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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

GB101 SPRING 2007 PRACTICE EXAM


The final exam will consist of 100 questions, of which 80% will be drawn from the
practice exam. The other 20% will be additional questions. All questions relate to the
text book readings and the stated learning objectives in the student study guide.

• All questions are either true/false or multiple choice.


• All Spring 2007 GB101 students will write the exam Saturday May 5th, 2007 at
9am.
• Room assignments and exam policies will be emailed and posted on the
Blackboard site.

AND YOU MIGHT BE INTERESTED TO KNOW THAT…


Students who access the practice exam within the first 24 hours
of it being posted seem to score a significantly higher grade on
their final exam. Similarly, students who access the practice
exam at all seem to score significantly higher than those
students who never use the practice exam.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

PRACTICE EXAM QUESTIONS


Origin: Chapter 20 Securities Markets
1. Government employees represent institutional investors.
A) True
B) False

Origin: Chapter 20 Securities Markets


2. As interest rates increase, bond prices fall.
A) True
B) False

Origin: Chapter 1 Managing Within the Dynamic...,


3. John earns the same amount of money this year as he did last year. Thus, his
standard of living must be the same as it was last year.
A) True
B) False

Origin: Chapter 5 Forms of Business Ownership,


4. Ellen wants to start a business. She is leaning toward setting up her company
as a sole proprietorship, but she is also looking at other possibilities. Ellen has
two major goals. First, given her limited personal wealth and eagerness to get
started, she wants to get her business up and running with the least possible
hassle and expense. Second, she wants to minimize her personal risk in the
event that her company experiences difficulties. If Ellen chooses a sole
proprietorship, she would:
A) be able to achieve both goals since this form of ownership is both the
easiest to form and the least risky.
B) meet her first goal since sole proprietorships are easy and inexpensive to
form. However, she would expose herself to a high level of personal risk
because owners of sole proprietorships have unlimited liability.
C) not achieve either goal since proprietorships are both costly to set up and
subject to unlimited liability.
D) achieve her second goal, since the owners of sole proprietorships are
legally protected from losing more than the amount they invest in their
company. However, she would find that the start-up costs would be higher
than if she had incorporated her business.

Origin: Chapter 3 Competing in Global Markets,


5. The European Union is an example of a common market.
A) True
B) False

Origin: Chapter 13 Marketing


6. A key element of customer relationship management is to:
A) keep the price of goods as low as possible.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

B) develop a strategy to achieve the largest possible market share.


C) allow customers to participate in the management of the firm.
D) learn as much as possible about customers.

Origin: Chapter 14 Developing and Pricing...,


7. Budd's Floral Shoppe is located in a large town that has several other florists.
The owner, Rose Budd, is likely to find that the presence of many larger
competitors means that the only way she can survive is to charge rock bottom
prices.
A) True
B) False

Origin: Chapter 3 Competing in Global Markets


8. All of the following are advantages of free trade except:
A) Free trade helps keep interest rates high.
B) The global market consists of over 6 billion potential customers.
C) Global competition helps to keep prices down.
D) Productivity increases in areas of comparative advantage.

Origin: Chapter 9 Producing World-Class Goods...,


9. A production process characterized by long production runs to turn out finished
goods over time is known as a(n):
A) assembly process.
B) continuous process.
C) extended process.
D) unrestricted process.

Origin: Chapter 20 Securities Markets,


10. When possible, businesses prefer to meet their long-term funding by:
A) selling common stock.
B) issuing preferred stock.
C) issuing bonds.
D) using retained earnings.

