Business exam review 2011

TASK: This is a mini (ok long) test that will help you to study. In pairs, work through the questions and find the answers using your textbook. The Teacher has the answer key, and can either give you the answer or provide the page reference so you can locate the answer in your group.

The last questions are essay format (large dumping ground for your expert knowledge). Be ready for this type of question on your exam.

NOTE: this is a test bank generated activity. Some questions may not have been expressly focused upon during our term. You can skip over, or look them up just in case they somehow help you on the exam.

GOOD LUCK

True/FalseIndicate whether the statement is true or false.

____ 1. A business that operates for profit can be defined as an organization that produces or sells goods or services to satisfy the needs, wants, and demands of consumers.

____ 2. Shares of stock represent the ownership of a corporation, and shareholders who buy shares become the owners of the company.

____ 3. A Crown corporation is a business operated by the provincial or federal government, such as Via Rail.

____ 4. If the merger is successful, two business may then agree to form a strategic alliance.

____ 5. One of the duties of an auditor is to help determine if an accounting fraud, such as an embezzlement, has taken place.

____ 6. Making sure that you learn about the culture that you will be dealing with is one way to offset the risk of importing.

____ 7. Two reasons for a country to reduce its trade barriers would be to allow the consumers of that country to have access to new products while also allowing domestic businesses to sell their products at lower prices abroad.

____ 8. When ingredients, such as flour and sugar, are used in a conversion process to make another good, the activity is called processing.

____ 9. Intellectual property consists of the ideas and talents of individuals and is considered to be a non-tangible product.

____ 10. Employees look at the labour market to find potential employers and to determine the types of skills in demand.

____ 11. Skilled employees could result in a business generating more profits, because these employees normally provide a better product or service.

____ 12. There are many tips to guide those persons going through an interview process, such as being friendly, being on time, listening carefully, and thanking the interviewer at the end.

____ 13. A trademark is a word or group of words that a business uses to distinguish its products from competitor’s products.

____ 14. When consumers are buying goods from vending machines, catalogues, or a website, they are using a specialty channel of distribution.

____ 15. Double-entry bookkeeping is based on the principle that each transaction involves two changes.

____ 16. In accounting, an asset is something that has value and is owned by a person.

____ 17. Having a skill means that you have the ability to do something specific, which enables you to translate knowledge into action.

____ 18. Gathering information is critical for a new entrepreneur and being able to take advantage of free services, such as libraries, Internet, consultants and professionals, will assist in getting started.

____ 19. Two advantages of using the Internet would be to having a link to government websites and to accessing an endless volume of information.

____ 20. In building good staff relationships, entrepreneurs try to get to know and empathize with their employees. By doing so, it becomes much harder to motivate the employees to do good work.

____ 21. Analyzing sales statistics, taste-test data, product histories, and consumer motivation data are all tasks that should be completed at the stage of development known as service mapping.

____ 22. The Bank of Canada issues and prints a bilingual series of bank notes on an as needed basis.

____ 23. One advantage of the Canadian banking system, as compared to other systems, is that once the Bank Act was established there wasn’t any necessity to review or revise it.

____ 24. Insurance companies are financial institutions that insure risks, which could deal with life, health, property, and car.

____ 25. People invest for many reasons: emergency needs, short- and long-term goals, security, and future needs.

____ 26. Compound interest is interest calculated on the principal plus and interest already earned.

____ 27. A registered retirement savings plan encourages people to save for retirement by allowing them to invest a portion of their earnings without having to pay taxes on that amount.

____ 28. All levels of government use credit to some extent and the federal government, on an annual basis, loans money to thousands of people when they issue Canada Savings Bonds.

____ 29. Businesses use short-term credit all of the time to purchase such things as land, buildings, and equipment.

____ 30. There are three basic types of credit cards: bank-issued credit cards, charge cards issued by retailers, and cards issued by travel and entertainment companies.

Multiple ChoiceIdentify the choice that best completes the statement or answers the question.

____ 1. The amount of money required at each stage of production is known asA. profitB. expensesC. costsD. income

____ 2. Consumers have exerted an influence on what is produced by manufacturers through a process known as A. pricingB. productionC. sellingD. competition

____ 3. If consumers choose to ‘vote with their feet,’ they are exercising their A. pricing powerB. controlC. influenceD. all of the above

____ 4. The last, and very important, step in a decision-making model is one where you

A. evaluate the decisionB. evaluate the choicesC. evaluate the alternativesD. evaluate the problem

____ 5. The advantage of setting up a business as a sole proprietorship is that it A. gives the owner limited liabilityB. allows the owner to share expertiseC. is easier and less expensive than other forms of businessD. all of the above

____ 6. A __________ accountant is an accountant who investigates legal and financial documents, looking for evidence of tampering.A. forensicB. privateC. certifiedD. public

____ 7. __________ legislation is designed to prohibit an employer from compensating employees of one sex differently from employees of the other sex who perform the same or substantially the same work. A. fair payB. severance payC. maximum payD. pay equity

____ 8. The actual cost of an imported item that takes into account such things as vendor cost, transportation charges, duties, and taxes is called the A. retail costB. landed costC. import costD. export cost

____ 9. If a country earns more from its exports than it pays for its imports, there is a A. trade surplusB. trade deficitC. trade balanceD. trade loss

____ 10. This component represents raw materials that do not become part of a new product.A. suppliesB. ingredientsC. labourD. capital

