Fundamentals of Business Question Bank
Course Introduction
Fundamentals of Business introduces students to the core concepts, practices, and structures that form the foundation of the modern business environment. This course covers areas such as organizational structures, management principles, marketing basics, finance, operations, and entrepreneurship. Students will develop an understanding of how businesses operate within social, economic, and legal frameworks, and explore the roles of ethics and decision-making in business settings. Through case studies and practical examples, the course equips students with critical thinking and problem-solving skills essential for success in the business world.
Recommended Textbook
Understanding Business 12th Edition by William G
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Nickels
Page 2
Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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Sample Questions
Q1) Bart Broekelman recently returned from Afghanistan where he was a member of the highly skilled special operations forces. He is now back home in the United States where he uses the G.I. Bill in order to go to school. This is one example of
A) how an event such as a war educates young people about conditions abroad.
B) the cost of war.
C) the benefits of war on education.
D) a squeeze on employer benefits.
Answer: B
Q2) The green movement is
A) a trend that started with the U.S. government.
B) concerned with depletion of natural resources.
C) developing more green food products to feed the world's poor.
D) our concern with the fact that everywhere we look, things are remaining green for longer periods of time.
Answer: B
Q3) Globalization has greatly increased living standards around the world.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Understanding Economics and How It Affects Business
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Sample Questions
Q1) Socialists believe that wealth should be more evenly distributed than what actually occurs in a free-market capitalistic system.
A)True
B)False
Answer: True
Q2) Under the ________ system there is very little incentive to work hard or to produce quality goods or services.
A) capitalist
B) socialist
C) communist
D) mixed economy
Answer: C
Q3) If a shortage exists in a market for a good, the price of that good will tend to fall.
A)True
B)False
Answer: False
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Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) While Asia represents an important source of U.S. imports, few export opportunities exist for U.S. firms to sell goods and services to Asian consumers.
A)True
B)False
Answer: False
Q2) A major concern voiced by U.S. critics of the North American Free Trade Agreement (NAFTA) was that it would result in
A) higher prices for consumer goods.
B) loss of jobs in the U.S. economy.
C) national security problems.
D) increased illegal immigration from Mexico.
Answer: B
Q3) Countertrading is a form of exchange where firms will put certain products "on the counter" offering them to foreign customers at a cheaper price than what they would offer them to domestic customers.
A)True
B)False
Answer: False
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Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) Recently, Bob was trying to choose among three mutual fund investments for his retirement account. As a socially conscious investor, he will prefer to invest in funds that hold the stocks of oil and coal companies, as opposed to wind-turbine and renewable energy companies.
A)True
B)False
Q2) Compliance-based ethics codes are based on preventing unlawful behavior.
A)True
B)False
Q3) Studies show that consumers are not concerned about the socially conscious behavior of the firms with which they do business.
A)True
B)False
Q4) Ethical behavior involves the clear and easy choice of right and wrong actions toward others.
A)True
B)False
Q5) Identify and discuss the social responsibilities of a firm to three of the four stakeholder groups described in your textbook.
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Chapter 5: How to Form a Business
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Sample
Questions
Q1) If the business is designated a sole proprietorship, profits are passed along to the owner. For tax purposes, these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.
A)True
B)False
Q2) Partnerships are the most common form of business ownership.
A)True
B)False
Q3) One method to avoid conflicts between partners is to solicit the services of a lawyer to create a well-written partnership agreement.
A)True
B)False
Q4) The coattail effect refers to inevitable repercussions on your business if a fellow franchisee should fail.
A)True
B)False
Q5) Describe and differentiate between the three types of corporate mergers. Give an example of each type.
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Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) Northeast City College received a government grant to create a business incubator. Once completed, Northeast City College's facility will offer
A) local government agencies assistance in obtaining funds for urban renewal.
B) area businesses advice on employee benefits and ways to reduce taxes.
C) venture capitalists an opportunity to identify new entrepreneurs.
D) new businesses low-cost office space with basic business services.
Q2) The executive summary section of the business plan contains
A) computerized information that readers can access interactively.
B) information that will capture the attention of bankers and other investors who receive many business plans every day.
C) qualifications, experience, and education of the entrepreneur and prospective employees.
D) a financial summary prepared by the business's accountant.