Origin: Chapter 1 Managing Within the Dynamic...,


11. If they wish to create more wealth, poor nations should focus on policies that
increase entrepreneurship and the effective use of knowledge.
A) True
B) False

Origin: Chapter 7 Management, Leadership, and...,


12. When managers determine that an organization is not making sufficient
progress toward achieving its goals and objectives and develop corrective
measures, they are involved in:
A) controlling.
B) planning.
C) directing.
D) accounting.
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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 13 Marketing


13. Determining the appropriate price for a good or service is one element of the
marketing mix.
A) True
B) False

Origin: Chapter 18 Understanding Financial...,


14. At the time the Jepson Plumbing Supply prepared its financial statements, it had
several customers who had bought goods in the past three months on its “90
days same as cash” credit plan. These customers had not yet paid their bills,
but they have good credit ratings and Jepson is confident that they will make
their payments on time. The amount these credit customers owe would show up
as part of the:
A) current assets listed on Jepson's balance sheet.
B) current liabilities listed on Jepson's balance sheet.
C) a deferred cash flow on Jepson's statement of cash flows.
D) unrealized revenue reported on Jepson's an income statement.

Origin: Chapter 11 Human Resource Management


15. Which of the following statements identifies a key difference between a job
description and a job specification?
A) A job description is concerned with the short run objectives of a job, but a
job specification is concerned with the job's long run objectives.
B) A job description is based on a human resource inventory, while a job
specification is the result of a performance appraisal.
C) A job description is a statement about the job, while a job specification is a
statement about the person who does the job.
D) A job description is a brief summary of what a job involves, while a job
specification is a detailed and technically complete statement of what a
job involves.

Origin: Chapter 9 Producing World-Class Goods...,


16. There is strong evidence that productivity in the service sector:
A) is rising, though the improvement has not been reflected in the reported
figures.
B) declined by more than 2 percent per year.
C) was unaffected by the use of computers.
D) rose at least twice as fast as productivity in the manufacturing sector.

Origin: Chapter 8 Adapting Organizations to...,


17. Within its production department, Sooner Manufacturing has shift leaders,
supervisors, assistant plant managers, plant managers, product group
managers, assistant division managers, division managers, an assistant vice
president for production, and a vice president in charge of production. Given
their multiple layer management structure, Sooner Manufacturing is an example
of a(n) ____________ organization.
A) tall
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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

B) wide
C) cross-functional
D) decentralized

Origin: Chapter 8 Adapting Organizations to...,


18. ________ refers to the process of dividing organizational functions into separate
units.
A) Coordination.
B) A chain of command
C) Empowerment
D) Departmentalization

Origin: Chapter 7 Management, Leadership, and...,


19. Which of the following statements about leadership styles is most accurate?
A) A manager should choose one style and use it consistently.
B) Managers have no control over the leadership style they use.
C) Effective managers often use a variety of leadership styles.
D) Managers should always start with an autocratic style, but can gradually
switch to a more democratic approach if workers earn their trust.

Origin: Chapter 19 Financial Management,


20. Inability to attract and retain qualified employees is one of the most common
ways for a firm to fail financially.
A) True
B) False

Origin: Chapter 8 Adapting Organizations to...


21. Organizations that utilize departmentalization benefit from improved
communication between their different departments.
A) True
B) False

Origin: Chapter 7 Management, Leadership, and...


22. Managers are most effective when they consistently use the same leadership
style with every employee assigned to their work group.
A) True
B) False

Origin: Chapter 4 Demonstrating Ethical...


23. Ethical behavior always treats others fairly.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 9 Producing World-Class Goods...


24. Sylacon Industries, a leading producer of consumer goods, is looking for a site
for a new production facility. The company is mainly focusing on sites that are
close to major highways and rail hubs and are not too far from some major
population centers. This suggests that a major location consideration for
Sylacon is:
A) quality of life.
B) access to cheap land.
C) reducing time to market.
D) access to low cost labor.

Origin: Chapter 1 Managing Within the Dynamic...


25. ____________ is the amount a business earns over and above what it spends
for salaries and other expenses.
A) Profit
B) Revenue
C) Interest
D) Dividends

Origin: Chapter 16 Today's Promotional...


26. Nightbrite's ________ relies heavily on advertising, personal selling, and limited
use of sampling.
A) marketing mix.
B) promotional mix.
C) communication network.
D) transfer marketing.

Origin: Chapter 21 Understanding Money and...


