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WorksheetsFinal Exam Review
Total questions: 65
Worksheet time: 33mins
Businesses seek to earn a profit by providing goods and services to others.
True
False
Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses.
True
False
A common characteristic of most entrepreneurs is that they
have experience in running large, complex organizations.
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.
Which statement is accurate about capitalism?
Markets operate to carry out the decisions made by central planners.
The primary function of the government is to distribute wealth more evenly.
Most means of production and distribution are privately owned and operated for profit.
Utilities, health care, education, and other important services are operated by the government.
A benefit of a free market can be that
it eliminates wealth inequalities in society.
businesses all make the same amount of profit.
businesses provide customers with quality products at fair prices.
it tends to reduce government regulation.
A major premise of a socialist system is
to keep tax rates extremely low so that businesses can prosper.
to reduce the inequality in the distribution of wealth.
to make sure that the people who create wealth are allowed to keep that wealth.
to create incentives to encourage entrepreneurs to create jobs and economic growth.
The economic and political system in which the government owns almost all the major factors of production is called
socialism.
capitalism.
communism.
collectivism.
The purpose of enacting trade protectionism toward foreign goods is to limit competition from abroad, particularly when the country has domestic companies that produce and sell the same products and services.
True
False
Why does it make sense to trade with other nations?
A nation will produce what it can produce most efficiently and effectively and buy from other nations what they can produce most efficiently and effectively.
Some nations have lots of natural resources and technological know-how. They have an ethical obligation to offer the rest to other nations.
After producing all the product and service its people want and need, a nation can sell the excess products to the world.
Other nations need foreign currency.
An unfavorable balance of trade occurs when the value of
exports exceeds the value of imports.
imports exceeds the value of exports.
imports equals the value of exports.
cash inflows is equal to the value of cash outflows.
In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called
revenue tariffs.
protective tariffs.
import quotas.
devaluations.
The concept of free trade means
buyers and sellers contract with each other and offer some goods at no cost.
goods and services can be traded freely across borders without political and/or economic barriers.
there is no exchange of currency for these products.
a bartering process without currency exchange is used to purchase goods.
The value of goods imported into Spain exceeds the value of Spanish exports. This indicates that Spain
has an exchange rate decrease.
utilizes high tariffs.
has a budget deficit.
has a trade deficit.
Goods and Services brought in from another country are called...
Tariffs
Exports
Supply
Imports
What was the name of the movie we watched in class about McDonald's?
Ferris Bueller's Day Off
Ghostbusters
The Founder
Caddyshack
When two or more people legally agree to become co-owners of a business, the form of business is called a partnership.
True
False
One of the major disadvantages of a sole proprietorship is the
possibility of disagreements between owners.
unlimited liability the owner has for the debts of the firm.
threat of double taxation on income.
high cost of starting or ending the company.
Unlimited liability means
when you own your own business, you are responsible for all the business debts.
you are only liable for the money you invest in the business.
as a franchisee your franchisor is responsible for the debts of the franchise.
you are liable for whatever advertising promises your firm makes.
What is an advantage of a partnership?
ease of starting and ending the business
unlimited liability
shared management and pooled skills
little time commitment
An owner of a corporation is known as a
general partner.
limited partner.
director.
stockholder.
Which of the following is true about a Limited Liability Company (LLC)?
It offers no liability protection to its owners.
It combines elements of partnerships and corporations.
It is owned by stockholders.
It has unlimited liability.
Liquidity is how quickly and asset can be converted into cash.
True
False
The three important financial statements prepared by accountants are
cash budget, capital budget, and master budget.
ledger, journal, and trial balance.
revenue summary, expense summary, and consolidation statement.
Income Statement, Balance Sheet, and Statement of Cash Flows
Which financial statement reports the company's revenues and expenses over a period of time?
trial balance
balance sheet
income statement
statement of cash flows
The balance sheet is composed of which three accounts?
assets, liabilities, and owners' equity
operating expenses, cash flow, and capital expenditures
revenue, expenses, and earnings
capital, cost, and valuation
The fundamental accounting equation states: Assets =
Liabilities plus Owners' Equity.
Liabilities plus Receivables.
Liabilities minus Owners' Equity.
Payables plus Cash Equivalents.
Resources that a firm owns are called
credits.
assets.
revenues.
equities.
A company's income statement is important to accountants and other stakeholders. It reveals a company's
capitalized value.
ability to distribute goods or services in a timely manner.
sources of funding.
profit over a period of time.
Debts owed by a business are called:
Assets
Liabilities
Revenues
Expenses
Businesses seek to earn a profit by providing goods and services to others.
True
False
Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses.
