Principles of Management Test Questions
Course Introduction
Principles of Management introduces students to the foundational concepts, theories, and practices that underpin the management process in modern organizations. The course explores key functions of management, including planning, organizing, leading, and controlling, while addressing topics such as decision-making, motivation, communication, and strategic management. Through case studies and practical examples, students gain insights into effective managerial skills, ethical considerations, and the dynamic challenges faced by managers in todays global business environment. This course aims to equip students with a comprehensive understanding of the role and responsibilities of managers, preparing them for leadership roles in diverse organizational settings.
Recommended Textbook
Understanding Business 12th Edition by William G Nickels
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Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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Sample Questions
Q1) One of the problems with globalization is that distribution systems and communication systems lack efficiency.
A)True
B)False
Answer: False
Q2) The number of U.S. jobs in manufacturing has increased in the past five years.
A)True
B)False
Answer: False
Q3) The immigrant population (both legal and illegal) is having the most dramatic effect on
A) car and truck makers.
B) mining and minerals industry.
C) schools, hospitals, and other services industries.
D) ice cream and confection industry.
Answer: C
Q4) Outsourcing means selling goods and services to people in other countries.
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) A benefit of a free market can be that
A) businesses provide customers with quality products at fair prices.
B) businesses all make the same amount of profit.
C) all businesses do better with more government regulation.
D) the government dictates the number of competitors there are in each industry.
Answer: A
Q2) Which of the following statements about the Federal Reserve Bank (the Fed) is most accurate?
A) The Fed is an agency of the U.S. Treasury Department that has the responsibility of collecting tax receipts for the IRS.
B) The Fed manages the U.S. money supply and interest rates.
C) The Fed is the primary government agency involved in carrying out our nation's fiscal policies.
D) The Fed is the agency of the government that ensures the U.S. maintains enough gold reserves to pay any foreign debts that result from international trade.
Answer: B
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4
Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) A(n) ________ is a firm that has made sizeable investments and has a physical presence in several foreign countries as a manufacturer and marketer of products and services.
A) trade cartel
B) multinational corporation
C) host company
D) import trading company
Answer: B
Q2) Bartering is the exchange of goods or services for other goods or services without the exchange of money.
A)True
B)False
Answer: True
Q3) Free trade results in a mutually beneficial exchange between and among nations.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) Which of the following terms describes someone who reports illegal or unethical behavior?
A) Whistleblower
B) Hornblower
C) Watch tower sentinel
D) Integrity watchdog
Q2) A(n) ________-based ethics code defines corporate values, creates a supportive environment, and stresses shared accountability among employees.
A) social
B) corporate responsibility
C) compliance
D) integrity
Q3) Compliance-based ethics codes are based on preventing unlawful behavior.
A)True
B)False
Q4) Making ethical choices is always easy.
A)True
B)False
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Q5) Identify the six-step approach to achieve a long-term improvement of business ethics.
Chapter 5: How to Form a Business
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Sample Questions
Q1) A partner (owner) who invests money in a business does not take an active role in managing the operation, and is only subject to losing the funds he/she invested is known as a(n) ________ partner.
A) implied
B) limited
C) partial
D) corporate
Q2) A(n) ________ is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.
A) intrapreneur
B) franchisee
C) limited partner
D) franchisor
Q3) 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
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Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) Small Business Administration loans help firms finance their domestic operations. These funds, however, cannot be used to finance exports since the money is provided by U.S. taxpayers.
A)True
B)False
Q2) The Small Business Administration's microloan program awards loans to entrepreneurs based primarily on their A) collateral.
B) credit history.
C) previous business success.
D) integrity and sound business idea.
Q3) A(n) ________ is a group of experienced professionals from different areas of business who join together to develop, make, and market a new product.
A) entrepreneurial team
B) joint venture
C) self-directed functional team
D) managerial task force
Q4) What is an entrepreneurial team? What benefits does a team offer compared to an individual entrepreneur?
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Chapter 7: Management and Leadership
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Sample Questions
Q1) ________ is a problem solving technique that attempts to come up with as many solutions as possible in a short time without censoring the ideas.
