Business Fundamentals
Practice Questions
Course Introduction
Business Fundamentals introduces students to the essential concepts and practices that form the foundation of the business world. The course covers key topics such as management principles, marketing strategies, financial management, accounting basics, organizational behavior, and the role of entrepreneurship in the economy. Students will explore real-world business scenarios, analyze case studies, and gain insights into decision-making processes vital for business success. This course is designed to develop critical thinking, problem-solving, and communication skills necessary for future studies or entry-level positions within various business sectors.
Recommended Textbook
Understanding Business 12th Edition by William G Nickels
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Page 2
Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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Sample Questions
Q1) Empowerment requires managers to focus more on ________ lower-level employees.
A) directly supervising
B) training
C) simplifying the jobs of
D) controlling and correcting
Answer: B
Q2) Efficiency means:
A) producing the desired result.
B) producing goods and services using the least amount of resources.
C) the amount of output you generate given the amount of input.
D) the buying and selling of goods using the most amount of resources.
Answer: B
Q3) Although employment in the service sector has increased rapidly in recent years, the vast majority of workers are still employed in the goods-producing sector.
A)True
B)False
Answer: False
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Chapter 2: Understanding Economics and How It Affects Business
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Sample Questions
Q1) The consumer price index (CPI) measures what is happening to prices at the wholesale level.
A)True
B)False
Answer: False
Q2) ________ unemployment results when the demand for labor varies during the year.
A) Frictional
B) Structural
C) Cyclical
D) Seasonal
Answer: D
Q3) A typical demand curve shows that
A) as people earn higher wages, they buy more of a specific good.
B) as supply increases, the amount purchased decreases.
C) people tend to buy more of a good than they really want.
D) people tend to buy more of a good when its price decreases.
Answer: D
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Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) Franchising is popular both domestically and internationally.
A)True
B)False
Answer: True
Q2) Which of the following statements is the most accurate observation regarding multinational corporations?
A) Rather than manage manufacturing and marketing facilities overseas, most multinational corporations attempt to enter global markets by exporting domestically produced goods.
B) Most multinational corporations are small- to medium-sized firms.
C) Because of political and economic concerns, most multinational corporations choose to ignore investment opportunities in China and Russia.
D) Only those firms with a physical presence in different nations qualify as multinational corporations.
Answer: D
Q3) Global markets consider the U.S. dollar to be a weak currency.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) Top leaders in government and business today are
A) held to higher ethical standards than in the past.
B) held to less strict moral standards than in the past.
C) less interested in social responsibility than in the past.
D) at odds with the general public in regard to ethical issues.
Q2) Ethical behavior involves the clear and easy choice of right and wrong actions toward others.
A)True
B)False
Q3) A corporate policy should never make a value statement about the environment or other social and political issues, because it is doubtful the company can live up to the proclamation.
A)True
B)False
Q4) On which of the three ethics check questions would Megan primarily focus?
A) Is it legal?
B) Is it fair and balanced?
C) How will it make me feel about myself?
D) Is this a win-win situation?
6
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Chapter 5: How to Form a Business
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Sample Questions
Q1) The coattail effect refers to inevitable repercussions on your business if a fellow franchisee should fail.
A)True
B)False
Q2) To change ownership in a corporation you simply sell your stock to someone else.
A)True
B)False
Q3) When two firms which do not participate in the same industries, for example, a software company and a fast food restaurant company, decide to merge, the result is called a ________ merger.
A) vertical
B) horizontal
C) linear
D) conglomerate
Q4) Global franchising is unlikely to experience major growth due to the high costs of operations in global markets.
A)True
B)False
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Page 7
Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) Mike remembers his grandfather telling him, "If you can find something you like to do, and somebody is willing to pay you to do it, that's the secret to a great life." The way Mike saw it, this was his chance. For the past five years, he's been splitting his time between school and working at a local tree farm. The owner recently announced he was ready to retire. As Mike began creating a business plan, he contemplated what the business might be worth. How much will he need to buy this business? For starters, Mike
A) needs to find a government database that outlines what nursery businesses are worth, on average, across the country.
B) should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage.
C) will want to determine the assessed value of the acreage that the business owns, and then bid competitively.
