BASIC
Which of the following statements is true of legally binding contracts:
A. They are not valid unless written.
B. They clearly outline both sides of an agreement.
C. Breaking one results in a lawsuit and possibly jail time.
D. They are enforceable for legal and illegal acts.
B . They clearly outline both sides of an agreement.
Legally binding contracts are meant to clearly outline an agreement. This way, disputes and litigation can hopefully be avoided. Legally binding contracts don't actually have to be written; they can still be valid if they're verbal, but they're much easier to prove if they are in writing. Breaking a contract doesn't always result in a lawsuit or jail time. In fact, most people avoid lawsuits at all costs, since they tend to be expensive and lengthy. Contracts are only enforceable for legal acts
Which of the following factors, other than job performance, will result in higher wages being given to many workers?
A. An increase in the number of vacation days per year.
B. A decrease in corporate borrowing.
C. A higher number of college graduates who have the same major.
D. A low number of available qualified workers looking for a job.
D. A low number of available qualified workers looking for a job.
Supply and demand of qualified workers for a specific type of job is a determining factor in the salary being offered to job applicants. When companies are expanding, they need employees with specific skills and a level of experience. As the unemployment rate drops, skilled workers are in short supply and wage/salary offers increase to attract workers from one company to another. College graduates with the skills needed often lack the experience and their wages will not increase until they can perform at the level needed. For example, although the current rate of unemployment is around 5%, the unemployment rate for people with a college education is around 3%.
. For the past two years, the price of gasoline increased 10%, while incomes did not increase. Which of the following will impact the monthly budget and financial plans of most people as a result of this price increase?
A. Insurance premiums.
B. Property taxes.
C. Use of an automobile.
D. Automobile repairs.
C. Use of an automobile
The economy is based on supply and demand for products. There is a relationship between the miles people drive and the price of gasoline. In the example above, the inflated price of oil and gasoline at 5% a year is the result of increased demand and having to produce more oil and gas by paying workers. Although there is a relationship between automobile repairs and an increase in miles driven, this is not a direct relationship and repairs will decrease as the higher cost for gasoline results in fewer miles driven. When the monthly budget for transportation is greater than the budgeted amount, money needs to be reallocated from another budget category or savings.
Explain the time value of money
Determine personal net worth
Assets-Liabilities
Important because
Which of the following is true of emotional intelligence:
A. It means you're an emotional person.
B. It helps you manage your emotions.
C. It's also known as “book smarts.”
D. It's not a good predictor of future success.
B. It helps you manage your emotions.
Emotional intelligence is the ability to recognize and manage emotions in yourself and others. It doesn't have anything to do with being an emotional person—a person who cries easily and one who never shows his/her emotions can have the same level of emotional intelligence. "Book smarts" aren't the same as emotional intelligence—the term is typically used to describe IQ, or a person's cognitive ability. Many people feel that emotional intelligence may actually be the best predictor of success in life. A person with emotional intelligence has many of the characteristics necessary for success, like problem solving skills, flexibility, and the ability to get along with others.
An important responsibility for young adults living independently is to
A. purchase cell phone product insurance.
B. pay the principal if they have a mortgage.
C. purchase vacation homes.
D. monitor credit card expenses and debt.
D. monitor credit card expenses and debt
At the age of 18, young adults become independent adults who are legally responsible for their finances and decisions. It is important to keep track of expenses, pay bills on time, and avoid debt. Although there are software programs and apps to assist with money management, young adults can also write down the amount of money they spend on everything to understand how they are using their money.
An example of a change in a person’s life situation requiring a review of their financial goals and plans is
A. graduating from middle school.
B. purchasing a new car.
C. buying life insurance.
D. becoming a parent.
D. becoming a parent
A person’s budget and financial plan is subject to changes as a person has children, changes jobs, attains goals and has unexpected sources of money or expenses. Becoming a parent is a life changing event in many ways but from a financial perspective it is estimated, by the U.S. Department of Agriculture, that the cost of raising a child is $245,000 for a middle income family through age 18, which does not include the cost of college. The average cost per child per year is $13,600.
Explain types of investments
Describe the concept of insurance
What is one way you can prevent identity theft?
A. Only give out personal information when the other person initiated the contact.
B. Memorize your social security number, and keep your card at home.
C. Throw away all credit card statements, receipts, and credit offers.
D. Only give out personal information to someone who says s/he works for a legitimate company.
B. Budget.
Budget accounts are often used by furniture or appliance retailers as a form of short-term credit —for example, "90 days same as cash" means that customers can purchase goods on credit with the same advantages they would have with cash purchases. Budget accounts do not charge interest if the user makes payments on time. However, if a customer doesn't pay the amount in full by the end of the 90 days, s/he is subject to finance charges applying to the full time period. In revolving credit accounts, the maximum amount of money that the credit user can owe (also known as the credit limit) is set at the time the credit account is opened. Regular credit accounts are also known as open credit accounts because they allow credit users to buy at any time during a set period. At the end of that time, the person or business is expected to pay the entire amount that is due for the purchases made during that period. An installment credit account is designed to handle one credit transaction, which is paid in installments within a certain time period. The credit user makes a down payment and signs an agreement to pay monthly installments until the total is paid.
Which of the following is an example of horizontal communication in the workplace:
A. An employee provides his/her manager with a status report about the company's new web site.
B. A supervisor provides a line worker with feedback about her/his job performance.
C. A manager provides a new employee with advice on job advancement within the company.
D. An employee sends an e-mail to a coworker about a short-term project.
D. An employee sends an e-mail to a coworker about a short-term project.
Horizontal communication occurs between employees (e.g., coworkers) who have the same level of authority within the organization. Supervisors and managers providing feedback or advice are examples of downward or vertical communication. An employee providing his/her manager with a report is an example of upward communication.
