BUS 6600 FINAL EXAM 1 QUESTIONS WITH VERIFIED
ANSWERS
Accounting versus other business functions - Answers - Recording, classifying,
summarizing and interpreting of financial events and transactions in an organization to
provide interested parties needed financial information
Adam Smith and the Invisible Hand Theory - Answers - The unobservable market force
that helps the demand and supply of goods in a free market to reach equilibrium
automatically.
Benefits and rights in different economic systems - Answers - Free-Market Economics -
the market largely determines what goods and services are produced, who gets them,
and how the economy grows
Command Economics - the government largely determines what goods and services
are produced, who gets them and how the economy will grow
Mixed Economy - some allocation of resources is made by the target and some by the
government
Bond financing - Answers - is a type of long-term borrowing that state and local
governments frequently use to raise money, primarily for long-lived infrastructure
assets. They obtain this money by selling bonds to investors. In exchange, they promise
to repay this money, with interest, according to specified schedules.
Branding & brand names - Answers - brand - name, symbol or design that identified the
goods or services and distinguishes them from competitors' offerings
trademark - a brand that has exclusive legal protections for both its brand name and
design
Manufacturers' brands - brand names of manufacturers that distribute products
nationally
Dealer (private-label) Brands - products that carry a retailer's or distributor's brand name
instead of a manufacturer's
Generic Goods - non-branded products that sell at a discount compared to
manufacturers' or dealers' brands
Knockoff Brands - illegal copies or national brands
Budget - Answers - sets forth management's expectations for revenues and allocates
the use of specific resources through the firm... depend heavily on the balance sheet,
income statement, statement of cash flows and financial forecasts.
Business era - Answers - production era, selling era, marketing concept era, customer
relationship era
, Buying stock on margin - Answers - borrowing some of the stock's purchase cost from
the brokerage firm.
Margin is the portion of the stock's purchase price that the investor must pay with their
own money. If a broker issues a margin call, the investor has to come up with money to
cover losses
Capitalism, Socialism, Communism, Nationalism - Answers - Capitalism - all or most of
the land, factories and stores are owned by individuals, not the government, and
operated for profit
Socialism - an economic system based on the premise that some basic businesses, like
utilites, should be owned by the government in order to more evenly distribute profits
among the people
Communism - an economic and political system in which the government makes almost
all economic decisions and owns almost all the major factors on production
Cash flow statement - Answers - reports cash receipts and cash disbursements related
to the three major activists of a firm: operations, investments, and financing
Commercial finance companies - Answers - is apart of the banking system, but is a
nonbank which is a financial institution that accepts no deposits, but offer many of the
services provided by regular banks.
Commercial paper - Answers - unsecured promissory notes in amounts of $100k+ that
come due in 270 days or less.
Common stock - Answers - the most basic form; holders have the right to vote for the
board of directors and share in the profits if dividends are approved
Company vision - Answers - more than a goal, its a broad explanation of why the
organization exits and where it's trying to go
Composition of the retail price of goods - Answers - target costing - designing a product
that satisfies customers and meets the firm's targeted profit margins
competition-based pricing - a strategy based on what the competition is charging for its
products
break-even analysis - the process used to determine profitability at various levels of
sales
total fixed costs - all costs that remain the same no matter how much is produced or
sold
Variable costs - costs that change according to the level of production
skimming price strategy - pricing new products high to recover costs and make high
profits while completion is limited
penetration price strategy - pricing products low with the hope of attracting more buyers
and discouraging other companies from competing in the market
everyday low pricing - setting prices lower than competitors with no special sales
ANSWERS
Accounting versus other business functions - Answers - Recording, classifying,
summarizing and interpreting of financial events and transactions in an organization to
provide interested parties needed financial information
Adam Smith and the Invisible Hand Theory - Answers - The unobservable market force
that helps the demand and supply of goods in a free market to reach equilibrium
automatically.
Benefits and rights in different economic systems - Answers - Free-Market Economics -
the market largely determines what goods and services are produced, who gets them,
and how the economy grows
Command Economics - the government largely determines what goods and services
are produced, who gets them and how the economy will grow
Mixed Economy - some allocation of resources is made by the target and some by the
government
Bond financing - Answers - is a type of long-term borrowing that state and local
governments frequently use to raise money, primarily for long-lived infrastructure
assets. They obtain this money by selling bonds to investors. In exchange, they promise
to repay this money, with interest, according to specified schedules.
Branding & brand names - Answers - brand - name, symbol or design that identified the
goods or services and distinguishes them from competitors' offerings
trademark - a brand that has exclusive legal protections for both its brand name and
design
Manufacturers' brands - brand names of manufacturers that distribute products
nationally
Dealer (private-label) Brands - products that carry a retailer's or distributor's brand name
instead of a manufacturer's
Generic Goods - non-branded products that sell at a discount compared to
manufacturers' or dealers' brands
Knockoff Brands - illegal copies or national brands
Budget - Answers - sets forth management's expectations for revenues and allocates
the use of specific resources through the firm... depend heavily on the balance sheet,
income statement, statement of cash flows and financial forecasts.
Business era - Answers - production era, selling era, marketing concept era, customer
relationship era
, Buying stock on margin - Answers - borrowing some of the stock's purchase cost from
the brokerage firm.
Margin is the portion of the stock's purchase price that the investor must pay with their
own money. If a broker issues a margin call, the investor has to come up with money to
cover losses
Capitalism, Socialism, Communism, Nationalism - Answers - Capitalism - all or most of
the land, factories and stores are owned by individuals, not the government, and
operated for profit
Socialism - an economic system based on the premise that some basic businesses, like
utilites, should be owned by the government in order to more evenly distribute profits
among the people
Communism - an economic and political system in which the government makes almost
all economic decisions and owns almost all the major factors on production
Cash flow statement - Answers - reports cash receipts and cash disbursements related
to the three major activists of a firm: operations, investments, and financing
Commercial finance companies - Answers - is apart of the banking system, but is a
nonbank which is a financial institution that accepts no deposits, but offer many of the
services provided by regular banks.
Commercial paper - Answers - unsecured promissory notes in amounts of $100k+ that
come due in 270 days or less.
Common stock - Answers - the most basic form; holders have the right to vote for the
board of directors and share in the profits if dividends are approved
Company vision - Answers - more than a goal, its a broad explanation of why the
organization exits and where it's trying to go
Composition of the retail price of goods - Answers - target costing - designing a product
that satisfies customers and meets the firm's targeted profit margins
competition-based pricing - a strategy based on what the competition is charging for its
products
break-even analysis - the process used to determine profitability at various levels of
sales
total fixed costs - all costs that remain the same no matter how much is produced or
sold
Variable costs - costs that change according to the level of production
skimming price strategy - pricing new products high to recover costs and make high
profits while completion is limited
penetration price strategy - pricing products low with the hope of attracting more buyers
and discouraging other companies from competing in the market
everyday low pricing - setting prices lower than competitors with no special sales