D) needs to understand that it's difficult to buy an existing business, rather than start your own. The key will be to meet with the company's accountant, and explain your interest. The accountant will have all the answers.
Q2) List and discuss at least three causes of small business failure.
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Chapter 7: Management and Leadership
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Sample Questions
Q1) Rodrigo has worked for Three Brothers Construction for over 10 years and was recently was promoted to the position of foreman. He is directly responsible for assigning various jobs to his work crew and evaluating their performance on a daily basis. Rodrigo is now a member of
A) top management.
B) middle management.
C) supervisory management.
D) forward management.
Q2) In this day of rapidly changing technology, technical skills are the most important skills for all levels of management.
A)True
B)False
Q3) A ________ is an overall explanation of why an organization exists and where it is trying to head.
A) tactical plan
B) prime directive
C) corporate charter
D) vision
Q4) Identify and define the four key functions of management.
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Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) Fayol's principle of the division of labor says that functions should be divided into areas of specialization such as production, marketing, and finance.
A)True
B)False
Q2) A virtual corporation is a networked organization made up of replaceable firms that join the network and leave it as needed.
A)True
B)False
Q3) A disadvantage of the matrix organization is the temporary nature of the teams.
A)True
B)False
Q4) Staff positions in an organization
A) support and assist the line positions.
B) are superior to line positions.
C) are less well-paid than line positions.
D) are ways to employ past CEOs until they retire.
Q5) Line organizations clearly define the lines of authority and responsibility. A)True B)False
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) ISO is a worldwide, nongovernmental federation that sets global measures of quality.
A)True
B)False
Q2) Most new manufacturing facilities use:
A) continuous processes.
B) intermittent processes.
C) traditional processes.
D) synthetic processes.
Q3) Online companies have helped businesses find the best supplies at the best prices.
A)True
B)False
Q4) Land, labor, capital, and knowledge are inputs into the production process.
A)True
B)False
Q5) The end result of PERT analysis is an estimate of the total cost of completing a project.
A)True B)False
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Chapter 10: Motivating Employees
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Sample Questions
Q1) Ahmed emigrated from his war-torn country to the United States three years ago. Recently, he found a job working on an assembly line at an electronics manufacturer. When he came to the U.S., Ahmed left his friends and family behind. Now he is lonely and hopes that his fellow employees will accept him so that he can build some lasting friendships. According to Maslow, Ahmed is looking to satisfy his
A) physiological needs.
B) safety needs.
C) social needs.
D) self-actualization needs.
Q2) Most Gen X managers are likely to be flexible and good at collaboration.
A)True
B)False
Q3) In a low-context culture, employees are less likely to place emphasis on relationship building. They want to jump right in and get the job done.
A)True
B)False
Q4) Compare the assumptions Theory X makes about employees with those of Theory Y. How do these different assumptions influence management styles?
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Page 12
Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample Questions
Q1) Which of the following statements about how current HR law views disabilities is accurate?
A) The law varies depending upon how the employee acquired the disability.
B) Disabilities include diseases such as epilepsy, autism, and diabetes.
C) Disabilities refer to physical but not mental disorders.
D) Any disorder does not require the employee to adapt the work environment to accommodate the employee.
Q2) A ________ is a check of a potential employee's work record, academic record, credit history, and recommendations.
A) personality profile
B) background investigation
C) fidelity appraisal
D) character review
Q3) Antonia is interested in transferring to a new position recently opened in her company. But first, she wants to find out more about the type of work and responsibilities involved in the job. A document that would have the information she wants is the job specification.
A)True
B)False
13
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Chapter 12: Dealing With Employeemanagement Issues
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Sample Questions
Q1) ________ is the process by which representatives of a union meet with representatives of management to negotiate a contract for workers.
A) Mediation
B) Arbitration
C) Mutual conciliation
D) Collective bargaining
Q2) Some contend that the main reason membership in labor unions has declined in recent years has been the passage of anti-labor legislation in the late 1980s that guaranteed all employees of a firm the same wages and benefits whether they joined a union or not.
A)True
B)False
Q3) The Labor-Management Relations Act (Taft-Hartley Act) allowed states to pass laws that prohibited compulsory union membership.
