Pre Assessment - Introduction to
Business Test Questions and All
Correct Answers.
Which economic system is in use if any individual can become a sole proprietor? - Answer
Capitalism
Match each business method to its measurement of economic performance. - Answer 1.
Current ratio - Current assets, divided by current liabilities
2. Return on sales - Net income after taxes, divided by net sales
3. Inventory turnover - Cost of goods sold, divided by average inventory
What are the four phases of the typical business cycle? - Answer Recession, depression,
recovery, and prosperity
A company performs market research to determine the best design, pricing, and expected sales
volume for a new product based on a patented new technology.
Which type of economy is this company operating in? - Answer Free-market
A mobile phone company headquartered in the United States has decided to pursue a
horizontal integration strategy. - Answer The competition within the industry will be
decreased.
The executive director for a nonprofit organization is engaging in fraud. The resulting problems
have reduced funds available for low-income families.
Which socially responsible action should the board take? - Answer Locating alternative
resources for needy families
Why does an organization voluntarily become more involved in social responsibility? - Answer
The organization is part of the society and cannot ignore social issues.
Country A exports $2.1 million in goods to Country B. Country A imports $2.5 million in goods
from Country B due to a rising demand for the products of Country B.
What is the result of this international business transaction for Country A? - Answer A trade
deficit
, Mexico is the second largest international trade market of the United States. The United States
exports a multitude of goods to Mexico.
What is expected concerning trade between these two countries? - Answer It will increase.
An entrepreneur has a small business that has been in operation for more than 15 years. The
entrepreneur is the only member of the company and treats the business as a pass-through
entity for tax purposes. The entrepreneur is not personally held responsible for business debts
and liabilities.
Which entity classification is appropriate for this entrepreneur's business? - Answer Limited
liability company
An individual has decided to create a new organization that assists the elderly in the community.
The organization will ask for tax-exempt donations to provide these services.
What is the entity classification for this business? - Answer Not-for-profit
What should a partnership agreement address? - Answer Investment by each partner
What are two characteristics of a partner in a general partnership? - Answer Each partner
has an active role in day-to-day management of the business.
Since all partners can execute contracts for the business, suppliers can be engaged quickly.
An owner has researched several business models for online coaching services. The owner
wants to take advantage of the business model that offers ease of protection against liability of
debts, raising money, and transfer of ownership.
Which business model is most appropriate? - Answer Limited liability corporation
An individual is interested in establishing a lawn care business as a sole proprietorship.
What will be a disadvantage of choosing this business model? - Answer Unlimited liability
Business Test Questions and All
Correct Answers.
Which economic system is in use if any individual can become a sole proprietor? - Answer
Capitalism
Match each business method to its measurement of economic performance. - Answer 1.
Current ratio - Current assets, divided by current liabilities
2. Return on sales - Net income after taxes, divided by net sales
3. Inventory turnover - Cost of goods sold, divided by average inventory
What are the four phases of the typical business cycle? - Answer Recession, depression,
recovery, and prosperity
A company performs market research to determine the best design, pricing, and expected sales
volume for a new product based on a patented new technology.
Which type of economy is this company operating in? - Answer Free-market
A mobile phone company headquartered in the United States has decided to pursue a
horizontal integration strategy. - Answer The competition within the industry will be
decreased.
The executive director for a nonprofit organization is engaging in fraud. The resulting problems
have reduced funds available for low-income families.
Which socially responsible action should the board take? - Answer Locating alternative
resources for needy families
Why does an organization voluntarily become more involved in social responsibility? - Answer
The organization is part of the society and cannot ignore social issues.
Country A exports $2.1 million in goods to Country B. Country A imports $2.5 million in goods
from Country B due to a rising demand for the products of Country B.
What is the result of this international business transaction for Country A? - Answer A trade
deficit
, Mexico is the second largest international trade market of the United States. The United States
exports a multitude of goods to Mexico.
What is expected concerning trade between these two countries? - Answer It will increase.
An entrepreneur has a small business that has been in operation for more than 15 years. The
entrepreneur is the only member of the company and treats the business as a pass-through
entity for tax purposes. The entrepreneur is not personally held responsible for business debts
and liabilities.
Which entity classification is appropriate for this entrepreneur's business? - Answer Limited
liability company
An individual has decided to create a new organization that assists the elderly in the community.
The organization will ask for tax-exempt donations to provide these services.
What is the entity classification for this business? - Answer Not-for-profit
What should a partnership agreement address? - Answer Investment by each partner
What are two characteristics of a partner in a general partnership? - Answer Each partner
has an active role in day-to-day management of the business.
Since all partners can execute contracts for the business, suppliers can be engaged quickly.
An owner has researched several business models for online coaching services. The owner
wants to take advantage of the business model that offers ease of protection against liability of
debts, raising money, and transfer of ownership.
Which business model is most appropriate? - Answer Limited liability corporation
An individual is interested in establishing a lawn care business as a sole proprietorship.
What will be a disadvantage of choosing this business model? - Answer Unlimited liability
