2019 Flashcards
Frederic used to own the only pizza place in town?until a new place opened up. Even though Frederic’s never been to the new pizza place, he tells everyone he meets that the new place uses inferior ingredients and has been investigated by the health department. He even leaves negative reviews of the pizza place online. Which business tort do Frederic’s actions fall under? A. Wrongful interference B. Unfair competition C. Copyright infringement D. Disparagement
D Disparagement. Frederic is making false statements about the quality of the new pizza place’s food and the cleanliness of the restaurant. He is also leaving false negative reviews of the pizza place online. This constitutes disparagement. This is not an example of unfair competition or wrongful interference. Frederic is not infringing on the new pizza place’s copyright. SOURCE: BL:069 SOURCE: LaMance, K. (2018, February 2). Business torts. Retrieved September 19, 2018, from https://www.legalmatch.com/law-library/article/business-torts.html
When entering into a contract with another business, an agent is the party that represents the A. consultant. B. defendant. C. opposition. D. principal.
D Principal. In the legal system, an agent is a person who acts on the behalf of his/her client. The client is called the principal. A defendant is a person who is charged with a tort or crime. Opposition refers to the other party involved in a contract or dispute. A consultant is an advisor. SOURCE: BL:072 SOURCE: HG.org. (1996-2018). Agency law - Agent law. Retrieved September 19, 2018, from https://www.hg.org/agency-law.html
The person who files a lawsuit is the A. plaintiff. B. defendant. C. lawyer. D. judge.
A Plaintiff. The plaintiff is the person in a case who makes a claim against another person or organization and starts the litigation process. The defendant is the person who is accused of breaking the law. The lawyer is the person who represents the plaintiff and/or defendant. The judge is the person who rules on a case. SOURCE: BL:160 SOURCE: Stoel Rives, LLP. (2012, January 24). How does a lawsuit work? Basic steps in the civil litigation process. Retrieved September 19, 2018, from https://www.stoel.com/how-does-alawsuit-work-basic-steps-in
Why might parties choose to use mediation to solve a dispute? A. To avoid going to court B. To spend more money C. To do less work D. To get a less personal result
A To avoid going to court. Parties may choose mediation if they want to avoid taking their case to court. Mediation often costs less money and results in a more personalized result. Mediation often means doing more work to resolve the dispute. SOURCE: BL:161 SOURCE: Dysart, K. (1995-2016). Why to choose mediation over litigation. Retrieved September 19, 2018, from http://www.hg.org/article.asp?id=18286
Sasha’s science teacher is explaining lab directions to the class. They’ll be performing a complicated experiment with many steps that will take about a week. The next day, Sasha tries to remember a step of the directions, but she can’t. Which step of following oral directions should Sasha have followed? A. Eliminate distractions B. Take notes C. Make eye contact D. Acknowledge directions verbally or nonverbally
B Take notes. If a speaker is giving you multiple directions at one time, it may be useful to take notes. That way, as you complete your project, you can look back on them. If Sasha had taken notes in her situation, she’d know what to do next in her experiment. Eliminating distractions, making eye contact, and acknowledging directions are all important steps when it comes to following directions, but they are not steps that would help Sasha in this situation. SOURCE: CO:119 SOURCE: Xdesign. (2016, October 20). 5 steps to giving and following instructions in the workplace. Retrieved September 19, 2018, from https://thinkx.net/blog/5-steps-to-giving-and-followinginstructions-in-the-workplace
“This is an exciting new opportunity for you,” says Jane’s boss. Which of the following nonverbal cues would appropriately reinforce that message? A. Focusing eyes on the computer B. Slouching C. Smiling D. Looking out the window
C Smiling. A smile conveys a positive message and reinforces good news. Poor posture sends the message that a person doesn’t really care about what s/he is saying. Lack of eye contact sends a message that the speaker may not be telling the truth or may wish to be doing something else. SOURCE: CO:059 SOURCE: Smith, J. (2013, March 11). 10 nonverbal cues that convey confidence at work. Retrieved September 19, 2018, from http://www.forbes.com/sites/jacquelynsmith/2013/03/11/10nonverbal-cues-that-convey-confidence-at-work/
Jolie is working in a group in her business class. If she wants to contribute to her group’s discussion in a meaningful way, what should she do? A. Summarize what’s been discussed in the conversation B. Let someone know right away if his/her idea is bad or unrealistic C. Wait for other people to lead the conversation when it gets silent D. Ask questions as a way of judging someone else’s suggestion
A Summarize what’s been discussed in the conversation. At the end of the group’s discussion?or even at quiet moments along the way?it’s helpful to summarize what’s been discussed so far. Jolie shouldn’t immediately close off an idea that’s out of the ordinary?even if she thinks an idea is bad or unrealistic, it’s important to listen to it. It’s also important to avoid judging other group members’ suggestions when asking questions. If there’s a silent time when no one wants to speak, Jolie should be a leader and take the reins. She should not be intimidated by a quiet moment. SOURCE: CO:053 SOURCE: Reineke, M. (n.d.). In-class discussion. Retrieved September 19, 2018, from https://sites.uni.edu/reineke/guidelin.htm
