ISOM FINAL EXAM QUESTIONS & ANSWERS
Accounting Cycle - Answer -A six-step procedure that results in the preparation and
analysis of the major financial statements.
Accounts Receivable - Answer -amounts that are currently owed to a firm
Accrued Expenses - Answer -Expenses incurred but not yet paid in cash or recorded.
Articles of Partnership - Answer -a partnership agreement
Asset Utilization - Answer -ratios that measure how well a firm uses its assets to
generate each $1 of sales
Balance of Payments - Answer -A record of all transactions between the residents of a
country and the residents of all other countries. It shows all payments received from
other countries (credits), and all payments made to other countries (debits). It has
CURRENT ACCOUNT, CAPITAL ACCOUNT, FINANCIAL ACCOUNT, and
ERRORS&OMISSIONS.
Balance of Trade - Answer -the difference between a country's total exports and total
imports
Balance Sheet - Answer -A financial statement that reports assets, liabilities, and
owner's equity on a specific date.
Budget Deficit - Answer -a situation in which the government spends more than it takes
in
Capital - Answer -An economic system based on private ownership of capital
Capitalist System - Answer -economic system that involves profit, private property and
free enterprise
Cartel - Answer -a formal organization of producers that agree to coordinate prices and
production
Charter - Answer -A document that gives the holder the right to organize settlements in
an area
Commercial banks - Answer -Privately owned financial institutions that accept demand
deposits and make loans and provide other services for the public
Commissions - Answer -incentive pay calculated as a percentage of sales
, Common Stock - Answer -a voting share of ownership in a corporation for which the
dividend varies, as determined by the corporation's board of directors
Comparative Advantage - Answer -The ability of a country to produce a good at a lower
cost than another country can.
Continuous Manufacturing - Answer -the manufacturing of products without interruption
CPA - Answer -Certified Public Accountant
Credit Union - Answer -A nonprofit financial institution that is owned by its members
and organized for their benefit.
Crisis Management - Answer -a coordinated effort to handle all the effects of
unfavorable publicity or another unexpected unfavorable event
Currency Devaluation - Answer -the reduction of the value of a nation's currency
relative to the currencies of other countries
Current Assets - Answer -cash and other assets expected to be exchanged for cash or
consumed within a year
Customization - Answer -making products to meet a particular customer's needs or
wants.
Debt Utilization - Answer -ratios that measure how much debt an organization is using
relative to other sources of capital, such as owners' equity.
Decision-Making Process - Answer -the steps one takes to make the best decision
Demand Deposit - Answer -the money in checking accounts
Depreciation - Answer -A lessening in value; a belittling
Development - Answer -A process of improvement in the material conditions of people
through diffusion of knowledge and technology.
Direct Investment - Answer -The purchase or acquisition of a controlling interest in a
foreign business by means other than the outright purchase of shares.
Diverse Workforce - Answer -A diversified group of people in the workforce
Dodd-Frank Act - Answer -a law enacted in the aftermath of the financial crisis of 2008-
2009 that strengthened government oversight of financial markets and placed limitations
on risky financial strategies such as heavy reliance on leverage
Accounting Cycle - Answer -A six-step procedure that results in the preparation and
analysis of the major financial statements.
Accounts Receivable - Answer -amounts that are currently owed to a firm
Accrued Expenses - Answer -Expenses incurred but not yet paid in cash or recorded.
Articles of Partnership - Answer -a partnership agreement
Asset Utilization - Answer -ratios that measure how well a firm uses its assets to
generate each $1 of sales
Balance of Payments - Answer -A record of all transactions between the residents of a
country and the residents of all other countries. It shows all payments received from
other countries (credits), and all payments made to other countries (debits). It has
CURRENT ACCOUNT, CAPITAL ACCOUNT, FINANCIAL ACCOUNT, and
ERRORS&OMISSIONS.
Balance of Trade - Answer -the difference between a country's total exports and total
imports
Balance Sheet - Answer -A financial statement that reports assets, liabilities, and
owner's equity on a specific date.
Budget Deficit - Answer -a situation in which the government spends more than it takes
in
Capital - Answer -An economic system based on private ownership of capital
Capitalist System - Answer -economic system that involves profit, private property and
free enterprise
Cartel - Answer -a formal organization of producers that agree to coordinate prices and
production
Charter - Answer -A document that gives the holder the right to organize settlements in
an area
Commercial banks - Answer -Privately owned financial institutions that accept demand
deposits and make loans and provide other services for the public
Commissions - Answer -incentive pay calculated as a percentage of sales
, Common Stock - Answer -a voting share of ownership in a corporation for which the
dividend varies, as determined by the corporation's board of directors
Comparative Advantage - Answer -The ability of a country to produce a good at a lower
cost than another country can.
Continuous Manufacturing - Answer -the manufacturing of products without interruption
CPA - Answer -Certified Public Accountant
Credit Union - Answer -A nonprofit financial institution that is owned by its members
and organized for their benefit.
Crisis Management - Answer -a coordinated effort to handle all the effects of
unfavorable publicity or another unexpected unfavorable event
Currency Devaluation - Answer -the reduction of the value of a nation's currency
relative to the currencies of other countries
Current Assets - Answer -cash and other assets expected to be exchanged for cash or
consumed within a year
Customization - Answer -making products to meet a particular customer's needs or
wants.
Debt Utilization - Answer -ratios that measure how much debt an organization is using
relative to other sources of capital, such as owners' equity.
Decision-Making Process - Answer -the steps one takes to make the best decision
Demand Deposit - Answer -the money in checking accounts
Depreciation - Answer -A lessening in value; a belittling
Development - Answer -A process of improvement in the material conditions of people
through diffusion of knowledge and technology.
Direct Investment - Answer -The purchase or acquisition of a controlling interest in a
foreign business by means other than the outright purchase of shares.
Diverse Workforce - Answer -A diversified group of people in the workforce
Dodd-Frank Act - Answer -a law enacted in the aftermath of the financial crisis of 2008-
2009 that strengthened government oversight of financial markets and placed limitations
on risky financial strategies such as heavy reliance on leverage
