Understanding Business Chapter One

An entity that seeks to earn a profit by providing a good or service is known as a(n)

• industry.

• business.

• corporation.

• service.

________ is the amount a business earns after deducting what it spends for salaries and other expenses.

• Profit

• Revenue

• Interest

• Dividends

A business incurs a ________ if its costs and expenses exceed its revenues.

• loss

• liability

• debit

• dividend

________ is the chance a business owner will lose the time and money invested in a business that proves to be unprofitable.

• Depreciation

• Risk

• Fallibility

• Redundancy

________ is a measure of the general well-being and satisfaction derived from a variety of factors including political freedom, safety, education, and a clean environment.

The amount of goods and services people can buy with the money they have is called their:

The customers, employees, stockholders, suppliers, creditors, and others who stand to gain or lose by the policies and activities of a business represent the firm's:

• market makers.

• economic environment.

• stakeholders.

• social mentors.

The most important difference between for-profit businesses and nonprofit organizations is that:

Last year, Archer Electronics reported revenues of $34 million while its total expenses were $10 million. Based on this information, Archer reported

• profits of $24 million.

• profits of $34 million.

• losses of $24 million.

• losses off $34 million.

A common characteristic of most entrepreneurs is that they:

• have a high level of scientific and technical expertise.

• accept the risks involved in starting and managing a business.

• possess a great deal of personal wealth.

• have experience in running large, complex organizations.