____ 11. When a product goes through a process where it is checked for size and quality against fixed standards, that product had beenA. gradedB. labelledC. processedD. manufactured

____ 12. If an employee is dismissed because the company has to downsize operations, an employee would appreciate receivingA. a recommendationB. outplacement counsellingC. a severance packageD. all of the above

____ 13. The key employability skill that focuses on working well with others and using a “give and take” approach to achieve results is categorized underA. academic skillsB. personal management skillsC. teamwork skills

D. fine motor skills____ 14. The piece of legislation that outlines an employee’s minimum rights in the workplace is called

theA. Ontario Human Rights CodeB. International Human RightsC. Employment Standards ActD. The Occupational Health and Safety Act

____ 15. The competitive market consists of all the sellers of a specific product, and is expressed most often in the following way.A. total salesB. total dollarsC. total profitD. total number of sellers

____ 16. The part of a good advertising campaign where one asks for the sale to be completed is known asA. attracting attentionB. gaining interestC. building desireD. getting action

____ 17. Market research relies on two types of data, which areA. primary and tertiary dataB. secondary and tertiary dataC. primary and secondary dataD. all of the above

____ 18. The stated purpose of accounting is to provide the necessary financial information so thatA. accurate and timely decisions can be made.B. employees get paid at the end of the week.C. inventories don’t pile up in a warehouse.D. there is always enough cash on hand to pay bills.

____ 19. When preparing a formal financial statement, it is important to remember to neverA. use abbreviations.B. have corrections appear on the page.C. forget to underline a total.D. all of the above

____ 20. When entrepreneurs empower their staff, they are practicing the following management skill.A. organizingB. directingC. controllingD. planning

____ 21. The venture evaluation criteria that involves projecting revenue and expenses is calledA. feasibilityB. marketabilityC. profitabilityD. economic ability

____ 22. The permission that one receives to have the exclusive right to publish or produce works of literature or art is called a(n)A. patentB. copyrightC. inventionD. innovation

____ 23. Entrepreneurial inventors who wish to minimize risk usually form a partnership with a business or a financial investor also known as aA. sales expertB. venture partnerC. marketing guru

D. limited partner____ 24. The income that is left after deductions is called take-home pay or

A. gross incomeB. incomeC. disposable incomeD. discretionary income

____ 25. The process that you can use to organize and control your financial resources while deciding in advance how your money will work for you is calledA. bankingB. savingC. goal settingD. budgeting

____ 26. Financial institutions provide term loans to their customers and charge interest rates, which can beA. fixedB. variableC. Neither (a) nor (b)D. Both (a) and (b)

____ 27. The financial institution that offers a variety of savings plans for the consumer is aA. bankB. credit unionC. Caisses PopulairesD. all of the above

____ 28. When the demand for, and prices of, most stocks are high, the market is called aA. bull marketB. grizzly marketC. bear marketD. calf market

____ 29. One way to invest is to buy collectibles and money can be made from this investment as long as theA. demand exceeds the supplyB. supply exceeds the demandC. Both (a) and (b)D. Neither (a) nor (b)

____ 30. This form of credit is usually granted to borrowers who have a strong relationship with the financial institution and who can guarantee the repayment.A. installment sales creditB. term loanC. demand loanD. mortgage loan

CompletionComplete each statement.

1. Self-confidence and an aptitude for managing others are but two ____________________ of entrepreneurs.

2. The last step in a decision-making model provides an opportunity for the decision makers to ____________________ the decision at some point in the future.

3. Three major economic questions include: (1) ____________________ goods and services should be produced? (2) _________________________ should these goods and services be produced? and (3) ____________________ should these goods and services be produced?

4. Our ____________________ tell us what we think is important and this, in turn, helps us make decisions about right and wrong.

5. Society’s ethics are usually minimum ____________________ for decency and respect for others.

6. Many companies choose to operate according to a _________________________, which is a document that explains specifically how employees should respond in different situations.

7. Cyber crime and privacy issues for persons and businesses were introduced in this decade: the ____________________.

8. A _________________________ describes the invisible barriers to senior leadership positions.

9. The federal government department that is responsible for dealing with hazardous waste and leaded gas is ______________________________.

10. When an employee leaves a company, the employer can help that person seek another job by providing a letter of ____________________.

11. Some employees may have an opportunity in a company to receive compensation in the form of _________________________ , which will allow them to become a part owner of the business.

12. Employees have rights in the workplace, such as being informed of hazards in the workplace. These safety measures are outlined legally in Part Two of the ______________________________.

13. The _________________________ management personnel are the ones who are responsible for implementing plans and activities for managers.

14. A good leader ____________________ directions, urgency, corporate values, plans, and goals clearly and effectively.

15. Management makes ethical decisions every day, such as contributing to charitable organizations, and by doing so, they try to be a good ____________________ partner.

16. The stage where most products fail to attract new customers, and where sales decrease, is known as the ____________________ stage of the product life cycle.

17. Many retailers use customer ____________________ cards, which are stamped after each use and which provide a free product once the card is completed.

18. The four standard rules for creating good advertising are _________________________, _________________________, _________________________, and _________________________.

19. Most of the activities that a business engages in, such as how expenses can be reduced, are about _________________________.

20. When an entrepreneur starts a new business, it is important to establish ____________________, which can be used to guide entrepreneurial decision-making.

21. As of the Summer 2007, every Canadian billionaire was an ____________________ who either earned his or her fortune or inherited it from ____________________ parents or grandparents.