What are the three main purposes of oral presentations? A. To inform, inspire, and entertain B. To inform, persuade, and entertain C. To inform, persuade, and instruct D. To interview, debate, and entertain
B To inform, persuade, and entertain. The three main purposes of oral presentations are to inform, persuade, and entertain. Interviews and debates are types of presentations, not purposes. An entertaining or persuasive presentation might inspire, but inspiring people is not one of the main purposes of oral presentations. An instructive presentation is an informational presentation. SOURCE: CO:025 SOURCE: LAP-CO-025?Well Said! (Making Oral Presentations)
Aaron prepared a detailed report for his supervisor that described several issues that Aaron’s work group has been experiencing with a long-term project. Aaron described the most difficult or challenging issues in the beginning of the report and ended the report with the least important points. How did Aaron organize the information in the report? A. Priority sequence B. Alphabetical by category C. Simple to complex D. Chronological order
A Priority sequence. Because Aaron first describes the most challenging or critical issues, he is arranging his report by priorities or level of importance. There is not enough information provided in the situation to determine if Aaron’s priorities were simple or complex or if they were addressed in chronological (timebased) order or in alphabetical order by category. SOURCE: CO:086 SOURCE: Burke, A. (2018, June 29). Examples of methods of organization. Retrieved September 19, 2018, from https://smallbusiness.chron.com/examples-methods-organization-18982.html
Jacob is determining the writing style to use for an analytical report. If most readers are likely to support the report’s content, Jacob should format the report for a(n) __________ audience. A. receptive B. indecisive C. argumentative D. intellectual
A Receptive. An analytical report is a document that explains and evaluates an issue, opportunity, or problem. Often, the analytical report includes recommendations for a business to take a certain course of action. If the writer anticipates that most members of the audience are receptive and will agree with the recommendations, then using a direct approach to structure the report is optimal. The direct approach involves writing the report so it focuses the attention on the conclusions and recommendations. If the writer anticipates a skeptical, argumentative, or indecisive audience, the indirect approach may be the best way to structure the report. The indirect approach involves preparing a logical argument that supports the recommendations and focuses on the rationale behind the recommendations. Intellect refers to a person’s level of understanding about a topic or concept, which varies per person and is not necessarily related to the structure of the report. SOURCE: CO:185 SOURCE: KU Writing Center. (n.d.). Writing informal and analytical reports. Retrieved September 19, 2018, from http://writing.ku.edu/sites/writing.drupal.ku.edu/files/docs/Writing_Informational_Analytical_R eports.pdf
Which of the following is the last component of a research report: A. Recommendations B. Purpose of the study C. Background information D. Methodology
A Recommendations. A research report is a written document that summarizes an investigation related to a particular issue or problem. The recommendations section is the proposed course of action, and it is the last component presented in the report. The purpose of the study, which appears at the beginning of the report, describes why the research is needed. The background or historical information is presented at the beginning of the report and usually appears after the purpose of the study. The methodology section of the report appears in the middle of the report and discusses the types of research tools used and why they were selected. SOURCE: CO:186 SOURCE: Paper Masters. (n.d.). Conclusions and recommendations. Retrieved September 19, 2018, from http://www.papermasters.com/conclusions_recommendations.html
Phoebe is the manager of a small company. One of her employees has been showing up late and missing work frequently. What channel of communication should Phoebe use to discuss this issue with him? A. A company-wide memo B. An email message C. Face-to-face conversation D. A video conference
C Face-to-face conversation. When discussing sensitive issues, face-to-face communication is the best strategy because it is the richest form of communication and has the least risk of misinterpretation. If Phoebe were to write an email, her employee may not understand her tone or meaning. A company-wide memo is inappropriate because this is an issue that should be only between Phoebe and the employee in question. Finally, video conferences are generally used when people are not in the same location and do not offer any benefits that a face-to-face conversation does not provide. SOURCE: CO:092 SOURCE: Fenell, Z. (2017, September 26). Importance of communication channels in business. Retrieved September 19, 2018, from https://bizfluent.com/about-6511827-importancecommunication-channels-business.html
When participating in a project-status meeting, it is important for a participant to A. be prepared to provide an update. B. monopolize the conversation. C. provide information about new company policies. D. take notes for the group.