27. The Fed uses ________ to regulate the money supply.
A) stock market investments
B) the deposit requirement
C) the political negotiation process
D) the discount rate

Origin: Chapter 19 Financial Management


28. Which of the following activities is most likely to be performed by a financial
manager?
A) Design of a marketable product that satisfies an unmet need.
B) Identification of specific target markets for a firm's goods.
C) Preparation of the balance sheet and income statement for the firm.
D) Analysis of the tax implications of various managerial decisions.

Origin: Chapter 6 Entrepreneurship and...


29. As the owner of a small manufacturing business, Myles has an interest in
exporting. However, he doesn't know how to get started. Fortunately, the
government provides an abundance of information to encourage entrepreneurs
like Myles.
A) True
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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

B) False

Origin: Chapter 18 Understanding Financial...


30. Which of the following is not an area of importance in accounting?
A) recording information about financial transactions.
B) summarizing information about financial transactions.
C) analyzing financial information.
D) setting prices for goods and services sold by the organization.

Origin: Chapter 19 Financial Management


31. The importance of financial managers to firms with large inflows is greater than
for firms with smaller cash flows
A) True
B) False

Origin: Chapter 13 Marketing


32. Which of the following is not consistent with relationship marketing?
A) Maintaining long-term relationships with customers.
B) Working with buyers to determine their individual needs.
C) Developing market share through mass media advertising.
D) Focusing more on retaining existing customers than on attracting new
customers.

Origin: Chapter 18 Understanding Financial...


33. General expenses would include office salaries, rent, and insurance.
A) True
B) False

Origin: Chapter 7 Management, Leadership, and...


34. In most high tech industries, the best way to respond quickly to rapid
technological changes is to keep most authority and responsibility in the hands
of a few key managers who provide precise, detailed directions to the workers.
A) True
B) False

Origin: Chapter 9 Producing World-Class Goods...


35. The U.S. economy is now dominated by the:
A) service sector.
B) manufacturing sector.
C) agricultural sector.
D) foreign sector.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 5 Forms of Business Ownership


36. Sandy Beech is a talented fashion designer who wants to start her own
women's sportswear company. However, she is concerned about some
problems she might face. She knows little about actual production methods or
the financial aspects of running a business, and has little personal wealth to put
into the company. In order to overcome these problems, Sandy should start her
business as a sole proprietorship.
A) True
B) False

Origin: Chapter 1 Managing Within the Dynamic...


37. Elemints is a company that produces industrial coatings for the steel industry.
Until recently it relied on wholesalers to distribute its products, but now it also
sells directly to customers through its website. This is an example of the largest
and most important type of e-commerce transaction.
A) True
B) False

Origin: Chapter 19 Financial Management


38. A line of credit from a bank guarantees a firm that a specified amount of
financing will be available whenever it is needed.
A) True
B) False

Origin: Chapter 2 How Economics Effects...


39. Communism is an economic system in which:
A) the government and private citizens own equal shares of the economic
resources.
B) all or most of the productive resources are owned by private businesses.
C) the government makes most of the major economic decisions.
D) individual consumers make all economic decisions.

Origin: Chapter 1 Managing Within the Dynamic...


40. Which of the following entails the greatest amount of risk?
A) Working for the government.
B) Working for a large business.
C) Working for a small business.
D) Starting a business.

Origin: Chapter 18 Understanding Financial...


41. The value of what stockholders own in a firm is called stockholders' equity.
A) True
B) False

Origin: Chapter 4 Demonstrating Ethical...


42. When faced with slow sales and low profits, even managers with strong
personal values may feel pressured to compromise those values.
A) True
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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

B) False

Origin: Chapter 1 Managing Within the Dynamic...,


43. Countries that provide little or no government involvement provide the best
environment for competitive businesses.
A) True
B) False

Origin: Chapter 14 Developing and Pricing...


44. According to the product life cycle model, profits tend to:
A) remain relatively constant until the decline stage, when they begin to drop.
B) reach a peak near the end of the maturity stage.
C) rise rapidly during the market preference stage.
D) peak before sales reach their highest level.

Origin: Chapter 9 Producing World-Class Goods...


45. Unlike the manufacturing sector, workers who provide services tend to have a
great deal of job security.
A) True
B) False

Origin: Chapter 18 Understanding Financial...