A) Brainstorming
B) Game theory
C) CAD/CAM
D) PMI
Q2) The first step to developing a knowledge management system is to develop the technology to keep information secure.
A)True
B)False
Q3) The steps of the controlling function include assigning tasks and establishing procedures to accomplish organizational goals.
A)True
B)False
Q4) Contingency planning involves developing alternative courses of action to be used if the primary plans do not achieve the desired results.
A)True
B)False
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Page 9
Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) A bureaucratic style of organization is slow when responding to change.
A)True
B)False
Q2) Some business organizations still follow the 1940s organizational theory of Max Weber.
A)True
B)False
Q3) An advantage of departmentalization is groupthink.
A)True
B)False
Q4) Dividing the required work among a group of employees is called
A) departmentalization.
B) delegation of responsibility.
C) division of labor.
D) separation of control.
Q5) Discuss Max Weber's views on organization theory.
Q6) Most companies are no longer self-sufficient or self-contained.
A)True
B)False
Q7) Describe two major issues that are important in organizational design. Page 10
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) Online-focused strategies don't affect operations managers since it is not essential for operations managers to negotiate in an interfirm environment.
A)True
B)False
Q2) ________ utility is the value added by the creation of finished goods and services using raw materials, components, and other inputs.
A) Manufacturing
B) Marginal
C) Consumption
D) Form
Q3) The decreased use of enterprise resource planning (ERP) reflects the fact that firms are not interested in combining the computerized functions of all divisions and subsidiaries of a firm.
A)True
B)False
Q4) Six Sigma is a quality measure that allows only 3.4 defects per million opportunities.
A)True
B)False
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Chapter 10: Motivating Employees
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Sample
Questions
Q1) Derek's manager often tells the employees "there isn't a lot of time for idle talk on the job. If you want to give us your opinion, as a believer in open communication, I'll gladly give you your chance to speak your mind, on your way out!" This manager is up to date on the purpose of the exit interview, as an important source of feedback for companies. Open communication always begins at this juncture.
A)True
B)False
Q2) Progressive managers are rewarding good work in all kinds of ways including more vacation days, thank-you events, and just letting everyone know when someone does a good job.
A)True
B)False
Q3) According to William Ouchi, two of the main features of the Japanese approach to management are individual decision making and rapid promotions.
A)True
B)False
Q4) Describe and compare the basic contributions of Maslow and Herzberg to the understanding of worker motivation.
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Page 13
Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample Questions
Q1) Which of the following statements best describes the current view of the role of human resource management within a firm?
A) Human resource management is largely a clerical function that involves keeping records, processing payroll, and making sure that federal regulations are met.
B) Human resource management has become so complex that only highly trained specialists should make human resource decisions.
C) Human resource management functions have become so important that in many firms all managers now perform them.
D) Changes in technology have largely done away with the need for a separate human resource department.
Q2) Newport Communications uses a flextime plan; however, all employees must be on the job from 10:00 a.m. until 2:00 p.m. What are these hours called?
A) core time.
B) mandatory attendance time.
C) shared facilities time.
D) compressed time.
Q3) Identify and describe three common methods of training and developing employees.
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Chapter 12: Dealing With Employeemanagement Issues
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Sample Questions
Q1) The primary purpose of collective bargaining is to
A) ensure worker participation in setting the goals and objectives of the company. B) establish and communicate clear guidelines for performance appraisals.
C) limit the authority of management to set job categories and direct worker activities. D) negotiate a labor-management agreement that both the union and management are willing to accept.
Q2) In the past, a variety of professionals have served as mediators. If a labor dispute were to break out between the management at an auto manufacturer and the local union that represents workers at the auto manufacturing plant, it would be highly unusual for a university professor who has studied labor relations to be asked to mediate. The disputing parties would save his time for something more serious like arbitration.
A)True
B)False
Q3) A common tactic of management in labor disputes is the use of secondary boycotts.
A)True
B)False
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Chapter 13: Marketing: Helping Buyers Buy
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Sample Questions
Q1) Which of the following describes individuals that want goods and services for personal consumption and have the resources to buy them?