A Be prepared to provide an update. It is important for a meeting participant to be prepared to present the required information at a scheduled meeting. Being unprepared is unprofessional and inconsiderate of the other participants’ time. Without the necessary information, the meeting may need to be rescheduled. Meeting participants should not monopolize the conversation. New company policies would be relevant only if they affect the project. Otherwise, they should be communicated outside the project-status meeting. It is not always necessary to take notes for the group. SOURCE: CO:063 SOURCE: Lovering, C. (2016, October 26). Purpose of weekly status meetings. Retrieved September 19, 2018, from https://smallbusiness.chron.com/purpose-weekly-status-meetings-76971.html
A customer asks Roger a question about a product, and he isn’t sure of the correct answer. He immediately phones his supervisor to get the needed information. Which technique for building positive customer relations does this illustrate? A. Be thankful. B. Keep your promises. C. Pay attention to internal customers. D. Be helpful.
D Be helpful. Roger is displaying helpfulness to this customer. He didn’t know the answer to the customer’s question, but he immediately went into action to find the person who did. This situation does not illustrate keeping promises, paying attention to internal customers (employees), or being thankful. SOURCE: CR:003 SOURCE: LAP-CR-001?Accentuate the Positive (Nature of Customer Relations)
Today, customer relationship management is considered an important tool in A. commercial investing. B. business decision-making. C. hiring new employees. D. establishing connections with vendors.
B Business decision-making. In the past, customer relationship management (CRM) was used mainly as a way to track and organize information about customers so a business could identify its most valuable clients and tailor its marketing strategies to generate more revenue. Today, its uses have expanded, and it is also considered an important tool in business decision-making. CRM is not typically considered a tool for use in commercial investing, hiring new employees, or establishing connections with vendors. These are not customer-focused activities. SOURCE: CR:016 SOURCE: LAP-CR-016?Know When To Hold ‘Em (Nature of Customer Relationship Management)
Which of the following is an economic service: A. Eyeglasses B. Bottle of perfume C. Baseball bat D.Ticket to football game
D Ticket to football game. The ticket entitles its owner to watch a football game?an intangible activity performed by others for a certain amount of money. The alternatives are examples of economic goodsphysical objects that are useful, scarce, and transferable. SOURCE: EC:002 SOURCE: LAP-EC-010?Get the Goods on Goods and Services (Economic Goods and Services)
Which of the following are examples of capital goods: A. Trucks, drum scanners, and minerals B. Bull dozers, photocopiers, and roads C. Tractors, laborers, and cranes D. Refineries, iron ore, and computers
B Bull dozers, photocopiers, and roads. Capital goods are manufactured or constructed items that are used to produce goods and services. Bull dozers, photocopiers, roads, trucks, drum scanners, tractors, cranes, refineries, and computers are types of capital goods. Laborers are human resources. Minerals and iron ore are natural resources. SOURCE: EC:003 SOURCE: LAP-EC-014?Be Resourceful (Economic Resources)
One reason that businesses use a matrix organizational design is to A. share human resources. B. improve employee productivity. C. segment areas of expertise. D. standardize business tasks.