22. To investigate the market for a new business, an entrepreneur should do two things: ____________________ the current market and create a ____________________ map.

23. An ____________________ is a product or process that does something that has never been done before.

24. The first step for an inventor is usually to protect the invention or innovation by obtaining a ____________________ or a ____________________.

25. When companies look for new ways to promote their business, such as the use of contests or promotions, they are changing their _________________________.

26. Coins are ____________________, or manufactured, in Ottawa while _________________________ are issued by the Bank of Canada.

27. When consumers buy with little or no thought, they are said to be buying ____________________.

28. All of the money in circulation is called the _________________________, and the Bank of Canada tries to control it by raising or lowering the ___________________________________.

29. A ____________________ is an agreement to rent something, such as a car, for a period of time at an agreed price.

30. ____________________ refers to a borrower’s ability to make payments on time and to pay a debt when it is due.

Problem

1. Assume that a business generated a profit of $10 000 during the past year after all costs and expenses were paid. If the costs and expenses represented 75 percent of the profit amount, how much revenue did it take to generate this business profit?

2. Jake purchased 150 shares of Google Incorporated’sstock when it first became available to the public. Setting the cost of buying and selling the stock aside, how much would Jake have made if he decided to sell 100 shares on November 21, 2006?

3. According to a GlobeScan study, 56 percent of shareholders believe that socially responsible companies are more profitable, and 18 percent say they have bought or sold shares because of the company’s social or environmental performance. Tim Horton’s has approximately 193 million common shares held by stockholders. Apply the percentages of the GlobeScan study to the common shares of Tim Horton’s.

4. According to the Ontario Workplace Safety and Insurance Board, in 2002 the average loss-time injury in Ontario cost $59 000. In 2006, the cost was approximately $98 000. The total loss-time injuries in 2002 for those who lost wages and those who didn’t lose wages amounted to 280 792. What was the total cost in 2002? Assuming a 20 percent decrease in loss-time injuries between 2002 and 2006, what would have been the total cost in 2006?

5. Calculate the gross pay of the following worker who is paid on a salary plus commission basis. The base salary is $750.00 and the commission varies depending on how much inventory is actually sold. The items sold retail for $5.00. If an employee sells less than 1000 items, the commission paid is 1%. On the next 1000 items sold the commission is 2%, and over 2000 items the commission is 3%. Assuming that P. Fountas sold 2700 items of inventory, how much would his gross pay total?

6. A marketing manager would like to charge the highest price possible for a new product that is being sold in order to maximize profits. That same manager is also aware that some consumers will pay more for a product simply because they believe that a higher priced product is better quality than a lower priced product. What approach could this manager use to try to be successful in offering this new product for sale?

7. The use of intermediaries reduces the number of exchanges needed to distribute products from producers. Consider a situation where 3 manufacturers produce products that are purchased by 1000 customers. Use the following information to determine the number of exchanges needed for each customer to purchase one product from each manufacturer.(a) How many exchanges will be needed if each manufacturer sells one product to each of

the 1000 customers?(b) How many exchanges will be needed if each manufacturer sells its products to 10

retailers, and each of the retailers sells all three products to 100 customers?(c) How many exchanges will be needed if each manufacturer sells its product to one

wholesaler, the wholesaler sells the three products to each of the 10 retailers, and each retailer sells all 3 products to 100 customers?

8. Chuck Garrod wants to open a sporting goods store. He has been told that he should have at least $35 000 to invest in his new business. He has $3000 in his bank account, a friend will lend him $4000, and he can get a bank loan for $10 000.a) How much does Chuck have for investing now?b) How much will he have to borrow to come up with the $35 000?c) If he can get an additional $5000 loan on his credit card account, how much will he still

need?d) If the local bank is willing to lend him $10 000, will he have enough to start his

business? If not, how much will the shortage be?

9. Celeste Hunt is a computer software marketing representative. She earns a basic salary of $450 per month plus a commission that is 4 percent of her sales. In addition, Celeste earns $90 in interest and dividends monthly.a) In a month with $37 000 in sales, what would Celeste’s total income be?b) What percent of her total income comes from each item: basic salary, commission, and

interest and dividends? (Round to the nearest percentage)

10. Even small amounts add up to large sums in a short time. How much will each person below save in one year (365 days) if he or she saves the following amounts without interest being added? Who saved the most?

a) Charles Jason: 20 cents a day _____________________b) Carla Spivak: 95 cents a week ____________________c) Alice Farney: $10 every two weeks ___________________d) Nolan Robinson: $20 a month _______________________e) Dianne Muisener: $50 quarterly _________________________f) Rashid Aziz: $100 semi-annually __________________________

11. Basic Business Tax Information

The current GST rate in Ontario is ______________. The current PST in Ontario is ____________.The HST came into effect on July 1, 2010 and the tax rate in Ontario became a rate of _______________. The HST is controlled by which level of government: municipal, federal, provincial? (circle one)

What is the reason for the HST being imposed by the government? Who do they say it is good for in the long-run?

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Hints: The government claims that HST will make Ontario more attractive to businesses. Apparently it is competitive in the business world. In exchange, the government offers start up investment tax breaks to new businesses. They lowered manufacturing taxes so businesses pay less on that end and the consumer pays a high price. If they are in low income brackets, they get it all back. They also lowered the Ontario tax rates that each family pays to income tax and many receive a cheque in the mail for the ‘difference’.