Q3) According to the Spotlight on Small Business box, people in college are not ready to start their own business.
A)True
B)False
Q4) Discuss several ways the Small Business Administration assists entrepreneurs.
Q5) 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) Which of the following activities would be a part of the leading function of management?
A) Devising a new strategic plan to enter a new foreign market currently dominated by a competing firm
B) Recruiting qualified workers to join the organization and assigning them to their proper position
C) Examining a financial report to see whether the firm's profits are improving and taking corrective action if they are not
D) Training and coaching workers to help them understand their job and perform it effectively
Q2) Given the lack of discipline and short attention spans of today's workers, modern managers must watch their workers closely, set strict rules, and vigorously enforce policies.
A)True
B)False
Q3) Planning is a key management function because other management functions depend on having a good plan.
A)True
B)False
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Page 9
Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) To better organize his landscaping business, Scott started to divide each job into several parts. One is excavation and removal of old landscaping, the next is design, followed by purchasing, and finally installation of new plants. If he assigns a different employee to each part, this action would be an example of departmentalization.
A)True
B)False
Q2) The marketing department manager at Creative Counselors International made a strong push to hire professionals with superior performance records in prior jobs. It didn't take long for these enthusiastic marketers to recognize the many talents within their department. They admired at how alike they were and how they seemed to agree with each other's work styles and ideas. After a while, it became difficult for others in the organization to present to this group. If the idea did not originate within the marketing team, marketers did not give it much credence. This phenomenon is called
A) departmentalization clique.
B) interoffice competition.
C) forward thinking friction.
D) groupthink.
Q3) Describe two major issues that are important in organizational design.
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) Picture Pieces corporation produces jigsaw puzzles. The quality of its materials and the calibration of machines that cut and fit pieces of a puzzle are extremely important if it is to eliminate defects and meet customer specifications. If the company meets or exceeds Six Sigma criteria, it will have no more than 60 defects per million puzzles.
A)True
B)False
Q2) In making a location decision, businesses seldom consider "quality of life" in various locations, because factors that influence quality of life have little or no impact on profits.
A)True
B)False
Q3) In recent years, the service sector of the U.S. economy has
A) grown much more rapidly than the manufacturing sector.
B) become the low-wage sector of the U.S. economy.
C) achieved extremely high productivity gains according to government reports.
D) focused less on quality and more on reducing costs of production.
Q4) Land, labor, capital, and knowledge are inputs into the production process.
A)True
B)False
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Page 11
Chapter 10: Motivating Employees
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Sample Questions
Q1) Referring to Maslow's Hierarchy of Needs Theory, one would agree that U.S. workers are more often interested in satisfying their physiological and safety needs, as opposed to their self-esteem needs.
A)True
B)False
Q2) Ronald, the CEO of Extel Micro-a technology provider with 17,000 employees-answers his own phone and takes calls from employees of all levels. He actually loves to hear about what employees think the company is doing right and what they could be doing better. Ronald is building teamwork by
A) creating an organizational culture that rewards listening.
B) rewarding employees with cash bonuses for good ideas.
C) giving high performers separate perks they value.
D) bolstering employee fairness.
Q3) The Hawthorne studies concluded that worker motivation
A) increased when managers applied the scientific management approach.
B) was most affected by monetary incentives.
C) improved when employees felt like their ideas were respected.
D) was mainly determined by physical working conditions such as lighting, temperature, and humidity.
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Page 12
Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample Questions
Q1) Job sharing tends to increase absenteeism and tardiness, because part-time workers are not as dedicated and loyal as full-time workers.
A)True
B)False
Q2) Reverse discrimination is the term the EEOC uses to refer to activities designed to "right past wrongs" that resulted from discrimination against women and minorities.
A)True
B)False
Q3) One objective of a carefully managed compensation and benefit program is to retain valued employees.
A)True
B)False
Q4) In coming years, high-tech growth areas such as computer technology, biotechnology, and robotics are likely to experience a A) surplus of labor.
B) significant decline in market demand, leading to a stagnant labor market.
C) shortage of skilled labor.
D) stable equilibrium in the labor market.
Page 13
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Chapter 12: Dealing With Employeemanagement Issues
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Sample Questions
Q1) The unions of the 21st century are likely to be quite different from those in the past.