A Share human resources. The matrix organizational structure involves integrated departmental functions with product or project orientation. For example, a technology specialist, a marketing researcher, a financial advisor, and a manufacturing line supervisor are members of different departments but often work together to develop a product or improve a process. The advantage to businesses of using this organizational structure is that the business is applying its resources efficiently because a representative from each of the major departments provides a unique set of skills and knowledge to achieve the business’s goals. Often, workers have two or more supervisors in the matrix organizational design. The matrix organizational design may improve the business’s overall efficiency, but it does not always improve an individual’s productivity. Departmental organizational design segments employees by their areas of expertise (e.g., accounting, sales, and production). Policies and procedures are developed to standardize various business activities and tasks in all types of organizational designs. SOURCE: EC:103 SOURCE: Griffin, R.W., & Moorhead, G. (2010). Organizational behavior: Managing people and organizations (9th ed.) [pp. 453-455]. Mason, OH: South-Western Cengage Learning.
Which of the following is an example of a government regulation that affects a business’s working conditions: A. Zoning laws B. Food inspection C. Minimum wage D. Price supports
C Minimum wage. Government regulation of business includes regulating working conditions provided by businesses. One such regulation involves minimum-wage laws that specify the lowest hourly wage that businesses can pay workers. Zoning laws are intended to protect business property. The inspection of food is intended to protect consumers. Government price supports maintain the price of a good or service to enable the producers to earn a profit. SOURCE: EC:008 SOURCE: LAP-EC-016?Regulate and Protect (Government and Business)
Which of the following is an item that is subject to an excise tax: A. Prescription medication B. Carton of eggs C. Ski boat D. Business computer
C Ski boat. An excise tax is a special government tax on certain nonessential and luxury items (e.g., ski boat) that is included in the price that consumers pay. Eggs, medication, and business computers are not luxury items that are subject to an excise tax. SOURCE: EC:072 SOURCE: LAP-EC-027?Pay Your Share (Business Taxes)
A company is facing negative returns. Which stage of production is the company in? A. Second B. Third C. Fourth D. First
B Third. During the third stage of production, the company sees negative returns. The first stage of production produces increasing returns, while the second stage of production produces diminishing returns. There is no fourth stage of production. SOURCE: EC:023 SOURCE: LAP-EC-031?Know Your Limits (Law of Diminishing Returns)
Which of the following is a true statement about gross domestic product (GDP): A. Improved use of resources increases the GDP. B. The underground economy overstates the GDP. C. It is easy to measure the GDP accurately. D. A decrease in GDP results in a higher standard of living.
A Improved use of resources increases the GDP. For example, a vacant warehouse does not produce revenue. If it is leased as office space, then the resource earns income. It is difficult to measure the GDP accurately because of several factors, including the large amounts of information that are collected and the problem of avoiding counting a good or service twice. A decrease in the GDP results in a lower standard of living. The underground economy understates the GDP because no receipts are kept in these transactions and they cannot be counted. SOURCE: EC:017 SOURCE: LAP-EC-001?Measure Up? (Gross Domestic Product)
Which of the following illustrates the impact of a country’s history on world trade: A. Countries with widely different religious beliefs have difficulty establishing trust. B. Countries that have engaged in war conflicts have difficulty establishing trust. C. Countries speaking different languages have difficulty understanding each other. D. Countries that are adjacent to each other have more opportunities for conflict.
B Countries that have engaged in war conflicts have difficulty establishing trust. When countries have a history of war, it can be difficult for them to establish trust with other countries to make trade possible. Countries speaking different languages represents a cultural difference. Countries that are adjacent to each other may have more opportunities for conflict or friendship, but the situation does not relate to the impact of the countries’ history on world trade. SOURCE: EC:115 SOURCE: Hughes, V. (2011, November 2). Cultures of trust. Retrieved September 19, 2018, from http://insight.kellogg.northwestern.edu/article/cultures_of_trust
One good way to raise your level of self-esteem when it has dropped is to A. discuss your feelings with someone you trust. B. withdraw from activities for a while. C. reanalyze all your past mistakes. D. keep your feelings to yourself.