Short Answer

1. “Although I am only in my early thirties, I am an award-winning leader in innovation in the development of computer hardware, computer software, and consumer electronics. I employ more than 20 000 people. My slogan, “Think different,” inspires all of my employees to think outside the box. I am the leader in digital music sales. Over 65 million of my portable music players have been sold. Over two billion songs have been legally downloaded from my online store. You know me by my healthy logo. Which company am I?”

2. Ponzi schemes are a type of illegal scam named for Charles Ponzi, who duped thousands of New England residents into investing in postage stamp speculation in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors he could provide a 40 percent return in just 90 days, compared to 5 percent for bank savings accounts. Although not exactly a pyramid scheme, a Ponzi scheme is a form of fraud designed to fool investors. Give an example of a pyramid scheme, and explain how it works.

3. Enron was involved in the biggest accounting scandal to date. It did so by inflating its income figures by US$586 million. At the time, the exchange rate between Canada and the United States was 0.67 US$/C$, meaning 67 cents of US currency could buy 1 Canadian dollar. What would the Enron figure have been in Canadian dollars?

4. It has been demonstrated that improving productivity is important for the success of a business venture. Why? Because an increase in productivity has the potential to generate more profits. In an effort to make workers more productive, a company may spend thousands of dollars on training costs. Would it make more sense, however, to cut back on employee training in order to increase profits even further? Explain your answer.

5. Coming soon to a cell phone near you: advertisements. Widespread mobile advertising will take a long time to develop, but for now, wireless carriers and marketers are looking at several ways to incorporate brands on the mobile phone. Some of the methods being explored in the Spring of 2007 included: web banners, mobile campaigns, mobile search, text messaging, interactive voice response, and quick response codes. Select one of these methods and provide an overview of how advertising is being used or will be used for that method.

6. What makes us buy? A fast-growing industry called neuromarketing uses science to help marketers understand how we respond to products that are advertised. The MTV network, for example, has used neuromarketing to study how viewers digest programing and ads by examining how the brain handles attraction, long and short-term memory, and understanding. Marketer’s use of neuroscience technologies has alarmed some consumer groups that fear it could lead to the discovery of an inner “buy” button. Do you support the marketers in their quest or the consumer groups in their concern?

7. Why are financial statements so important to a business when it makes decisions?

8. Raymond Wilson turned his hobby into a baseball card business. Raymond began his business with a small loan from the bank and money saved from working while in college. The business grew steadily each year. By preparing a specific budget at the beginning of each year, Raymond was able to spend his money wisely on new inventory and improvements to his store.

This year he used the same budgeting process that he had implemented the past four years. He estimated that sales would increase 10 percent, so he planned to increase expenses accordingly. The budget projected another nice profit. The first two months went well. Then the economy suddenly slipped into a recession that continued through the rest of the year. Raymond’s customers cut back on their spending at his store. His sales declined but his expenses continued to increase.

Why did Raymond experience problems when he had been so successful in the past? What changes could he implement in his budgeting strategy?

9. Jack Chiang has worked hard to build up a good business. He has many customers and they are pleased with his services. His new business is a source of satisfaction - he likes being his own boss and feeling good about what he accomplishes.

But finances are a problem for Jack. He had to borrow $20 000 to get the supplies and equipment he needed to get started as an entrepreneur. His day-to-day business expenses are more than he had expected.

A number of customers are slow in making payments. Jack doesn’t have the time to pursue customers who are slow in paying their bills. Late-paying customers make it difficult for him to pay his bills on time, which makes his creditors unhappy with him. With debts piling up, Jack is wondering if he is a good business person and wondering if he should just declare bankruptcy. What is Jack’s basic problem and what would you recommend that he do to solve that problem?

10. Students have never seemed to enjoy the food or the choice of food that is served in high school cafeterias. How could things change for the better? Since most ideas begin with a “What If ...?”, generate five “What If ...?” questions of your own to help address this issue.

11. Buying on the Internet is changing. Take for example, ladies shoes. According to Forrester Research Inc., a U.S. based firm, in 2002 online footwear sales at $954 million was about one-fifth the size of the $4.4 billion online apparel business. In 2006, those numbers have changed such that footwear had surged to $2.9 billion, or about one-third the size of the $9.6 billion sold in apparel. Why are many “shoe shoppers”growing more comfortable with buying on the Internet?

12. You may think of me as the fanciest of car brands, but I’m actually a global engineering giant, providing engines, other machines and services in four global markets - civil aerospace, defense aerospace, marine and energy. Born in England in 1904, I now have 54 000 gas turbines in service worldwide and a broad customer base made up of 600 airlines, 4 000 corporate and utility aircraft and helicopter operators, 160 armed forces, and more than 2 000 marine customers, including 70 navies. My annual sales are almost US$13 billion. Which company am I?

13. What is wrong with each of the following statements made by students who are discussing investing their savings?a) Most savings accounts are alike, so why bother to shop around?b) Keeping your transaction register up-to-date isn’t important because the bank has the

official record.c) Always put your money in the savings plan that pays the highest interest regardless of

your investment goal.

14. Steve Panera has charge accounts at three different stores. He also has a bank charge card and an oil company credit card that he uses quite frequently. Last month he took out a personal loan that requires him to pay $60 a month for the next 18 months. The total of the payments he makes on his three charge accounts is $222 per month. His monthly income, after taxes and other deductions, is $1000. His normal expenses for an apartment, utilities, food, clothing, and other necessities amount to more than $650 per month. Calculate Steve’s financial position at this point in time and provide a recommendation for him to help him deal with his financial situation.

