BUSI 1301 MIDTERM EXAM UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Just as with a for-profit business, the first priority for a not-for-profit organization is
making a profit.
a. true
b. false
Answer:
b. false
Question:
2. In his book The Wealth of Nations, the economist Adam Smith was the first person
to describe _____.
a. socialism
b. communism
c. capitalism
d. entrepreneurship
Answer:
c. capitalism
Question:
3. Large businesses must be organized as corporations.
a. true
b. false
Answer:
b. false
Question:
4. a. one company purchases the property and assumes the
obligations of another company
Answer:
An acquisition occurs when _____.
a. one company purchases the property and assumes the obligations of another
company
b. one corporation owns 8% of the stock of another corporation
c. owners of small companies band together to operate their businesses
collectively
d. two or more firms combine to form a single company
,Question:
5. The rate the Fed charges member banks for short-term loans is called the __________.
a. discount rate
b. margin rate
c. federal funds rate
d. reserve requirement
Answer:
a. discount rate
Question:
6. ______ are creditors (an entity to whom a debt is owed) of a corporation or
government body.
a. commercial paper holders
b. bondholders
c. treasury bills holders
d. certificate of deposit holders
Answer:
b. bondholders
Question:
7. _____ are essential because it serves as a primary incentive for people to start
companies, expand them, and provide consistently high-quality competitive
goods and services.
a. coupons
b. profits
c. discounts
d. rebates
Answer:
b. profits
Question:
8. a. hyperinflation
Answer:
_____ is an economic situation characterized by soaring prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
, Question:
9. Which of the following financial institutions would invest the greatest percentage
of its assets in common stocks and other long-term investments?
a. commercial bank
b. pension fund
c. credit union
d. property and liability insurance company
Answer:
b. pension fund
Question:
10. Low-priced retailers like Dollar Tree and Dollar General will likely see increased
sales during an economic recession.
a. true
b. false
Answer:
a. true
Question:
11. In the U.S. economy, _____ are considered the reward for the risk of entering a
business.
a. revenues
b. concessions
c. profits
d. sales
Answer:
c. profits
Question:
12. Which of the following financial statements shows a company's financial position
on a particular date?
a. statement of changes in retained earnings
b. income statement
c. statement of cash flows
d. balance sheet
Answer:
d. balance sheet
QUESTIONS AND CORRECT ANSWERS
Question:
1. Just as with a for-profit business, the first priority for a not-for-profit organization is
making a profit.
a. true
b. false
Answer:
b. false
Question:
2. In his book The Wealth of Nations, the economist Adam Smith was the first person
to describe _____.
a. socialism
b. communism
c. capitalism
d. entrepreneurship
Answer:
c. capitalism
Question:
3. Large businesses must be organized as corporations.
a. true
b. false
Answer:
b. false
Question:
4. a. one company purchases the property and assumes the
obligations of another company
Answer:
An acquisition occurs when _____.
a. one company purchases the property and assumes the obligations of another
company
b. one corporation owns 8% of the stock of another corporation
c. owners of small companies band together to operate their businesses
collectively
d. two or more firms combine to form a single company
,Question:
5. The rate the Fed charges member banks for short-term loans is called the __________.
a. discount rate
b. margin rate
c. federal funds rate
d. reserve requirement
Answer:
a. discount rate
Question:
6. ______ are creditors (an entity to whom a debt is owed) of a corporation or
government body.
a. commercial paper holders
b. bondholders
c. treasury bills holders
d. certificate of deposit holders
Answer:
b. bondholders
Question:
7. _____ are essential because it serves as a primary incentive for people to start
companies, expand them, and provide consistently high-quality competitive
goods and services.
a. coupons
b. profits
c. discounts
d. rebates
Answer:
b. profits
Question:
8. a. hyperinflation
Answer:
_____ is an economic situation characterized by soaring prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
, Question:
9. Which of the following financial institutions would invest the greatest percentage
of its assets in common stocks and other long-term investments?
a. commercial bank
b. pension fund
c. credit union
d. property and liability insurance company
Answer:
b. pension fund
Question:
10. Low-priced retailers like Dollar Tree and Dollar General will likely see increased
sales during an economic recession.
a. true
b. false
Answer:
a. true
Question:
11. In the U.S. economy, _____ are considered the reward for the risk of entering a
business.
a. revenues
b. concessions
c. profits
d. sales
Answer:
c. profits
Question:
12. Which of the following financial statements shows a company's financial position
on a particular date?
a. statement of changes in retained earnings
b. income statement
c. statement of cash flows
d. balance sheet
Answer:
d. balance sheet