46. A loan officer at the Saltwater State Bank is considering a loan application from
Lanwell Mills. He is concerned about the ability of the company to make
repayments if it grants the loan. The loan officer is likely to be very interested in
Lanwell's statement of cash flows.
A) True
B) False

Origin: Chapter 7 Management, Leadership, and...


47. ____________ is the management function that involves determining whether
an organization is progressing toward its goals, rewarding employees for doing
a good job, and taking corrective action when they are not.
A) Organizing
B) Controlling
C) Leading
D) Officiating

Origin: Chapter 18 Understanding Financial...


48. Jeremy operates his own small business, but doesn't want to be bothered with
dealing with accounting information. He tells his friends, "All I need accounting
for is to prepare my income tax return for my business. I'll hire someone to do
that for me." Jeremy's attitude would be disastrous if he managed a large firm,
but is a reasonable view for a small business owner.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 18 Understanding Financial...


49. The best way for a firm to avoid serious cash flow problems is to sustain a rapid
growth in sales.
A) True
B) False

Origin: Chapter 3 Competing in Global Markets


50. Export trading companies help to match buyers and sellers from different
countries.
A) True
B) False

Origin: Chapter 11 Human Resource Management


51. Employment tests should focus on general job skills rather than skills that are
related directly to the job.
A) True
B) False

Origin: Chapter 18 Understanding Financial...


52. _________ is the systematic write-off of the value of a tangible asset over its
useful life.
A) Expense structuring
B) Depreciation
C) Capital budgeting
D) Gross margin allocation

Origin: Chapter 9 Producing World-Class Goods...


53. Although experts predict that services will become more interactive in the future,
the technology does not yet exist to make this prediction a reality.
A) True
B) False

Origin: Chapter 2 How Economics Effects...


54. At the equilibrium price the quantity consumers desire to buy equals the quantity
sellers desire to sell.
A) True
B) False

Origin: Chapter 20 Securities Markets


55. Shannon believes the best investment strategy is to "buy low, and sell high."
Shannon's optimism regarding future stock price increases indicates that she is
a:
A) bull.
B) bear.
C) tiger.
D) lion.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 3 Competing in Global Markets


56. Foreigners sometimes comment on the ethnocentric attitudes of U.S. business
people. This indicates that American business people:
A) follow the philosophy of “when in Rome, do as the Romans.”
B) quickly accept the suggestions and ideas of others.
C) believe our culture is superior to all others.
D) take pride in the many ethnic groups that make America a "melting pot."

Origin: Chapter 3 Competing in Global Markets


57. The federal government created ___________ to help small and medium sized
businesses get involved in exporting.
A) the World Trade Organization
B) Federal Export Loan Banks
C) Export Assistance Centers
D) the Federal Trade Promotion Commission

Origin: Chapter 6 Entrepreneurship and...


58. If you have managerial skills and leadership ability, you also posses the
personality to be an entrepreneur.
A) True
B) False

Origin: Chapter 5 Forms of Business Ownership


59. Two of Rolanda's friends have approached her to see if she would like to join
them in starting a new business. Rolanda is willing to invest money in the
business and share in its profits, but she has no desire to be involved in the
day-to-day management of the company. She is also very nervous about the
risk of losing her personal assets. Rolanda's preferences suggest that she
would like to see the business operated as a general partnership.
A) True
B) False

Origin: Chapter 11 Human Resource Management


60. Transfers and promotions are internal sources used by human resource
managers to fill recruiting needs.
A) True
B) False

Origin: Chapter 3 Competing in Global Markets


61. To provide better service for their customers, America Online purchased office
space in India for their online customer service representatives. This is an
example of:
A) dumping.
B) foreign direct investment.
C) a nontariff trade restriction.
D) ethnocentricity.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 6 Entrepreneurship and...


62. State and local governments often act as venture capitalists.
A) True
B) False

Origin: Chapter 9 Producing World-Class Goods...


63. Frolichstein Fabrics promotes itself as a specialty manufacturer that will produce
according to customer specifications. This firm will probably be best served by
using an intermittent process in production.
A) True
B) False

Origin: Chapter 1 Managing Within the Dynamic...