True
False
A business incurs a __________ if its costs and expenses exceed its revenues.
loss
profit
asset
liability
A common characteristic of most entrepreneurs is that they _________
accept the risks involved in starting and managing a business.
avoid taking any risks in business.
prefer working for others rather than themselves.
are unwilling to innovate or change.
__________ is the study of how a society employs its limited resources to produce goods and services and how it distributes them among competing groups and individuals.
Economics
Biology
Geography
Psychology
__________ studies the operation of a nation's economy as a whole.
Macroeconomics
Microeconomics
Sociology
Political Science
__________ looks at the behavior of individual people and organizations in specific markets.
Microeconomics
Macroeconomics
Sociology
Anthropology
The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as __________.
resource development.
resource depletion.
resource allocation.
resource conservation.
__________ is the name of a free-market economic system in which most factors of production and distribution—such as land, factories, railroads, and stores—are owned by individuals.
Capitalism
Socialism
Communism
Feudalism
Which statement is accurate about capitalism?
Most means of production and distribution are privately owned and operated for profit.
Most means of production and distribution are owned by the government.
All economic decisions are made by central planners.
Profit is not a motive for businesses.
__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product.
Perfect competition
Monopoly
Oligopoly
Monopolistic competition
__________ exists when the entire supply of a good is controlled by a single seller.
A monopoly
A partnership
A cartel
A duopoly
A benefit of a free market can be that ________
businesses provide customers with quality products at fair prices.
government controls all prices and products.
monopolies are guaranteed to form.
consumers have no choice in products.
A major premise of a socialist system is ________
to reduce the inequality in the distribution of wealth.
to maximize private ownership of resources.
to promote unrestricted free markets.
to encourage monopolistic practices.
The economic and political system in which the government owns almost all the major factors of production is called ________ communism.
communism.
capitalism.
socialism.
feudalism.
__________ refers to a general rise in the price level of goods and services over time.
Inflation
Deflation
Stagnation
Depreciation
__________ policy refers to the efforts of the federal government to keep the economy stable by increasing or decreasing taxes and/or government spending.
Fiscal
Monetary
Trade
Regulatory
When the federal government's collection of tax revenues is less than what it spends in a given year, it results in a __________.
national deficit.
national surplus.
balanced budget.
trade deficit.
Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as __________ policy.
monetary
fiscal
trade
regulatory
As a society, we have unlimited wants but there are limited resources for us with which to produce. This is called...
Scarcity
Abundance
Inflation
Monopoly
Revenue - ______________ = Net Profit or Loss
Expenses
Assets
Liabilities
Revenue
The purpose of enacting trade protectionism toward foreign goods is to limit competition from abroad, particularly when the country has domestic companies that produce and sell the same products and services.
True
False
__________ is the selling of products to another country.
Exporting
Importing
Manufacturing
Retailing
It makes sense to trade with other nations because:
it allows countries to obtain goods and services they cannot produce efficiently themselves.
it leads to a loss of resources for all countries involved.
it prevents countries from accessing new technologies.
it reduces the variety of products available in each country.
An unfavorable balance of trade occurs when the value of ________ exceeds the value of exports.
imports
exports
goods produced
foreign investments
Apple's manufacturing strategy is __________, where they company makes arrangements for a foreign manufacturer to make the product. Apple's logo and/or trademark are still attached to the completed product.
contract manufacturing
vertical integration
franchising
licensing
In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called ________.
import quotas
tariffs
subsidies
embargoes
The concept of free trade means ________
goods and services can be traded freely across borders without political and/or economic barriers.
countries impose high tariffs on imported goods.
only domestic goods and services are allowed to be traded.
trade is restricted to certain approved countries.
The value of goods imported into Spain exceeds the value of Spanish exports. This indicates that Spain ________
has a trade deficit.
has a trade surplus.
has balanced trade.
is a net exporter.
Goods and Services brought in from another country are called... ________ Imports
Imports
Exports
Taxes
Tariffs
Unlimited liability means _________.
when you own your own business, you are responsible for all the business debts.
you are not responsible for any business debts.
your liability is limited to the amount you invested.
the government pays your business debts.
What is an advantage of a partnership?
shared management and pooled skills.
unlimited liability for all partners.
profits are taxed twice.
ownership cannot be transferred easily.
An owner of a corporation is known as a _________.
stockholder.
employee.
manager.
customer.
Which of the following is true about a Limited Liability Company (LLC)?
It offers no liability protection to its owners.
It combines elements of sole proprietorship and corporation.
It is owned by stockholders.
It has unlimited liability.
A(n) ________ is a state-chartered legal entity with authority to act and to have liability separate from its owners.
corporation
partnership
sole proprietorship
cooperative
Liquidity is how quickly and asset can be converted into cash.
True
False
