SLCC BUS 1050 — Foundations of Business
Practice Exam Questions And Correct
Answers (Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. What is the primary goal of most businesses?
a) To provide entertainment
b) To employ as many people as possible
c) To earn a profit
d) To support government programs
Rationale: Businesses exist to generate profit by providing goods or
services that meet customer needs.
2. Which of the following best describes a stakeholder?
a) A company owner only
b) Government regulators only
c) Anyone affected by the company’s decisions
d) Only customers
, Rationale: Stakeholders include employees, customers, suppliers,
investors, and communities impacted by the business.
3. Which type of economy relies on supply and demand to determine
prices?
a) Command economy
b) Market economy
c) Traditional economy
d) Mixed economy
Rationale: In a market economy, prices and production are
determined by voluntary exchanges between buyers and sellers.
4. GDP (Gross Domestic Product) measures:
a) The wealth of individuals
b) The total value of goods and services produced within a country
c) Government tax revenue
d) Stock market growth
Rationale: GDP is the sum of all goods and services produced
domestically over a specific period.
5. Which is an example of a tangible good?
a) Legal advice
b) A smartphone
c) Insurance policy
d) Consulting service
, Rationale: Tangible goods are physical items like a smartphone,
while services are intangible.
6. Which of the following is an advantage of sole proprietorship?
a) Unlimited liability
b) Full control of decision-making
c) Limited resources
d) Shared profits
Rationale: Sole proprietors maintain full decision-making power but
face unlimited personal liability.
7. A corporation is a business that:
a) Exists only while the owner is alive
b) Has a separate legal identity from its owners
c) Cannot raise capital through stocks
d) Has unlimited liability for owners
Rationale: Corporations are distinct legal entities that can own
property, sue, and be sued.
8. Which is a disadvantage of a partnership?
a) Shared decision-making
b) Unlimited liability
c) Increased resources
d) Combined expertise
Rationale: Partners share liability, meaning each can be held
responsible for business debts.
, 9. A mission statement defines a company’s:
a) Short-term financial goals
b) Purpose and core values
c) Daily operations
d) Long-term budget plan
Rationale: A mission statement outlines why the business exists and
what it stands for.
10. Which of the following best describes corporate social
responsibility (CSR)?
a) Avoiding taxes
b) Maximizing profits at all costs
c) Considering social and environmental impacts in business
decisions
d) Downsizing to cut costs
Rationale: CSR emphasizes balancing profit-making with positive
social and environmental contributions.
11. What is the main difference between for-profit and nonprofit
organizations?
a) Nonprofits don’t sell goods
b) Nonprofits reinvest surplus funds into their mission rather than
distributing profits
c) Nonprofits do not employ people
d) Nonprofits are government-owned
Practice Exam Questions And Correct
Answers (Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. What is the primary goal of most businesses?
a) To provide entertainment
b) To employ as many people as possible
c) To earn a profit
d) To support government programs
Rationale: Businesses exist to generate profit by providing goods or
services that meet customer needs.
2. Which of the following best describes a stakeholder?
a) A company owner only
b) Government regulators only
c) Anyone affected by the company’s decisions
d) Only customers
, Rationale: Stakeholders include employees, customers, suppliers,
investors, and communities impacted by the business.
3. Which type of economy relies on supply and demand to determine
prices?
a) Command economy
b) Market economy
c) Traditional economy
d) Mixed economy
Rationale: In a market economy, prices and production are
determined by voluntary exchanges between buyers and sellers.
4. GDP (Gross Domestic Product) measures:
a) The wealth of individuals
b) The total value of goods and services produced within a country
c) Government tax revenue
d) Stock market growth
Rationale: GDP is the sum of all goods and services produced
domestically over a specific period.
5. Which is an example of a tangible good?
a) Legal advice
b) A smartphone
c) Insurance policy
d) Consulting service
, Rationale: Tangible goods are physical items like a smartphone,
while services are intangible.
6. Which of the following is an advantage of sole proprietorship?
a) Unlimited liability
b) Full control of decision-making
c) Limited resources
d) Shared profits
Rationale: Sole proprietors maintain full decision-making power but
face unlimited personal liability.
7. A corporation is a business that:
a) Exists only while the owner is alive
b) Has a separate legal identity from its owners
c) Cannot raise capital through stocks
d) Has unlimited liability for owners
Rationale: Corporations are distinct legal entities that can own
property, sue, and be sued.
8. Which is a disadvantage of a partnership?
a) Shared decision-making
b) Unlimited liability
c) Increased resources
d) Combined expertise
Rationale: Partners share liability, meaning each can be held
responsible for business debts.
, 9. A mission statement defines a company’s:
a) Short-term financial goals
b) Purpose and core values
c) Daily operations
d) Long-term budget plan
Rationale: A mission statement outlines why the business exists and
what it stands for.
10. Which of the following best describes corporate social
responsibility (CSR)?
a) Avoiding taxes
b) Maximizing profits at all costs
c) Considering social and environmental impacts in business
decisions
d) Downsizing to cut costs
Rationale: CSR emphasizes balancing profit-making with positive
social and environmental contributions.
11. What is the main difference between for-profit and nonprofit
organizations?
a) Nonprofits don’t sell goods
b) Nonprofits reinvest surplus funds into their mission rather than
distributing profits
c) Nonprofits do not employ people
d) Nonprofits are government-owned