A) secondary market
B) business-to-business market
C) market segmentation
D) consumer market
Q2) The marketing manager's job is to design a program that effectively combines the ingredients of the marketing mix.
A)True
B)False
Q3) Contacting customers after a sale to reassure them that they made the right decision is intended to offset
A) reverse satisfaction.
B) cognitive dissonance.
C) doubt resolution.
D) relationship conflict.
Q4) Explain how mass marketing and relationship marketing differ.
Q5) Describe the steps involved in the marketing process.
Q6) Identify and discuss the four eras of the evolution of marketing.
Page 16
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Chapter 14: Developing and Pricing Goods and Services
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Sample Questions
Q1) The marketing efforts for convenience and specialty goods are essentially the same.
A)True
B)False
Q2) Rather than having frequent special sales, a company maintains lower prices than competitors all the time. This pricing strategy is known as everyday low prices (EDLP).
A)True
B)False
Q3) Suitorium is a men's clothing store in a large suburban shopping mall. The managers of the store know that their customers usually comparison shop, looking carefully at quality and price before deciding to buy. With this information, Suitorium carries quality clothing, offers competitive pricing, and friendly, helpful service. The target customers apparently view men's suits as a
A) specialty good.
B) convenience good.
C) shopping good.
D) unsought good.
Q4) Discuss the role of packaging in a firm's total product offer.
Q5) What is a brand? What is a brand name? What is meant by brand equity?
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Chapter 15: Distributing Products
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Sample Questions
Q1) In the battle between online and traditional brick-and-mortar retailers, the online retailers seem to have all of the advantages needed to emerge as the clear winners.
A)True
B)False
Q2) Limited-function wholesalers that mainly serve small businesses by selling them a limited assortment of goods are known as
A) backdoor wholesalers.
B) consolidated wholesalers.
C) cash-and-carry wholesalers.
D) agency wholesalers.
Q3) ________ put many small shipments together to create a single large shipment that can be transported more cost-efficiently to the final destination.
A) Containerized shippers
B) Freight consolidators
C) Mixed merchandisers
D) Freight forwarders
Q4) What is logistics? Describe the types of issues you might deal with if you specialized in logistics.
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) Trade shows represent sales promotion programs designed to create product enthusiasm from distributors and dealers.
A)True
B)False
Q2) Institutional advertising creates an attractive image for an organization rather than for a product.
A)True
B)False
Q3) In terms of total dollars spent, the number one and two advertising media are
A) television along with direct mail.
B) digital and television.
C) television and newspapers.
D) digital and radio.
Q4) In evaluating the best advertising medium to reach a specific target market the clear choice is
A) cable television.
B) newspapers.
C) network television.
D) direct mail.
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Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) ________ is the accounting practice of recording each transaction in two places in the accounting journal.
A) Double-entry bookkeeping
B) Trial balancing
C) Account matching
D) Entry duplication
Q2) Which of the following is a key step in the accounting cycle?
A) recording information into journals
B) collecting data from customers
C) forecasting expenses and revenues
D) preparing the advertising message
Q3) Sophie has been a bookkeeper for a small chain of boutiques for nearly four years. Six months ago, the manager retired and a new manager was brought in. The new manager routinely asks her for information and advice about how to interpret the information she records. Sophie's experience as a bookkeeper means she is qualified to provide this type of advice.
A)True
B)False
Q4) Thoroughly describe each of six parts of the accounting cycle.
Page 20
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Chapter 18: Financial Management
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Sample Questions
Q1) Leverage refers to the use of borrowed funds to increase a firm's rate of return.
A)True
B)False
Q2) Rock Solid Concrete Company does not offer customers a cash discount for early payment of their accounts receivable. As a result, most customers wait to pay their bill on the last day before late penalties are charged. These customers apparently understand the
A) time value of money.
B) benefits of tax-deductible expenses.
C) financial community's perception of equity financing.
D) government's regulations of the chemical industry.
Q3) A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.
A)True
B)False
Q4) What are two major forms of debt financing? Describe and differentiate between the two types.
Q5) Explain the term leverage. When is it more favorable for firms to use this strategy?