A Discuss your feelings with someone you trust. Often, this is all that is necessary to restore your selfesteem. It is never helpful to your self-esteem to bottle up your feelings, withdraw from life, or go over past mistakes repeatedly. SOURCE: EI:016 SOURCE: Mind. (2016, June). How to increase your self-esteem. Retrieved September 19, 2018, from https://www.mind.org.uk/information-support/types-of-mental-health-problems/selfesteem/#.W6JMQGhKiM8
Workers can demonstrate their honesty and integrity by giving a fair amount of ___________ for their pay. A. worry B. concern C. effort D. loyalty
C Effort. Honest employees work during all of the hours for which they are paid. They do their fair share of work no matter what their feelings of loyalty to the employer might be. Worry and concern are not indicative of honesty and integrity. SOURCE: EI:022 SOURCE: LAP-EI-138?Sincerely Yours (Demonstrating Honesty and Integrity)
For two hours a day, Jacob shuts his office door to prevent interruptions, does not check email, and does not accept incoming phone calls. This enables Jacob to focus on his most important tasks. What technique is Jacob using to help him manage his work commitments effectively? A. Eliminating the use of technological tools B. Delegating his workload C. Controlling environmental distractions D. Developing a detailed ¡°to-do¡± list
C Controlling environmental distractions. By taking steps to minimize distractions, Jacob can focus his full attention on the most important work that he needs to accomplish. This helps him be more productive and manage all of his work commitments effectively. Although a ¡°to-do¡± list may help Jacob prioritize his work, he is not developing the list in the situation provided, nor is he delegating work to others. Jacob is not accepting telephone calls or checking email, but he may be using his computer to do other tasks such as writing a report, or he may be making outgoing calls. SOURCE: EI:077 SOURCE: LAP-EI-077?Commit to It! (Managing Commitments in a Timely Manner)
How does having a sense of humor help you maintain a positive attitude? A. It encourages you to give your appearance the attention it deserves. B. If you hang out with positive people, you’ll be positive as well. C. It is easier to maintain a positive attitude when you’re healthy. D. It keeps you from taking yourself too seriously.
D It keeps you from taking yourself too seriously. Having a sense of humor helps you maintain a positive attitude because it keeps you from taking yourself too seriously. Being able to laugh at yourself and at annoying things that happen is very good for your positive attitude. It helps you keep things in perspective. Having a sense of humor does not have anything to do with hanging out with positive people, staying healthy, or giving your appearance the attention it deserves. SOURCE: EI:019 SOURCE: LAP-EI-003?Opt for Optimism (Positive Attitude)
When people make you angry or upset, you may be able to maintain your self-control if you A. frown to indicate your displeasure. B. use language to vent your anger. C. adopt a defensive attitude. D. make an effort to remain calm.
D Make an effort to remain calm. In some cases, acting calm will actually help you be calmer. Using language to vent your anger indicates you have lost your self-control. Frowning and being defensive are negative responses that will not help you maintain your self-control. SOURCE: EI:025 SOURCE: LAP-EI-014?Control Yourself! (Demonstrating Self-Control)
Which of the following is an internal source of feedback: A. Teachers B. Yourself C. Friends D. Employers
B Yourself. Feedback is evaluative information about you, your behavior, or the results of your behavior. Internal feedback is feedback that comes from within yourself, and it may be negative or positive. Friends, teachers, and employers are external sources of feedback. SOURCE: EI:003 SOURCE: LAP-EI-015?Grin and Bear It (Using Feedback for Personal Growth)
Which of the following is an example of violating a coworker’s privacy in the workplace: A. Thomas changed the wording on Carrie’s report with her approval. B. Ruby saw that her coworkers were having a serious discussion, so she walked away. C. Joe needed a pen, so he opened Ali’s desk drawer to look for one while she was away. D. Paige sent a personal email from her work computer to her friend Alan.
C Joe needed a pen, so he opened Ali’s desk drawer to look for one while she was away. Employees should not go through their coworkers’ desks, files, correspondence, or personal belongings in the workplace. To do so is a violation of privacy. When employees respect the privacy of others in the workplace, they are more likely to gain the trust and respect of their coworkers and managers. Walking away from a serious discussion and changing a document with the writer’s approval are not violations of privacy. Sending a personal email from work is not an invasion of privacy, but it is wasting company resources because it is not business-related. SOURCE: EI:029 SOURCE: Hamlin, K. (2017, July 5). Respecting a co-worker’s personal space. Retrieved September 19, 2018, from https://careertrend.com/respecting-coworkers-personal-space-9496.html
Which of the following is a true statement about secondary dimensions of diversity: A. They are mental aptitudes. B. They are physical traits. C. They are determined by a person’s subculture. D. They can change over time.