A)True
B)False
Q4) One of the things that labor is interested in is fairness.
A)True
B)False
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Chapter 13: Marketing: Helping Buyers Buy
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Sample Questions
Q1) The two major types of markets in business are the consumer market and the government market.
A)True
B)False
Q2) A firm's marketing mix consists of 4 major components, which are generally referred to as the four
A) Ps.
B) keys to success.
C) intangibles of marketing.
D) persuaders.
Q3) A firm gathers ________ data by conducting surveys, interviewing customers, or mailing out questionnaires.
A) primary
B) secondary
C) non-referenced
D) unbiased
Q4) The four elements of the marketing mix are product, production, price, and predictability.
A)True
B)False
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Chapter 14: Developing and Pricing Goods and Services
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Sample Questions
Q1) Firms utilize ________ when they attempt to add value to their product by offering service after the sale, product demonstrations, or interactive customer websites.
A) nonprice competition
B) relationship branding
C) niche marketing
D) break-even segmentation
Q2) Endorsements by sports or movie celebrities can help create a favorable brand association.
A)True
B)False
Q3) The combination of all the factors that consumers evaluate when deciding whether or not to buy a good or service is called a
A) total product offer.
B) product mix.
C) product differentiation.
D) product package.
Q4) Packaging is an important part of the total product offer.
A)True
B)False
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Chapter 15: Distributing Products
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Sample Questions
Q1) Though vending machines can sell just about anything, they are most often used to sell
A) shopping goods.
B) convenience goods.
C) specialty goods.
D) inferior goods.
Q2) A channel of distribution consists of the marketing intermediaries who join together to transport and store goods in their path from producers to consumers.
A)True
B)False
Q3) Franchise systems are one type of ________ distribution system.
A) corporate
B) wholesale
C) contractual
D) administered
Q4) There are four specific types of channel systems available to companies that tie firms together in a unified way.
A)True
B)False
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) Successful PR departments find that listening to the public is not enough. They have to tell the public that they are being responsive.
A)True
B)False
Q2) Registration in Ms. McNick's classes reaches maximum enrollment quickly. Students register immediately online just to insure their seat in her class. One student summed it up: "Everyone's heard she is the best teacher on campus." Ms. McNick's classes benefit from
A) viral publicity.
B) positive public relations.
C) free advertising.
D) word-of-mouth promotion.
Q3) The total annual expenditures on advertising in the United States
A) peaked last year at approximately $700 billion.
B) has declined significantly as firms utilize different online promotional opportunities.
C) is about $420 billion.
D) has been capped at $300 billion by a government stimulus package.
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Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) General expenses include office salaries, rent, and insurance.
A)True
B)False
Q2) Identify the three key financial statements that corporations are required to prepare, and describe the type of information found on each.
Q3) ________ measures the speed of inventory moving through the firm and its conversion into sales.
A) Asset turnover ratio
B) Inventory turnover ratio
C) Sales turnover ratio
D) Cost of goods sold turnover ratio
Q4) Harrison, a potential investor, is interested in both Barkatorium's balance sheet and income statement when evaluating whether or not to invest.
A)True
B)False
Q5) As a certified public accountant, you would be working in the area of managerial accounting.
A)True B)False
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Chapter 18: Financial Management
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Sample Questions
Q1) Akiko realizes the importance of developing a ________ for her interior design business. Akiko understands the importance of appropriately allocating resources in order to achieve the goals of her firm.
A) market prediction
B) financial forecast
C) budget
D) cash flow analysis
Q2) Shopper's Choice Department Stores has fallen behind in payments to suppliers due to cash flow shortages. Some suppliers are withholding shipments to Shopper's Choice until they receive payments on overdue accounts. To meet their immediate needs, Shopper's Choice Department Stores should utilize
A) vulture capital.
B) long-term financing.
C) contingency capital.
D) short-term financing.
Q3) Accountants truly represent the financial managers of a business.
A)True
B)False
Q4) Identify and describe the major steps involved in financial planning.
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Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Q1) Stocks that are not listed as trading on one of the national or international stock exchanges can be traded on the OTC, over-the-counter exchange.