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Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Sample Questions
Q1) Which of the following legislative acts created the Securities and Exchange Commission?
A) Dealers Trust and Assistance Act of 1933
B) Federal Trade Commission Act of 1933
C) Securities and Exchange Act of 1934
D) Bond Trading Act of 1934
Q2) Penny is concerned about the interest rate risk if the company decides to issue bonds. Penny would like protection from interest rate fluctuation. Therefore, the bond issue's features should include a(n)
A) equity proposition.
B) call provision.
C) convertibility clause.
D) collateral agreement.
Q3) A mutual fund that carries a load will require the investor to pay a commission, only if the fund appreciates in price.
A)True
B)False
Q4) Bonds represent a major source of long-term financing. What is a bond? Explain the major elements that must be in a bond issue.
Page 22
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Chapter 20: Money, Financial Institutions, and the Federal Reserve
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Sample Questions
Q1) Bigbux Bank holds $300 million in deposits from their customers. If the Fed sets the reserve requirement at 12 percent, Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.
A)True
B)False
Q2) The reserve requirement represents the Fed's most powerful tool for conducting monetary policy.
A)True B)False
Q3) On payday, employers can designate their banks to electronically transfer funds from the business's checking account to the employees' checking account. This represents an example of a(n)
A) debit card system.
B) check kiting system.
C) electronic check conversion.
D) direct deposit.
Q4) The global money markets trade about $5 trillion every day. A)True B)False
23
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Chapter 21: Appendix: Working Within the Legal Environment
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Sample Questions
Q1) Nolan and Sadie own a very successful Cajun restaurant. They recently built their own building and own all of the decorations in the restaurant, along with the equipment needed to run the business. They will pay real property taxes on the building and land and personal property taxes on the decorations and equipment.
A)True
B)False
Q2) Regulations covering sales, checks, bank deposits, and bills of lading are contained in the Uniform Commercial Code.
A)True
B)False
Q3) Paul is a renowned nature photographer. Each of his works is copyrighted. This means that anyone can use his photos so long as they give Paul notice.
A)True
B)False
Q4) The primary objective of a sin tax is to generate additional revenue for the government.
A)True
B)False
Page 24
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Chapter 22: Appendix: Using Technology to Manage Information
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Sample Questions
Q1) Today the role of the chief information officer is to help the business use technology to communicate better with others while offering better service and lower costs.
A)True
B)False
Q2) Data mining looks for previously unknown relationships among vast amounts of data.
A)True
B)False
Q3) If a business wanted to gather up-to-the-minute data on its customers, one way to do that would be
A) database management.
B) data mining.
C) social media.
D) physical-world observations.
Q4) The quality of management information depends on its accuracy and reliability.
A)True
B)False
Q5) Identify and describe the major security issues confronting information managers.
Page 25
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Chapter 23: Appendix: Managing Risk
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Sample Questions
Q1) A surety bond protects employers from employee dishonesty.
A)True
B)False
Q2) Explain the benefits of workers' compensation. Who is required to carry this type of insurance?
Q3) Erin received a letter from her employer's insurance company inquiring if her children had health insurance coverage from another provider. According to the ________, the insurance provider has the right to this information.
A) rule of 80
B) rule of indemnity
C) law of legal compliance
D) law of large numbers
Q4) Explain the four ways of managing risk.
Q5) Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.
A)True
B)False
Q6) Explain what makes the acceptance of risk possible for insurance companies.
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Chapter 24: Appendix: Managing Personal Finances
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Q1) Employers often match part of the contribution of their employees into a 401(k) retirement plan.
A)True
B)False
Q2) Keogh plans are intended to help small business owners save for retirement.
A)True
B)False
Q3) Whole life insurance premiums provide the insured with both pure insurance and a savings plan.
A)True
B)False
Q4) A person in the 25 percent tax bracket who invests $1,000 in a traditional IRA immediately postpones $250 in taxes.
A)True
B)False
Q5) IRAs, 401(k), and Keogh plans all include incentives to encourage saving for retirement.
A)True
B)False
Q6) Describe the major steps involved in estate planning.
Page 27
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