64. All of the following can increase labor's productivity except:
A) increased education and training.
B) higher wages.
C) better technology.
D) increased amount of machinery and equipment.

Origin: Chapter 11 Human Resource Management


65. Randy Waller is in his early sixties. A few years ago he had planned to retire by
the time he was sixty, but when the time came, he decided to continue working.
In fact, not only is Randy still working, he has put any plans to retire on hold for
at least several years. Randy's decision to keep working into his late sixties is
unusual in today's labor market.
A) True
B) False

Origin: Chapter 13 Marketing


66. In an effort to increase customer loyalty, management at Phat International has
worked to create a personal dialogue with their customers. This dialogue will
enable Phat to offer products that exactly meet their customers' needs and
provide personalized service before and after the sale. Phat International's new
strategy illustrates:
A) a production orientation.
B) relationship marketing.
C) personalized promotion.
D) niche marketing.

Origin: Chapter 7 Management, Leadership, and...


67. Planning is the function of management that involves anticipating future trends
and determining the best strategies and tactics to achieve an organization's
goals and objectives.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 19 Financial Management


68. Which of the following statements is most accurate?
A) Accounting and finance are not related.
B) Financial managers keep the books for a firm.
C) Financial managers need to understand accounting.
D) Nonprofit organizations must choose between accounting and finance.

Origin: Chapter 13 Marketing


69. Given today's marketing environment, marketing managers must constantly
adjust the marketing mix.
A) True
B) False

Origin: Chapter 2 How Economics Effects...


70. Permany is a nation with an economic system that closely approximates pure
capitalism. While Permany's economy is likely to generate a great deal of
wealth, it may do a poor job of providing an acceptable level of income for the
elderly or disabled.
A) True
B) False

Origin: Chapter 6 Entrepreneurship and...


71. Small businesses account for over 40% of the gross domestic product (GDP) in
the United States.
A) True
B) False

Origin: Chapter 19 Financial Management


72. One activity of the accounting function is to collect payments from overdue
customer accounts.
A) True
B) False

Origin: Chapter 13 Marketing


73. Which of the following describes a word, letter, or group of words or letters that
differentiate the goods and services of a seller from those of competitors?
A) Brand name
B) Product designation
C) Prototype name
D) Generic name.

Origin: Chapter 4 Demonstrating Ethical...


74. A social audit attempts to measure a firm's progress in the area of worker-
management relations.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 19 Financial Management


75. Nicole is a financial manager. Her responsibilities include all of the following
except preparing:
A) a cash flow analysis.
B) financial statements.
C) for the acquisition of funds.
D) for the expenditure of funds.

Origin: Chapter 4 Demonstrating Ethical...


76. ________ refers to the standards of moral behavior.
A) Legality
B) Responsibility
C) Integrity
D) Ethics

Origin: Chapter 7 Management, Leadership, and...,


77. Today's workers require a different managerial style than workers of previous
eras.
A) True
B) False

Origin: Chapter 13 Marketing


78. As a marketing manager for a retailer of lighting products, Lucinda will likely to
be involved in all of the following except:
A) setting a price for the light fixtures her firm produces.
B) deciding the best way to distribute the firm's products.
C) developing ideas for new types of light fixtures.
D) determining the best way to finance the purchase of new production
equipment.

Origin: Chapter 11 Human Resource Management


79. A job specification identifies the minimum qualifications a person must have to
fill a particular job.
A) True
B) False

Origin: Chapter 19 Financial Management


80. The most difficult kind of loan to obtain from a bank is a secured loan.
A) True
B) False

Origin: Chapter 20 Securities Markets


81. Al prefers corporate bonds as an investment option because bonds guarantee
that investors receive the face value of the bond whenever it is sold.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 20 Securities Markets


82. Most businesses prefer to meet their long-term financial needs through:
A) debt financing.
B) capital from the sale of stock.
C) retained earnings.
D) capital from the sale of bonds.

Origin: Chapter 21 Understanding Money and...