15. Both lenders and borrowers have used unfair and deceitful credit practices in the past. Lenders have provided credit cards to customers without really checking on their credit worthiness. In other cases, borrowers have lied about information on loan applications or had no intention of paying back the amount of money that they borrowed. Who is at fault?

A case in point. Lori kept falling further behind on her four credit card payments. Her creditors kept asking for money and Lori hated opening her mail. Some creditors even threatened to take her to court. A fifth credit card company offered to pay off her other creditors if she just signed for a loan. Lori checked out her options with a cash advance outlet and was told that she could get a portion of what she needed as long as she agreed to sign another contract. Lori needed help and her credit rating was at risk. Things became so messed up that Lori even thought about leaving town so she could avoid her creditors and start over in another location. Is all of this Lori’s fault? What are some things that Lori could do to help resolve her credit problem?

16. If you had the choice to control two factors of production, which would they be and what would you be doing within each of these 'factors'?

17. Corporations are very unique, both in the structure of how it is run and in how it is set up in terms of owners. Explain everything you know about a corporation and ensure you use these terms: Board of Directors, shares, CEO, private vs public, liability.

18. Advertising is a very complex industry. Billions of dollars are spent annually trying to master this effective method to promote sales of products. Briefly explain (not list) the four rules to an effective advertisement?

19. Discuss the three ways in which employees may leave a business for which they work.

20. Income distribution is a relatively simple concept. You earn money and certain dollars are allocated for different purposes. Explain using pictures and words, how income distribution applies to someone earning a gross income of $1700 per month.

21. If you were hired as 'management', what would you be doing? State and explain the four functions of management.

22. Double your money If I want to double my $5,000 at a rate of 5%, how many years will it take? Hint: Use the Rule of 72.

Actually forgot to teach this to you, but it may be on the exam. It is rather simple really….

The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.

= 72/8=9

23. Basic Banking – writing a cashable cheque

a) Emily Victorian received a bill for her son Ralphy’s scooter from Pete’s Scooters which totals $335.75 for the scooter. She already paid $122.02 as a deposit, but now must pay the balance. Please complete the cheque below in perfect detail as if you were Emily. Ralphy’s scooter account number is S-0692.

b) What is a stale-dated cheque? ______________________________________________________________________________________________________________________

c) What occurred when a cheque is marked NSF and returned? ______________________________________________________________________________________________

d) What is a post-dated cheque? _________________________________________________

____________________________________________________________

memo__________________________________039 02356-00232323 -0001

___________________________mp

Pay to the order of_________________________________________] $

039

________________________

________________________________________________________/100 DOLLARS

BMO Bank of Montreal1381 Woodroffe AvenueOttawa K2G 1V7

24. Prepare a Red Shoes supply and demand graph and label the surplus and shortage, X, Y, E, QS, QD, 0, and give it an appropriate title. (5 marks)

Price Quantity Quantity New Quantity ($ per unit) Demanded Supplied Demanded 120 5000 400 8500140 4500 800 7500160 4000 1200 6500180 3500 1600 5500200 3000 2200 4500220 2500 2600 3500240 2000 3200 3500260 1500 3600 2500280 1000 4000 1500300 500 4400 500

Business exam review 2011Answer Section

TRUE/FALSE

1. ANS: T PTS: 1 OBJ: p. 6 TOP: Profit or Non-Profit?2. ANS: T PTS: 1 OBJ: p. 44 TOP: Forms of Business Ownership3. ANS: T PTS: 1 OBJ: p. 44 TOP: Forms of Business Ownership4. ANS: F PTS: 1 OBJ: p. 65 TOP: International Business Structures5. ANS: T PTS: 1 OBJ: p. 86 TOP: Accounting Scandals6. ANS: T PTS: 1 OBJ: p. 130

TOP: Five Ways to Offset the Risks of Importing7. ANS: T PTS: 1 OBJ: p. 134

TOP: Canada and International Trade Agreements8. ANS: T PTS: 1 OBJ: p. 157 TOP: Raw Materials9. ANS: T PTS: 1 OBJ: p. 160 TOP: Types of Capital

10. ANS: T PTS: 1 OBJ: p. 178 TOP: The Labour Market11. ANS: T PTS: 1 OBJ: p. 181 TOP: The Importance of Skilled Labour12. ANS: T PTS: 1 OBJ: p. 184-185 TOP: Interview Tips13. ANS: F PTS: 1 OBJ: p. 230 TOP: Branding14. ANS: T PTS: 1 OBJ: p. 243 TOP: Channels of Distribution15. ANS: T PTS: 1 OBJ: p. 274 TOP: Double-Entry Bookkeeping16. ANS: T PTS: 1 OBJ: p. 276 TOP: Assets17. ANS: T PTS: 1 OBJ: p. 315 TOP: Entrepreneurial Skills18. ANS: F PTS: 1 OBJ: p. 316-318 TOP: Gathering Information19. ANS: F PTS: 1 OBJ: p. 319 TOP: Using the Internet20. ANS: F PTS: 1 OBJ: p. 323 TOP: Staff Relationships21. ANS: T PTS: 1 OBJ: p. 341 TOP: Product or Service Mapping22. ANS: F PTS: 1 OBJ: p. 365 TOP: Forms of Legal Tender23. ANS: F PTS: 1 OBJ: p. 397 TOP: The Bank Act24. ANS: T PTS: 1 OBJ: p. 404 TOP: Insurance Companies25. ANS: F PTS: 1 OBJ: p. 436 TOP: Why People Save26. ANS: T PTS: 1 OBJ: p. 438 TOP: Earnings and Yield27. ANS: T PTS: 1 OBJ: p. 442