A)True
B)False
Q2) The number of households that face the burden of caring for one or more elderly parents has increased significantly and is expected to continue growing over the next 20 years.
A)True
B)False
Q3) The vast majority of grievances filed by union members are negotiated and resolved by shop stewards and supervisory managers.
A)True
B)False
Q4) During its early years, the AFL tried to expand as rapidly as possible by recruiting both skilled and unskilled workers.
A)True
B)False
Q5) Identify several laws that significantly influenced labor-management relations. Discuss the major provisions of each law.
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Page 14
Chapter 13: Marketing: Helping Buyers Buy
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Sample Questions
Q1) Marketing research is a process that most firms complete once a year, in order to gather information for the firm's budgeting process.
A)True
B)False
Q2) For safety's sake, Marshall Metals produces as many products as possible since customers are not a good source of informing the organization what they want to buy.
A)True
B)False
Q3) Psychographic segmentation involves dividing a market into segments based on lifestyle, values, attitudes, or interests.
A)True
B)False
Q4) Customer relationship management (CRM) is the process of learning as much as possible about customers and doing everything you can to satisfy them.
A)True
B)False
Q5) Explain how mass marketing and relationship marketing differ.
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Page 15
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) While the product life cycle is a good theory, it's not important for marketers to recognize what life cycle stage a product is in.
A)True
B)False
Q3) "It tastes better than candy!" is an advertising slogan for a new probiotic gummy. The manufacturer claims that their probiotics is of a higher quality and tastes better than any competing brand. These claims are part of the firm's strategy to achieve
A) deceptive marketing recognition.
B) the creation of knockoff products.
C) new-product development.
D) product differentiation.
Q4) Discuss the role of packaging in a firm's total product offer.
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16
Chapter 15: Distributing Products
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Sample Questions
Q1) The need for Lite Bite to recall its almond chocolate bars suggests that it had to be very concerned with
A) outbound logistics.
B) reverse logistics.
C) administered distribution.
D) drop shipping.
Q2) An increase in energy prices would encourage shippers to rely more on rail transportation.
A)True
B)False
Q3) Railroads are an energy-efficient mode of transporting many types of goods.
A)True
B)False
Q4) Traditional retailers can stay competitive with online retailers by being part of a unified system of distribution.
A)True
B)False
Q5) Warehouse clubs are usually smaller than supermarkets.
A)True
B)False
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) With the increase of digital advertising, infomercials are rarely shown on television.
A)True
B)False
Q2) A good public relations program recognizes that the
A) company must not ever admit fault.
B) firm must be willing to make changes in its policies and procedures.
C) firm must be independent of production and service activities.
D) media are not to be trusted since they profit by selling bad news.
Q3) To execute an effective promotional strategy, firms are required to choose between a push strategy and a pull strategy.
A)True
B)False
Q4) When an organization uses advertising to create an attractive image for itself, this type of advertising is called
A) retail advertising.
B) trade advertising.
C) comparison advertising.
D) institutional advertising.
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Page 18
Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) The LIFO method of inventory valuation bases the cost of goods sold on the cost of A) merchandise that has been held in inventory for the longest period of time.
B) most recent merchandise purchased by the firm.
C) actual units customers purchased.
D) merchandise the firm acquired at the lowest cost.
Q2) The Sarbanes-Oxley Act strengthens the protection for whistleblowers who report wrongful actions of company officers.
A)True
B)False
Q3) The fact that Minnie spends most of her time measuring costs and checking to see if departments are staying within their budgets suggests that she is often involved in A) auditing.
B) managerial accounting.
C) bookkeeping.
D) departmental certification.
Q4) Explain the meaning of the fundamental accounting equation and its relation to the balance sheet. If it is helpful, create an example using numbers.
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Chapter 18: Financial Management
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Sample Questions
Q1) If a company secures a three-year bank loan, this is considered
A) short-term financing.
B) asset funding.
C) liability funding.
D) long-term financing.
Q2) Which of the following is a primary area of concern for financial managers?
A) undercapitalization
B) inability to recruit qualified workers
C) poor advertising messages
D) inadequate market control
Q3) Budgets are prepared after the financial forecasts are developed.