83. When the Fed increases the reserve requirement, banks:
A) must increase the dollar volume of loans they make to customers.
B) must pay more to borrow from the Fed.
C) have fewer funds available for lending.
D) will find their balance sheets temporarily out of balance.

Origin: Chapter 3 Competing in Global Markets


84. When trading in global markets, most countries prefer to import more than they
export.
A) True
B) False

Origin: Chapter 16 Today's Promotional...,


85. The traditional promotion mix for a firm consists of the:
A) strategic mix of price, product, place and advertising.
B) various types of advertising media the firm selects to reach each specific
target market.
C) marketing intermediaries employed by the firm to create a supply value
chain.
D) advertising, personal selling, public relations, and sales promotion used to
reach a target market.

Origin: Chapter 21 Understanding Money and...


86. When the Fed increases the reserve requirement, banks make fewer loans.
A) True
B) False

Origin: Chapter 3 Competing in Global Markets


87. Kodak contracts with a firm in Taiwan to manufacture Kodak digital cameras.
This is an example a joint venture.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 2 How Economics Effects...,


88. In an effort to promote rapid growth, the government of Goldinia has kept taxes
low, done little to regulate business activities, and implemented only modest
social programs. The government is now facing political pressure to do more to
clean up the environment and reduce the inequalities of income and wealth.
Which of the following statements is most accurate? Goldinia's government is
currently taking:
A) a purely capitalist approach to achieve its economic goals, and is likely to
continue doing so in the future.
B) a purely socialist approach to achieve its economics goals, and is likely to
continue doing so in the future.
C) a predominately socialist approach to achieving economic goals, but the
current pressures it faces suggest it is likely to adopt a more capitalist
approach in the future.
D) a predominately capitalist approach toward achieving economic goals, but
the current pressures it faces suggest it is likely to adopt a more socialist
approach in the future.

Origin: Chapter 7 Management, Leadership, and...


89. Which of the following statements comparing today's workers with those from
earlier eras is most accurate? Compared to earlier workers, today's employees
are:
A) more loyal to the firm.
B) less educated and less self-directed.
C) more willing to leave the firm to seek better opportunities.
D) more likely to need direct guidance and direction from their managers.

Origin: Chapter 3 Competing in Global Markets


90. Countries with a high standard of living are referred to as developing countries.
A) True
B) False

Origin: Chapter 20 Securities Markets


91. If investor Jones buys a share of stock in the ABC Corporation from investor
Smith, the ABC Corporation automatically receives a fixed percentage of the
selling price.
A) True
B) False

Origin: Chapter 9 Producing World-Class Goods...


92. A key element of the statistical quality control process is the reliance on quality
control experts to inspect at the end of the production line to make sure that no
defective products are shipped to final customers.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 11 Human Resource Management


93. Employees at the Kempton Company have been complaining that the
company's fringe benefits package forces all employees to take the same
benefits regardless of differences in their needs. Kempton could reduce this
criticism by establishing a cafeteria-style fringe benefits plan.
A) True
B) False

Origin: Chapter 11 Human Resource Management,


94. All of the following are external recruitment sources except:
A) college placement bureaus.
B) public and private employment agencies.
C) applicants who show up at the office and apply.
D) recommendations of employees.

Origin: Chapter 5 Forms of Business Ownership


95. The debts of a business operated as a sole proprietorship are considered to be
the personal debts of the owner of the business.
A) True
B) False

Origin: Chapter 18 Understanding Financial...


96. Accounting provides financial information that can be useful to the owners,
creditors, suppliers, employees, and competitors of an organization.
A) True
B) False

Origin: Chapter 7 Management, Leadership, and...


97. Pam is a sales manager for Paradise Beauty Products. She has told her sales
people that she expects each of them to increase their customer contacts by at
least 5 percent in the next month. Pam has set a(n):
A) procedural policy.
B) functional objective.
C) policy guide.
D) performance standard.

Origin: Chapter 19 Financial Management


98. The budget that estimates a firm's projected cash inflows and outflows, as well
as cash shortages or surpluses during a given time period is called the
________ budget.
A) capital
B) operating
C) cash
D) monetary

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 18 Understanding Financial...