TOP: Registered Retirement Savings Plans28. ANS: F PTS: 1 OBJ: p. 469 TOP: Government Credit29. ANS: F PTS: 1 OBJ: p. 470 TOP: Business Credit30. ANS: T PTS: 1 OBJ: p. 473 TOP: Credit Cards

MULTIPLE CHOICE

1. ANS: C PTS: 1 OBJ: p. 6 TOP: Profit or Non-Profit?2. ANS: D PTS: 1 OBJ: p. 11 TOP: Consumer Influence on Products3. ANS: D PTS: 1 OBJ: p. 13 TOP: Consumer Influence on Price4. ANS: A PTS: 1 OBJ: p. 21 TOP: Making Good Business Decisions5. ANS: C PTS: 1 OBJ: p. 41 TOP: Forms of Business Ownership6. ANS: A PTS: 1 OBJ: p. 86 TOP: Accounting Scandals7. ANS: D PTS: 1 OBJ: p. 102 TOP: Labour Practices8. ANS: B PTS: 1 OBJ: p. 126 TOP: Costs of Importing and Exporting9. ANS: A PTS: 1 OBJ: p. 128 TOP: Balance of Trade

10. ANS: A PTS: 1 OBJ: p. 157 TOP: Factors of Production11. ANS: A PTS: 1 OBJ: p. 166 TOP: Factors of Production12. ANS: D PTS: 1 OBJ: p. 188

TOP: Departures, Dismissals, and Retirements13. ANS: C PTS: 1 OBJ: p. 194 | p. 196

TOP: Key Employability Skills14. ANS: C PTS: 1 OBJ: p. 203-204

TOP: Ethical, Moral, and Legal Considerations15. ANS: B PTS: 1 OBJ: p. 249 TOP: The Competitive Market16. ANS: D PTS: 1 OBJ: p. 255 | p. 257

TOP: Creating Good Advertising17. ANS: C PTS: 1 OBJ: p. 263-264 TOP: Marketing Research Tools18. ANS: A PTS: 1 OBJ: p. 273 TOP: What Accountants Do19. ANS: D PTS: 1 OBJ: p. 284 TOP: Preparing a Balance Sheet20. ANS: B PTS: 1 OBJ: p. 320-322 TOP: Management Skills21. ANS: C PTS: 1 OBJ: p. 329-330 TOP: Venture Evaluation Criteria22. ANS: B PTS: 1 OBJ: p. 346 TOP: Patents and Copyrights23. ANS: B PTS: 1 OBJ: p. 349 TOP: Producing the Invention24. ANS: C PTS: 1 OBJ: p. 368-370 TOP: Types of Personal Income25. ANS: D PTS: 1 OBJ: p. 380 TOP: Budgeting26. ANS: D PTS: 1 OBJ: p. 422 TOP: Other Financial Services27. ANS: D PTS: 1 OBJ: p. 441 TOP: Common Savings Plans28. ANS: A PTS: 1 OBJ: p. 450 TOP: Investing in Stocks29. ANS: A PTS: 1 OBJ: p. 456 TOP: Collectibles30. ANS: C PTS: 1 OBJ: p. 478 TOP: Loans

COMPLETION

1. ANS: characteristics

PTS: 1 OBJ: p. 15 TOP: Starting a Business2. ANS: evaluate

PTS: 1 OBJ: p. 22 TOP: Making Good Business Decisions3. ANS: What, For Whom, How

PTS: 1 OBJ: p. 27 TOP: Economic Systems4. ANS: values

PTS: 1 OBJ: p. 75 TOP: What is Ethical Behaviour?5. ANS: standards

PTS: 1 OBJ: p. 76 TOP: What is Ethical Behaviour?6. ANS: code of ethics

PTS: 1 OBJ: p. 77 TOP: What Role Should Ethics Play in Business?7. ANS: 2000s

PTS: 1 OBJ: p. 81 TOP: Ethical Dilemmas and Developments Over Time8. ANS: glass ceiling

PTS: 1 OBJ: p. 95 TOP: Antidiscrimination Issues

9. ANS: Environment Canada

PTS: 1 OBJ: p. 124 TOP: Barriers to International Business10. ANS: recommendation

PTS: 1 OBJ: p. 187 TOP: Departures, Dismissals, and Retirements11. ANS:

sharesstock options

PTS: 1 OBJ: p. 191 TOP: Handling Compensation12. ANS: Canada Labour Code

PTS: 1 OBJ: p. 193 TOP: Health and Safety13. ANS:

lower-levellower level

PTS: 1 OBJ: p. 211 TOP: Levels of Management14. ANS: communicates

PTS: 1 OBJ: p. 212 TOP: Communicating15. ANS: community

PTS: 1 OBJ: p. 219 TOP: Management and the Community16. ANS: decline

PTS: 1 OBJ: p. 233 TOP: The Product Life Cycle17. ANS: loyalty

PTS: 1 OBJ: p. 248 TOP: Premiums18. ANS: attract attention, gain interest, build desire, get action