D They can change over time. Secondary dimensions of diversity are differences that may change at various points throughout one’s lifetime and include characteristics such as language, religion, income, geographic location, family status, work experience, communication style, and education level. Physical traits and mental aptitudes are primary dimensions of diversity, which are inborn differences that cannot be changed. These differences include gender, age, race/ethnicity, etc. Subculture is a secondary group within a dominant culture. For example, suppose that a U.S. citizen has parents of Chinese decent; the Western culture is most likely the person’s dominant culture, while his/her Chinese heritage represents a subculture. A person’s subculture may influence some of a person’s secondary dimensions of diversity, but it does not determine these dimensions. SOURCE: EI:033 SOURCE: LAP-EI-033?Getting To Know You (Cultural Sensitivity)
During a staff meeting, Matthew says, “In closing, I want to congratulate Shelby, who has been instrumental in landing the Feldman account. This account has the potential to greatly impact our company’s sales.” Matthew is motivating an employee by A. providing her with a monetary reward. B. acknowledging her efforts. C. giving her new job responsibilities. D. supporting her ideas.
B Acknowledging her efforts. One way to motivate team members is to acknowledge their work accomplishments either individually or in a group setting (e.g., meeting). When employees feel that management appreciates their contributions to the company, they are often motivated to keep up the good work. In this situation, Matthew is not providing Shelby with a monetary reward, giving Shelby new job responsibilities, or supporting Shelby’s ideas. SOURCE: EI:059 SOURCE: Kostanyan, A. (2014, September 22). 15 effective ways to motivate your team. Retrieved September 19, 2018, from http://www.huffingtonpost.com/anush-kostanyan/15-effectiveways-to-moti_b_5854242.html
Frank has a good understanding of his own emotions. What component of emotional intelligence does Frank demonstrate? A. Social management B. Self-management C. Social awareness D. Self-awareness
D Self-awareness. Frank is demonstrating self-awareness. Self-awareness is a person’s knowledge of his/her own emotions. Each of us perceives the world through a unique set of values and beliefs. If you know what is important to you, your awareness will give you the confidence you need to respond appropriately. Self-management is the ability to direct and control one’s emotions in a way that is purposeful. Social awareness is the ability to know and understand others’ emotions. Social management is the ability to respond effectively to others’ emotions. SOURCE: EI:009 SOURCE: LAP-EI-016?Lead the Way (Concept of Leadership)
Collaborative relationships with colleagues from other departments are beneficial to the business because they often A. support highly competitive attitudes. B. prevent workplace conflict. C. generate innovative ideas. D. facilitate independent behavior.
C Generate innovative ideas. Collaboration involves working together in a cooperative manner. Colleagues from different departments often collaborate with one another to accomplish business goals. An advantage of collaboration is that colleagues from different departments have different perspectives, which can help generate innovative ideas for developing new products, improving processes, increasing productivity, and solving problems. Collaboration may reduce conflict, but it does not prevent it from ever happening. Although a little friendly competition among colleagues might positively affect some business activities, highly competitive attitudes tend to reduce trust and create a negative work environment. The goal of collaboration is interdependence (relying on one another) rather than acting independently (without others’ input). SOURCE: EI:061 SOURCE: DuBrin, A. (2010). Leadership: Research findings, practice, and skills (6th ed.) [pp. 339-340]. Mason, OH: South-Western Cengage Learning.