The Buford Company's ability to pay its short-term debts has improved steadily over the past three years. What financial ratio helped the company identify this trend?
A. Asset-turnover
B. Qualitative
C. Liquidity
D. Market-value
C. Liquidity.
Businesses use different financial ratios to identify trends that affect their business activities. A financial ratio is the comparison of two numbers from a business's financial statement. Businesses calculate and use financial ratios to look at relationships between dollars, numbers, and percentages. Many businesses compare their current financial ratios to previous years to identify trends and patterns in their sales, spending, liquidity, etc. The liquidity ratio measures a business's ability to pay its short-term debts, which is an important indicator of business's financial well-being. Qualitative data are facts and figures based on opinion and personal interpretations. Businesses do not calculate asset-turnover and market-value ratios to evaluate their ability to pay their short-term debts.
Discuss the nature of the accounting cycle
Explain the nature of special journals
Special journals are all accounting journals except for the general journal. These journals are used to record specific types of high-volume information that would otherwise be recorded in and overwhelm the general ledger.
Which of the following is a true statement about bookkeeping:
A. It is carried out on a monthly basis.
B. It includes balancing the books and posting to ledgers.
C. Most of it is done by hand.
D. Certified accountants are responsible for carrying out each step.
B It includes balancing the books and posting to ledgers.
Bookkeeping includes four steps of the accounting cycle—analyzing financial transactions, journalizing transactions, posting to ledgers, and balancing the books. Bookkeeping must be done on a daily basis, not a monthly basis. Although it is possible to do bookkeeping by hand, most of it is now done on computers. While certified accountants are capable of carrying out each step, bookkeepers, who are not certified, are often responsible for keeping an accurate record of each business transaction.
A bank carefully analyzes a customer's current level of debt before it approves a(n)
A. operating proposal.
B. service request.
C. loan application.
D. insurance claim.
C. Loan application.
Financial institutions consider many factors before granting a loan to a prospective customer. Primary factors include the customer's credit history, credit score, assets, current income, employment status, and debt ratio. If the customer carries a high level of debt in relation to his/her assets, it would be too risky for the bank to grant a loan because the customer is more likely to become delinquent or default on the loan. Banks do not analyze a customer's current level of debt before it approves a s
Lily Marshall, a human resources manager with Spartan Industries, recently met with employee Barry Endicott. Barry accepted a position with another company and will begin his new job next week. During the meeting, Lily asked Barry what he liked and disliked about his job with Spartan and what the company can do to make working conditions better. What human-resources activity was Lily performing?
A. Onboarding tasks
B. Exit interview
C. Application screening
D. Workplace familiarization
B. Exit interview.
Exit interviews are discussions with employees who are leaving that are designed to gain feedback for the business. Businesses often consider this feedback when making policy changes that affect compensation, working conditions, etc. Application screening involves "weeding out" the applicants that do not meet minimum requirements for the job or have not satisfactorily completed the application. The human-resources function conducts onboarding activities when new employees join the company (e.g., orientation, facility tour or familiarization, and paperwork).
Discuss the nature of depreciation
Depreciation is considered to be an expense for accounting purposes, as it results in a cost of doing business. As assets like machines are used, they experience wear and tear and decline in value over their useful lives. Depreciation is recorded as an expense on the income statement.
Explain the nature of tax liabilities
Tax liability is the total amount of tax debt owed to a government by an individual, corporation, or other entity. Income taxes, sales tax, and capital gains tax are all forms of tax liabilities.
When Casey looks at her small business's income statement, she's excited to see that her profit is much more than she expected. However, she soon realizes that she's looking at the total profit before all other expenses have been deducted. Casey is looking at her
A. operating expenses
B. net income
C. revenue
D. gross profit
D. Gross profit.
A business's total profit before all other expenses have been deducted is known as the gross profit. The gross profit helps businesses see how much money they've invested in making or obtaining their products versus how much it costs to run the business. The net income is the business's final profit, or the money the company actually makes after all expenses have been deducted and taxes have been paid. The revenue is the total amount of money earned by a business—all money coming into the business, no matter what the source, is revenue. Operating expenses are all of the expenses associated with running the business.
Which of the following is a benefit of financial-information management software:
A. Improves productivity by replacing automated activities with manual tasks
B. Provides users with faster, better access to data from multiple sources
C. Lowers compliance costs by eliminating audit trails and economies of scale
D. Reduces risk and lowers confidence in the confidentiality and safety of data
B. Provides users with faster, better access to data from multiple sources.
Financial-information management software has a number of benefits. It provides users with faster, better access to data, even from multiple sources. It also improves productivity by replacing tasks that used to be completed by hand with automated activities. It lowers compliance costs, but it does so by increasing audit trails and economies of scale, not eliminating them. Finally, it reduces risk and increases users' confidence in the confidentiality, safety, and integrity of data.
Statistical data revealed that Zane Industries sold 32% more of the Model EQ2 desktop photocopier last year after it made changes to increase the photocopier's speed and refine its print quality. In this situation, the statistical findings helped the company determine that
A. research and development expenses exceeded the budget.
B. its sales forecasts were inaccurate.
C. product improvements helped boost sales.
D. the company achieved its sales goals.
C. Product improvements helped boost sales.
Statistics are information presented in numerical form. Businesses use statistics to evaluate performance and identify trends. In the situation described, the business used statistics to identify a specific increase in sales after it made improvements to a product. There is not enough information provided to know how the statistical information relates to the company's sales goals, sales forecasts, and research and development budget.
Explain the role of capital markets in business finance
Explain the nature of hostile takeovers
Occurs when an acquiring company attempts to take over a target company against the wishes of the target company's management. An acquiring company can achieve a hostile takeover by going directly to the target company's shareholders or fighting to replace its management.