PTS: 1 OBJ: p. 255 TOP: Creating Good Advertising19. ANS: financial worth

PTS: 1 OBJ: p. 273 TOP: Basic Accounting Concepts20. ANS:

goalsobjectives

PTS: 1 OBJ: p. 313 TOP: Entrepreneurial Characteristics21. ANS: entrepreneur, entrepreneurial

PTS: 1 OBJ: p. 325 TOP: Some Canadian Entrepreneurs22. ANS:

segment, productsegment, service

PTS: 1 OBJ: p. 340 TOP: Finding Entrepreneurial Opportunities23. ANS: invention

PTS: 1 OBJ: p. 344 TOP: What Is an Invention?24. ANS: patent, copyright

PTS: 1 OBJ: p. 346 TOP: Patents and Copyrights25. ANS: marketing strategy

PTS: 1 OBJ: p. 352-354 TOP: Innovators as Entrepreneurs26. ANS: minted, bank notes

PTS: 1 OBJ: p. 365 TOP: Forms of Legal Tender27. ANS: impulsively

PTS: 1 OBJ: p. 379 TOP: Avoiding Impulse Buying28. ANS:

money supply, prime lending ratebank rate, prime lending rate

PTS: 1 OBJ: p. 401 TOP: The Bank of Canada29. ANS: lease

PTS: 1 OBJ: p. 478 TOP: Loans30. ANS: Capacity

PTS: 1 OBJ: p. 483 TOP: Capacity

PROBLEM

1. ANS:

The total revenue is $17 500.

PTS: 1 OBJ: p. 6 TOP: Profit or Non-Profit?2. ANS:

Initial Cost Sales Revenue Profit

PTS: 1 OBJ: p. 44 TOP: Business Fact3. ANS:

PTS: 1 OBJ: p. 90 TOP: Business Fact4. ANS:

2002:

2006:

PTS: 1 OBJ: p. 94 TOP: Workplace Safety5. ANS:

1000 items 1% of $5000.00 $50.002% of $5000.00 $100.00700 items 3% of Commission total Salary + Commission

PTS: 1 OBJ: p. 189 TOP: Handling Compensation6. ANS:

Answers will vary. It is important to point out that simply setting a high price for the new product will not work unless there is little or no competition for that product. The marketing manager could try to convince consumers that the new product is superior by using advertising, promotional activities, and publicity. Using these approaches will help first create an awareness of the new product and that awareness will result in consumer demand. If the marketing manager can somehow convince consumers that they are getting something really special and unique, they will be willing to pay a higher price. These marketing approaches should emphasize quality to help justify setting the price at a higher level.

PTS: 1 OBJ: p. 215 TOP: Marketing and Distribution7. ANS:

(a) 3 manufacturers 1 product 1000 customers 3000 exchanges(b) 3 manufacturers 10 retailers 3 products 100 customers 9000 exchanges(c) 3 manufacturers 1 wholesaler 3 products 10 retailers 3 products 100

customers 27 000 exchanges

PTS: 1 OBJ: p. 243 TOP: Channels of Distribution8. ANS:

a)b)c)d) If the $10 000 represents the original bank loan, Chuck will still be $13 000 short of the

$35 000 needed. However, if this amount is in addition to the $10 000, so that the bank loan now totals $20 000, Chuck is still short $3000 of the $35 000 needed.

PTS: 1 OBJ: p. 322-324 TOP: Relationship Skills9. ANS:

a)

b)

PTS: 1 OBJ: p. 368 TOP: Types of Personal Income10. ANS:

a) b) c) d) e) f)

Alice Farney saved the most over the course of one year.

PTS: 1 OBJ: p. 438 TOP: Earnings and Yield

SHORT ANSWER

1. ANS:Apple Inc.

PTS: 1 OBJ: Chapter 1 TOP: ProfileNOT: Data used for this mystery company was generated in the Spring of 2007.

2. ANS:One form of a pyramid scheme is the chain letter in which you are asked to send money to the person at the top of the list. You then remove that name from the top of the list, move the other names up one place, and add your name to the bottom of the list. You then forward several letters with your name on this list, hoping that your name gets moved up by others then you will receive money from many more people. The theory is the chain is never broken, so the money continues to flow to those at the top of the list. The chain letter scheme,however, rarely succeeds in the real world.

PTS: 1 OBJ: p. 83 TOP: Fraud3. ANS:

To convert to Canadian dollars, divide the US income figure by the conversion rate. That is, divide US$586 million by US$0.67. Therefore, the Canadian dollar figure is $874.6 million.

PTS: 1 OBJ: p. 88 TOP: Accounting Scandals4. ANS:

If a worker does not receive initial training, that person could get frustrated and quit or make costly mistakes (such as accidentally damaging equipment). Also, if something new is introduced in the workplace, the worker would be less productive if he or she had to figure it out on his or her own. Retraining helps workers deal with a change of job task, and specialized training can result in workers being more enthusiastic about their role. When all is said and done, training employees, although costly in the short run, has the potential of paying off in the long run.

PTS: 1 OBJ: p. 169 TOP: Four Major Types of Training5. ANS:

Answers will vary. Students can use a search engine such as Google to research the method they have chosen. A written or oral response could be provided.