A)True
B)False
Q2) A no-load mutual fund charges no commission fees to buy or sell its shares.
A)True
B)False
Q3) The purpose of the SEC's circuit breakers rule is to
A) prevent market disruption caused by a communication malfunction.
B) halt trading for a short time following a dramatic drop in stock prices.
C) allow floor traders to specialize in trading the securities of specific industries.
D) prevent individuals from profiting from information not available to the general public.
Q4) If a company announces a stock split, the investor may receive two or more shares of the company stock, for every one share that he/she holds.
A)True
B)False
Q5) Explain the differences between preferred stock and common stock.
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Chapter 20: Money, Financial Institutions, and the Federal Reserve
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Sample Questions
Q1) An increase in the discount rate produces a decrease in money supply.
A)True
B)False
Q2) The president of the island nation of Winstone refuses to raise taxes, but wants to expand many government services and increase the size of Winstone's armed forces. He plans to pay for all of the desired expenditures by printing more money. If the president carries out his plan by rapidly increasing the supply of money, Winstone will likely experience
A) a severe recession.
B) reduced private sector spending.
C) widespread surpluses of goods and services.
D) an increase in the rate of inflation.
Q3) When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.
A)True
B)False
Q4) The World Bank primarily finances projects to protect the environment.
A)True
B)False
Q5) Identify and discuss the tools and products that electronically transfer funds.
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Chapter 21: Appendix: Working Within the Legal Environment
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Sample Questions
Q1) Some economists advocate a ________ on the consumption of such products as gasoline, liquor, cigarettes, and even soda, in the hope that consumers will think about how their purchases are having negative impacts on themselves and their environment.
A) progressive tax
B) sin tax
C) flat tax
D) tax credit
Q2) Copyrights are filed with the Library of Congress and involve large amounts of paperwork.
A)True
B)False
Q3) The number of Americans filing for bankruptcy has increased tremendously since the late 1980s.
A)True
B)False
Q4) The U.S. court system is organized solely at the federal and state levels.
A)True
B)False
Q5) Explain two of the major U.S. antitrust laws.
Page 23
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Chapter 22: Appendix: Using Technology to Manage Information
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Sample Questions
Q1) A computer ________ is a piece of programming code that is inserted into other programming to cause an unexpected and often-undesirable event for the victim.
A) virus
B) cold
C) wasp
D) firecracker
Q2) Gary has been using Dropbox. The cloud he is storing his information to is called a A) private cloud.
B) public cloud.
C) hybrid cloud.
D) analytical cloud.
Q3) One advantage of networked computers is that they offer much greater computer security than the older mainframe systems.
A)True
B)False
Q4) A basic truth in management is that you can never have too much information. A)True
B)False
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Chapter 23: Appendix: Managing Risk
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Sample Questions
Q1) The federal government provides some insurance protection.
A)True
B)False
Q2) Brad has decided to increase the size of his auto repair business, although he realizes that this decision brings added risk. This is an example of ________ risk.
A) speculative
B) pure
C) insurable
D) managed
Q3) Liability losses result from property damage or injuries suffered by others for which the policyholder is held responsible.
A)True
B)False
Q4) The type of risk that is of most concern to businesspeople is speculative risk.
A)True
B)False
Q5) Any risk is insurable as long as you can pay the premium.
A)True
B)False
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Chapter 24: Appendix: Managing Personal Finances
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Q1) When purchasing with a credit card, it's important to remember that ________ if you do not pay the balance in full within a stated time period.
A) the credit limit is reduced
B) no returns are allowed
C) interest is charged on the remaining balance
D) discounts are available
Q2) Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.
A)True
B)False
Q3) Thomas contributed $2,800 to a Roth IRA. He is currently in the 25% tax bracket. How will his contribution affect his income tax for the current year?
A) It will reduce the amount of taxes he owes in the current tax year by $700.
B) It will increase the amount of taxes he owes in the current year by $700.
C) It will reduce the amount of taxes he owes in the current year by $2,100.
D) It will have no effect on the amount of taxes he owes this year.
Q4) Describe the major steps involved in estate planning.
Q5) What are the advantages of investing in a home?
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