John recently expanded his business into another country to reach more of his target market. He was initially thrilled with his company’s profits following the expansion?until he converted the money back to his domestic currency. At that point, he realized that the company made much less than he originally thought. What risk involved with international business did John experience? A. International trade agreement changes B. Foreign exchange rate fluctuations C. Political unrest in foreign countries D. The cost of international unionized labor
B Foreign exchange rate fluctuations. Foreign exchange rate risk occurs when the value of an investment fluctuates due to changes in a currency’s exchange rate. When a domestic currency appreciates against a foreign currency, profits earned in the foreign country will decrease after being exchanged back to the domestic currency. John’s profits were greater in the foreign currency than in domestic currency because of fluctuations in the exchange rate between the two currencies. International trade agreements, political unrest, and the cost of international unionized labor are all factors that business owners should consider before engaging in international business, but John did not experience them in this situation. SOURCE: EN:041 SOURCE: Beers, B. (2018, January 11). The risks businesses face in international finance. Retrieved September 19, 2018, from http://www.investopedia.com/ask/answers/06/internationalfinancerisks.asp
Which of the following is a disadvantage of a checking account: A. Overdraft protection B. Direct payroll deposit C. Account balance requirement D. Online transaction options
C Account balance requirement. Financial institutions often require customers to maintain a certain amount of money in their bank accounts. The account holder may be charged fees if the minimal account balance requirements are not met. Direct payroll deposit, overdraft protection, and online transaction options are benefits or services that many types of checking-account products offer that customers may need to pay fees to obtain. SOURCE: FI:058 SOURCE: Zacks. (2018, May 10). Advantages and disadvantages of savings and checking accounts. Retrieved September 14, 2018, from https://finance.zacks.com/advantages-disadvantagessavings-checking-accounts-3843.html
Justine’s rich uncle wants to give her $5,000 toward the purchase of a car. But since Justine doesn’t plan to buy the car for at least another year, her uncle told her that she can have the money now, or he can wait and give her the money when she actually buys the car. Justine chooses to take the money now and deposit it in her savings account. After all, her deposit will yield 6% interest compounded annually. A year from now, her $5,000 will be worth $5,300. What financial concept does this scenario illustrate? A. Time-value of money B. Dividend reinvestment plan C. Capital budgeting D. Accrual accounting
A Time-value of money. Due to the time-value of money, any certain amount of money (such as Justine’s $5,000) is worth more now than later as a result of its earning potential. Rather than letting her uncle keep the $5,000 until next year, Justine is wise to take the money now and put it in a deposit-bearing savings account. That way, Justine can earn more money ($300, to be precise) on the money from her uncle. A dividend reinvestment plan (also known as a DRIP) is a method used by many investors to grow their investments more quickly. It involves using stock dividends to purchase more shares of that stock. Capital budgeting is the process that a firm’s financial managers use to determine which projects to invest in. The accrual accounting method involves recording transactions at the time they occur even if no money changes hands at the time. SOURCE: FI:270 SOURCE: Carther, S. (2017, May 18). Understanding the time value of money. Retrieved September 19, 2018, from http://www.investopedia.com/articles/03/082703.asp#axzz2BZGrTRpM
Incorrect information on an individual’s credit report may hinder his/her ability to A. earn interest on stock holdings. B. withdraw money from a savings account. C. pay monthly credit card balances. D. obtain a bank loan.
D Obtain a bank loan. Banks obtain credit reports to make decisions about providing loans; therefore, it is important for individuals to periodically review the accuracy of their credit reports. By obtaining copies of their credit reports from an authorized credit agency, individuals can identify problems and take corrective action. Information presented in a credit report does not affect an individual’s ability to withdraw money from a savings account, pay monthly credit card balances, or earn interest on stock holdings. SOURCE: FI:072 SOURCE: Irby, L. (2018, May 1). What is a credit report and why is it important? Retrieved September 19, 2018, from https://www.thebalance.com/what-is-a-credit-report-and-why-is-it-important960448
How do businesses transfer risk? A. Screen employees B. Implement security measures C. Check for hazards D. Obtain insurance
D Obtain insurance. Risk is the possibility of loss. There are many ways to reduce the possibility of loss. One way to reduce the possibility of loss is by transferring the risk, which is done by obtaining insurance. Insurance is a contractual agreement in which one company (insurer) will pay for specified losses incurred by the other company (insured) in return for installment payments (premium). Implementing security measures, checking for hazards, and screening employees are ways to control and prevent certain types of risks. SOURCE: FI:081 SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2012). Marketing essentials (pp. 807-808). Columbus, OH: Glencoe/McGraw-Hill.
Emma is reviewing the sales budget in relation to the actual sales generated for a set time frame. How is Emma using financial information in this situation? A. To compare estimated performance with actual performance B. To establish new quality standards and benchmarks C. To identify external economic trends D. To analyze the impact of aging accounts
A To compare estimated performance with actual performance. Businesses rely on accurate financial information to make sound business decisions. In the situation provided, Emma is comparing one financial report (budget) with another financial report (actual sales) to determine if the business performed as expected?if it achieved its sales goals. Although external economic conditions can affect sales, Emma is analyzing internal financial information rather than identifying external economic trends. Emma is not establishing new quality standards and benchmarks or analyzing the impact of aging accounts. SOURCE: FI:579 SOURCE: LAP-FI-009?By the Numbers (The Need for Financial Information)