PTS: 1 OBJ: p. 257 TOP: Types of Advertising6. ANS:

Answers will vary. Anytime the brain is involved in a study, there are many variables to consider. In fact, many researchers argue that technology allows them to “observe” how a brain works rather than to “control” the brain. There is so much that is not known about how the brain functions that finding a “buy” button may be just a hopeful wish on the part of marketers. Exploring the ethical side of the issue is another way of dealing with student responses.

PTS: 1 OBJ: p. 262 TOP: Types of Market Research

7. ANS:Business owners review financial statements carefully to determine how their businesses are performing. By analyzing the statements, owners can determine if sufficient profits are being made and, if that is not the case, focus on what can be done to change the pattern. The information from the financial statements also allows the owners to compare their businesses with similar businesses, which is essential so that they can be competitive and successful. The information from financial statements can be used for budget projections and predictions about future performance.

PTS: 1 OBJ: p. 280 TOP: Preparing Financial Statements8. ANS:

Raymond assumed that by relying on past performance, he would be guaranteed future success. He also didn’t take into account that an external factor, such as a recession, could impact on the budget projection that he made for the year. Keeping expenses at a higher level when sales are dipping below projections is a formula for disaster. If Raymond were to assess his businesses performance on a more regular basis, say monthly, and make necessary adjustments if things change, he may be more successful. These monthly updates would allow Raymond to make better decisions on a more timely basis.

PTS: 1 OBJ: p. 273 TOP: Basic Accounting Concepts9. ANS:

Not collecting money that is owed to Jack’s business is causing his problem. His comment about not having the time to collect from his customers is a big mistake. He has to take the time to collect or get someone to do it for him. He needs those funds from his customers to pay his creditors, or he will have to borrow more money and go further into debt.

Using an incentive for early payment and/or charging a penalty in the form of interest for late payments will help get those funds flowing into the business. Jack will also have to evaluate his lending policy and procedures and see if he is extending credit to the wrong people. That is, those who have no intention to pay or who take forever to pay off what they owe. Jack may wish to review the four management skills of an entrepreneur to make sure that he is covering all bases.

PTS: 1 OBJ: p. 320-322 TOP: Management Skills10. ANS:

Answers will vary. Examples could include: What if students had input into menu items? What if a nutritionist helped develop better choices? What if a salad bar were made available? What if the prices were more reasonable? What if the food was prepared on site and not just warmed up?

PTS: 1 OBJ: p. 337 TOP: Idea-driven Enterprises11. ANS:

Choice, choice, and more choice is not all that different from the marketing success formula of location, location, location. There are many specialized websites even in women’s shoes. Now that more security has been added to online purchasing, Internet sales are taking off. Gap Inc. (Piperlime.com) and Amazon.com (Endless.com) are two of the new entrepreneurial ventures to get into this expanding market for women’s shoes.

PTS: 1 OBJ: p. 338 TOP: Market-driven Enterprises12. ANS:

Rolls-Royce

PTS: 1 OBJ: p. 385 TOP: Managing Money for Business Use13. ANS:

a) Savings accounts may be similar, but some factors that can be compared by shopping around include: safety of investment, interest rates, compounding of interest, services offered, availability of service, and convenience of location.

b) If a person relies on the bank’s records, there is no way of checking to see if a mistake has been made by the bank. Also, a person may have forgotten about writing a cheque

and assumes that money is available and may write a cheque on an insufficient balance. Comparing the two records, by reconciling the balances, is a check on both balances.

c) The highest interest may mean the highest risk and many investors may not be comfortable taking that kind of chance.

PTS: 1 OBJ: p. 435-457 TOP: Savings and Investing14. ANS:

Steve’s monthly expenses total $932 ($60 + $222 + $650), and his monthly income after taxes and deductions is $1000. This leaves Steve with $68 per month to cover any bank charge card transactions and payments to the oil company. Steve has to pay back $1080 for the loan ($60 18), but we don’t know what he did with the money he received. Steve is starting to get himself in a situation where he is using credit to pay off credit and committing his monthly income to pay off more debt. There is no evidence of him saving any of his income for an emergency. Steve should work on a budget which may have him consolidate his debts and have one payment. Also, Steve needs to commit some of his income to savings and should look at reducing his monthly expenditures.

PTS: 1 OBJ: p. 473 TOP: Types and Sources of Credit15. ANS:

Lori doesn’t need another credit card, and she certainly doesn’t need to deal with a cash advance outlet that will give her more debt and charge higher interest rates. To protect her credit rating, Lori must deal with her problem and may seek the help of a credit counselling service in her community to help get her debts organized and under control. Is it Lori’s fault? Some would say that she chose to accept the credit cards and used them for purchases that she could not afford. There is nothing to indicate that Lori was deceitful when she applied. It appears as though she was tempted by easy credit. Is this the creditor’s fault? Again, there is nothing to suggest that they did anything wrong but suggesting a creditor’s consolidation loan would only put Lori further in debt. It would be a short-term solution but would be more costly in the long run. As mentioned, Lori could access a credit counselling service that would help find solutions to her problem both short term and long term. This service may even contact Lori’s creditors to see if some of the debt could be forgiven or at least some of the interest on the accumulated debt. This third-party intervention, who would work on her behalf, seems like the best option for Lori. It is apparent that Lori needs a plan in the form of a budget to help her control her spending pattern in the future. Lastly, leaving town is not a solution ... debt and creditors have a way of finding those who owe money!

PTS: 1 OBJ: p. 483-489 TOP: Credit Worthiness