the amount of money invested in the partnership should the business fail

No

If a partner enters into a contract against the wishes of the other partners, the other partners are legally responsible for the contract.

Yes

Can the bankruptcy of any partner cause a sudden end to the partnership

Yes

Must creditors be informed about the formation of a limited partnership?

Yes

Corporations tend to be

few in number and large in size

In a recent year, corporate sales of goods and services were about

Sixteen times more than sales form partnerships

An official document giving power to run a corporation is a

charter

Shareholders of a corporation are often called

owners

Net proceeds refer to the

cash received from the sale of all assets minus the payments of all debts

Unissued shares are the

shares that might be sold and used to expand the business at a later date

Which statement is true about obtaining money in corporations

Corporations can borrow money more easily than can partnerships

People who invest in a corporation are

financially liable up to the amount originally invested

When an owner of a corporation dies

the life of the corporation is not affected

Taxes that are unique to a corporation are

a filing fee, an organization tax, an annual state tax, and a federal income tax

A corporation with taxable earning of $74,000 has a tax rate of 15% on the first $50,000 and a 25% tax rate on the next $25,000. The federal income taxes Will amount to

$13,500

An agreement that involves two or more businesses to provide a good or service is called

A joint venture

virtual corporation

takes advantage of fast-changing market conditions

In order to form a sub chapter s corporation, what is the maximizing number of stockholders that the firm can have

100

Tennessee Valley Authority is an example of

Quasi-public corporation

Although a corporation is owned by a group of people, does it act as if it were a single person?

Yes

Is a corporation allowed to make contacts but not borrow money?

No

Is it possible for a corporation to be sued in its own name

Yes

Can a person who buys only one share of stock become an owner of a corporation

Yes

Is a dividend the amount of money a person pays to buy a share of stock?

No

Can creditors collect from stockholders if the corporation fails?

No

Are the members of the board of directors elected by stockholders?

Yes

Can a corporation make important changes in the purpose of its business without changing its charter

No

When shares are transferred, must the transfer of ownership be indicated in the records of the corporation?

Yes

Is the annual state tax rate for corporations based on profits?

Yes

Is it possible for some corporations to avoid double taxation

Yes

Does a joint venture occur when two major contractors agree to connect two cities by building a tunnel under a river?

Yes

Do virtual corporations tend to be temporary relationships?

Yes

Does a cooperative provide members with both cost and profit advantages that they would not have individually?

Yes

Is a limited liability company taxed as if it were a sole proprietorship or partnership?

Yes

Is a major strength of an LLC its limited liability feature?

Yes

Do large corporations and multinational firms usually qualify as LLCs?

No

Does a nonprofit corporation pay dividends to shareholders?

No

Is a "quasi-public corporation" operated only by state governments?

No

You will receive the greatest gain on your principal if interest is compounded

Daily

A savings account at a credit union is Called a

Share account

Money left over after you laid your bills is

Discretionary income

Which of the following is not a short term need

Child's education

Which of the following is not a long term need

New car

Which of the following is a condition determining how much money you will save

All of these

A stockbroker works for which type of financial institution?

brokerage firm

If liquify is important to you, which of the following savings options would you not want to consider

Certificate of deposit

A method to make regular saving easier is

automatic payroll deduction

The date on which a certificate of deposit is due is called the

maturity date

Short-term needs include things such as home ownership, education of children, and retirement

FALSE

Discretionary income is income you have left to spend after the bills have been paid

TRUE

A regular savings account pays less interest than a certificate of deposit

TRUE

Commercial banks offer only a few banking services and are not competitive

FALSE

A money market fund is insured by the FDIC for a maximum of $250,000

FALSE

convience is a reason why many people choose a financial institution

TRUE

Your goals for saving money will affect your choice of a financial institution

TRUE

Early withdrawal penalties are charges against certificates of deposit for withdrawals prior to maturity

TRUE

Earnings on stock are called

dividends

Which of these statements is true about common stock

each share has voting privileges

Assigning your voting right to someone else is known as a

proxy

How are stocks of well known companies classified

Blue chip

What has an effect on stock value?

the company, interest rates, the market

A market characterized by pessimism is a

bear market

Which of the following is not a stock index

P/E ratio

preffered stock

Carries less risk than common stock

What is the marketplace for OTC stocks?

NASDAQ

Which of the following is not a characteristic of common stockholders

They are paid dividends before holders of any other types of stocks or bonds

a stock that remains stable during declines in the economy

defensive stock

People who buy and sell stocks on the stock exchange

floor brokers

A public corporation stock is traded openly in stock markets

TRUE

Corporations must pay dividends to stockholders regardless of profits

FALSE

Stockholders can lose personal assets when the business fails

FALSE

Growth stocks reinvest profits so the business can grow and expand

TRUE

Most investors consider stock purchases as long-term investments

TRUE

The largest stock exchange in the United States is the American Stock Exchange

FALSE

The New York stock exchange is an auction market where buyers and sellers are brought together

TRUE

With direct investment, stockholders can avoid broker commissions

Tue

TRUE

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