A)True
B)False
Q4) Riley, a new graduate with a finance degree, was recently hired by a large corporation to work in tax management. Riley's goal is
A) to prepare the company's tax returns.
B) to develop ways to increase taxes in order to enhance the bottom line.
C) to minimize the firm's tax consequences.
D) to be the firm's tax collector.
Q5) Identify and describe the major steps involved in financial planning.
Page 20
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Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Sample Questions
Q1) A bull market occurs when overall stock prices increase.
A)True
B)False
Q2) A U.S. government bond paying 3.25% interest annually is a lower risk than a Bathtub Brewing Company bond paying 6%.
A)True
B)False
Q3) Issuing new stock increases the firm's outstanding debt on their balance sheet. A)True
B)False
Q4) Unlike stocks, for selling purposes, bond prices remain stable over the life of the bond.
A)True
B)False
Q5) Program trading refers to computer trading software that automatically sells stocks when their price dips to a predetermined level.
A)True
B)False
Q6) 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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Q1) Early in our nation's history, people generally accepted the importance of a central bank authority.
A)True
B)False
Q2) By the time of the Civil War, the U.S. banking system operated
A) as an efficient model that many other countries copied.
B) under the control of the first Federal Reserve System.
C) inefficiently with different banks issuing different types of currencies.
D) much the same as it does today.
Q3) Which of the following is NOT included in the M-1 or M-2 definitions of the money supply?
A) savings account deposits
B) gold
C) checking account deposits
D) currency
Q4) The wave of bank failures during the Great Depression prompted the government to establish federal deposit insurance to protect the public from bank failures.
A)True
B)False
22
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Chapter 21: Appendix: Working Within the Legal Environment
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Sample Questions
Q1) Sales taxes are the largest source of tax income received by the federal government. A)True
B)False
Q2) An interlocking directorate occurs when a contract between a retailer and a wholesaler requires misleading advertising.
A)True
B)False
Q3) Bigbux Bank recently changed its advertising campaign. It now announces the bank has the lowest bank fees in the country even though it has not done research to discover whether this is true. Business law is the framework within which a competitor could take Bigbux to court in the event its claims are not true.
A)True
B)False
Q4) Criminal law defines crimes, establishes punishments, and includes payment for personal injury.
A)True
B)False
Q5) Explain the difference between statutory law, common law, and business law.
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Chapter 22: Appendix: Using Technology to Manage Information
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Sample Questions
Q1) Subjectivity is one of the four characteristics of useful information. A)True
B)False
Q2) The software or hardware barrier that a business uses to prevent unauthorized users from gaining access to their intranet is known as a tripware.
A)True
B)False
Q3) The success of data mining depends on access to data. A)True
B)False
Q4) 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.
Q5) There are three types of cloud computing: private clouds, public clouds, and hybrid clouds.
A)True B)False
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Chapter 23: Appendix: Managing Risk
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Sample Questions
Q1) Antonio is a silversmith and works with various metals. At the end of the day, he reclaims and separates each metal by using an inexpensive toxic acid though other methods are available. The risk of fire as well as health dangers to Antonio is unknown. What should Antonio do?
A) Dispose of the used acid by pouring it down the drain since the government will take care of any environmental issues that come from polluting the water.
B) Get a fire insurance policy and make sure to visit the doctor regularly.
C) Switch to another potentially less dangerous method of separating each metal.
D) Pour it out in back of the studio in the gutter.
Q2) Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.
A)True
B)False
Q3) A terrorist attack is an example of pure risk.
A)True
B)False
Q4) An insurance policy is a written contract.
A)True
B)False
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Chapter 24: Appendix: Managing Personal Finances
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Q1) How does term insurance differ from whole life insurance? Describe the newer types of life insurance that have been offered in recent years.
Q2) Excessive debt is as much a problem of young consumers as it is of other age groups.
A)True
B)False
Q3) Throughout history an investment in ________ has yielded an excellent return, regardless of the state of the economy or political changes.
A) antiques
B) a good education
C) government bonds
D) savings accounts
Q4) The key to generating enough capital for investment for many individuals is to A) obtain as many credit cards as possible in order to maximize spending power.
B) live frugally.
C) borrow money from friends and family.
D) buy only high-quality consumer goods.
Q5) Identify and discuss the six steps that individuals can take to gain control of their personal finances.
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