99. Many business decisions are made in hopes of improving a firm's "bottom line".
Which of the following financial statements will reflect a firm's "bottom line"?
A) income statement
B) balance sheet
C) statement of cash flows
D) trial balance

Origin: Chapter 16 Today's Promotional...


100. The combination of advertising, personal selling, public relations, and sales
promotion activities used by an organization represents its:
A) marketing communications system.
B) marketing mix.
C) public relations package.
D) promotional mix.

Origin: Chapter 6 Entrepreneurship and...


101. Traditionally small business statistics classified the retirement of an owner of a
sole proprietorship as a business failure.
A) True
B) False

Origin: Chapter 19 Financial Management


102. Carolina Financial Services is considering the purchase and installation of an
expensive computer network. This is the type of expenditure that would be
included in a(n):
A) capital budget.
B) cash budget.
C) operating budget.
D) asset budget.

Origin: Chapter 11 Human Resource Management


103. A fringe benefit plan that allows employees to choose the package of benefits
they want up to a certain dollar amount is called a __________ plan.
A) cafeteria-style
B) variable lifestyle
C) 401K
D) flexible spending

Origin: Chapter 19 Financial Management


104. ___________ offer short-term secured loans to high-risk borrowers.
A) Commercial finance companies
B) Reserve banks
C) Credit brokers
D) Investment bankers

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 16 Today's Promotional...


105. All of the following are advantages of magazine advertising except:
A) Targeting of specific market segments.
B) Ability to quickly change message.
C) Superior color.
D) Relatively long life.

Origin: Chapter 6 Entrepreneurship and...


106. Which of the following would not be helpful in explaining why individuals accept
the risks of business ownership?
A) The potential for profit and wealth.
B) The sense of self-satisfaction and independence.
C) The challenge of taking calculated risks.
D) The desire to work fewer hours.

Origin: Chapter 19 Financial Management


107. All of the following are primary areas of concern for financial managers except:
A) under-capitalization.
B) inability to recruit qualified workers.
C) poor control over cash flow.
D) inadequate expense control.

Origin: Chapter 13 Marketing


108. Because the marketing concept emphasizes a profit orientation, marketing has
not been used successfully by nonprofit organizations.
A) True
B) False

Origin: Chapter 2 How Economics Effects...


109. When the supply curve and demand curve for a particular good are on a single
graph, the point at which the two curves intersect identifies the:
A) total profit earned by producers.
B) total amount of labor that will be employed in that market.
C) amount of time it takes to bring together the buyers and sellers of the
good.
D) equilibrium price of the good.

Origin: Chapter 6 Entrepreneurship and...


110. The United States government views entrepreneurship as a result of an
individual's self-motivation. The government, therefore, can do very little to
encourage an individual to become an entrepreneur.
A) True
B) False

Origin: Chapter 19 Financial Management


111. When using ________ financing, the company incurs a legal obligation to repay
the amount borrowed.
A) debt
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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

B) equity
C) retained earnings
D) commitment

Origin: Chapter 18 Understanding Financial...


112. The “bottom line” of an income statement shows the firm's:
A) retained earnings.
B) gross margin.
C) net income or net loss.
D) owners' equity.

Origin: Chapter 4 Demonstrating Ethical...


113. Organizational ethics are learned by:
A) attending corporate responsibility seminars.
B) tracking the failures of those who are caught in business scandals.
C) attending business classes and regularly taking notes.
D) observing the actions of others.

Origin: Chapter 1 Managing Within the Dynamic...


114. All of the following policies would tend to foster entrepreneurship except:
A) establishing a currency that is tradable on world markets.
B) establishing more regulations to protect the environment.
C) developing policies to reduce corruption in business and government.
D) allowing private ownership of businesses.

Origin: Chapter 13 Marketing


115. __________ recognizes the need to create mutually beneficial exchange
relationships over time with all of an organization's stakeholders.
A) Relationship management
B) Stakeholder marketing
C) The fundamental law of consumption
D) The silver rule

Origin: Chapter 6 Entrepreneurship and...


116. Small business owners often struggle in attracting qualified workers. Which of
the following does not contribute to this problem? Small firms offer:
A) less attractive fringe benefits than offered by larger firms.
B) lower wages than paid by large corporations.
C) limited room for advancement.
D) a lack of challenging jobs.

Origin: Chapter 3 Competing in Global Markets


117. The comparative advantage theory states that all nations should strive to
become self-sufficient in order to enjoy the highest standard of living.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 3 Competing in Global Markets


118. A devaluation of the U.S. dollar would make American goods cheaper to foreign
buyers.
A) True
B) False

Origin: Chapter 19 Financial Management


119. One of the primary factors that influences the interest rate a firm pays on long-
term loans is the:
A) intensity of competition the firm faces.
B) current level government regulations.
C) general level of market interest rates.
D) exchange rate of the Euro to the U.S. dollar.

Origin: Chapter 8 Adapting Organizations to...


120. Huggin Motels, a national chain of motels, utilizes a centralized authority
structure. Which of the following provides the most likely explanation for why
management at Huggin would favor centralized authority?
A) Top management at Huggin Motels intends to empower its first-line
employees.
B) Top management at Huggin wants to improve customer service response
time.
C) Top management desires to maintain a uniform image and high quality
service.
D) Huggin Motels wants to utilize a cross-functional organization.

Origin: Chapter 4 Demonstrating Ethical..


121. When it comes to social responsibility, some people feel that “before you can do
good, you must do well.” This reflects a firm's primary responsibility is to their:
A) customers.
B) investors.
C) employees.
D) community.

Origin: Chapter 14 Developing and Pricing...


122. Some goods have a product life cycle that is completed in a shorter amount of
time than other goods.
A) True
B) False

Origin: Chapter 16 Today's Promotional...


123. The last step in creating a promotional campaign is to evaluate the
effectiveness of each element of the promotional mix.
A) True
B) False

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 6 Entrepreneurship and...


124. Historically entrepreneurs in the U.S. have:
A) often created wealth for themselves, but have had a minor impact on the
economy as a whole.
B) started many small firms that later became major corporations employing
thousands of workers.
C) been successful only when they worked in partnership with the federal
government.
D) played an important role, but are less important now in creating jobs and
wealth.

Origin: Chapter 18 Understanding Financial...


125. As an accountant, Joe Billings would be most likely to be involved in:
A) developing plans to help his company establish a supply chain.
B) setting prices for specific goods.
C) summarizing and interpreting financial information needed by his firm's
managers.
D) developing a fringe benefit program that improves employee morale.

Origin: Chapter 6 Entrepreneurship and...


126. Luis is a partner in a firm that specializes in producing vitamins and health food
products. While the business is considered small by U.S. standards, he is
attempting to persuade his partner to expand internationally. Luis would list all
of the following as advantages of going international except:
A) exporting can help sell excess inventory.
B) marketing programs benefit from the cultural similarities in prospective
markets.
C) expanding internationally can reduce a firm's dependence on their
domestic market.
D) selling your products in other markets can extend their life cycle.

Origin: Chapter 5 Forms of Business Ownership


127. The ___________ is the most common form of business ownership.
A) partnership.
B) corporation.
C) joint venture.
D) sole proprietorship.

Origin: Chapter 13 Marketing


128. Keith has been hired as a marketing manager for a textbook publishing
company. His primary responsibilities are likely to be concerned with:
A) establishing inventory control methods.
B) making certain production schedules are met.
C) planning and executing the conception, pricing, promotion and distribution
of his firm's products.
D) preparing job descriptions and job specifications for sales representatives.

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GB101 S07 Practice Exam for Students – Posted April 3rd, 2007

Origin: Chapter 6 Entrepreneurship and...


129. About 80% of all Americans find their first jobs in:
A) government agencies.
B) large corporations.
C) the manufacturing sector.
D) small businesses.

Origin: Chapter 18 Understanding Financial..


130. The balance sheet reports revenues and selling costs for a period of time.
A) True
B) False

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