Bus082-201 summer 2014 Test 2 chpts.4,5,& 6

Chpt 4

1. Which of the following describes the debate regarding video sharing in the boxed material Making Ethical Decisions, "To Tube or Not to Tube?"? A. The debate is over whether it is legal and/or ethical for individuals to upload videos onto YouTube that they themselves did not create.B. The debate involves the unfair advantage that Viacom and other large corporations have when uploading videos onto YouTube, even though they are operating within the law.C. The debate is over whether the Digital Millennium Copyright Act (DMCA) has outgrown its usefulness.D. The debate is about why Viacom is complaining to YouTube about illegal uploads when they have no support from other organizations.

2. A U.S. government official has indicated that for a generous contribution to his reelection fund, he would ignore your firm's apparent violation of several anti-pollution laws. Which of the following "ethics check questions" would you consider first? A. Is it legal?B. Is it fair and balanced?C. How will it make me feel about myself?D. Is it a generous amount?

3. A friend offers to share with you a term paper previously prepared for her Introduction to Business class last semester. When you tell her that it wouldn't be fair, she reminds you of your habit of reading an entire Harry Potter book at the local bookstore without paying for the book. Which ethics-based question would be most helpful in evaluating these situations? A. Is it legal?B. Is it balanced?C. Who wins and who loses?D. Will I get caught?

4. A high-level manager gathers his team of supervisors together to create a new office policy that will affect all employees at the company. After receiving a verbal nod from the supervisors, he then proceeds to pass around a written form of the new policy and asks all members of the team to initial it. He explains to the supervisors that the new policy will be posted in the break rooms on each floor of corporate headquarters. If you were a part of this work team, which question would you ultimately ask yourself before initialing your approval of this policy? A. Is it legal?B. Is it balanced?C. How will it make me feel about myself?D. Is it a lose-lose situation?

5. The Hum-dinger Corporation recently instituted a corporate ethics code. The president of the company realizes that ethical relationships are based on: A. fairness and honesty.B. strict penalties for illegal activities.C. a full-time compliance officer monitoring employee behavior.D. watchdogs and whistleblowers.

6. Which of the following would most likely involve ethical concerns? A. Overstating an expense report.B. Forecasting sales for the next year.C. Developing the marketing plan for the next year.D. Improving working conditions.

7. With respect to business ethics, it can be said that "it takes two to tango." This indicates that: A. dancing around issues should be part of a firm's code of ethics.B. an individual's behavior is influenced by the behavior of others.C. teamwork eliminates a need for personal ethics.D. management is insensitive to ethical issues.

8. Jake recently invested in a Hottie Potatee franchised business that serves potatoes with all the trimmings. The business needs lots of employees in order to operate effectively. He told you that if he calls the business once each day and tells the employees that he is on his way there, they will be on their best behavior. As he tells it, "It's okay if I really don't make it there, after all, I'm the owner and the business should be able to run without micromanagement." As a recent student of business ethics, you remind Jake that: A. he should post a code of ethics that stipulates how each employee should work and how each employee should treat the customers.B. he should create a survey for customers to respond to, and then he will always know if his employees are productive.C. employees usually take-on the behavior of their leaders. If integrity is not important to the owner, it may not be important to employees.D. "No good deed goes unpunished." Even though he may think he is doing a good thing, his employees will not appreciate the fact that he is working very hard on his business, off-site. Their expectations are that he should be there, working side by side with them.

9. While speaking with his sales force, the director of sales explains, "Anyone caught violating a sales law will be fired." After studying business ethics, you recognize this remark as a reference to the firm's __________ ethics. A. technology-basedB. personal responsibility-basedC. compliance-basedD. integrity-based

10. In an effort to promote the importance of a valuable education, the faculty and staff at the local community college are trained to ask each student about their career preferences, rather than suggest courses that may not benefit the student's future goals. Although it would be tempting to suggest courses just to increase the College's enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with: A. an integrity-based ethics code.B. a compliance-based ethics code.C. a response to a government mandate.D. a personal responsibility commitment.

11. Sharon, a CPA for a large firm noticed that the company's accounting records drastically overstated the amount of inventory on hand, which led to overstating the assets of the firm. Initially, she brought it to the attention of her supervisor, but when nothing was done to correct the mistake in a timely manner; she decided the best course of action was to report it to the appropriate government official. Although her actions took her outside the company, she was counting on current law, under the ____________ to protect her against company retaliation. A. Cellar-Kefauver ActB. Sarbanes-Oxley ActC. Robinson-Patman ActD. Sherman Act

12. A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a: A. whistleblower.B. horn blower.C. cheerleader.D. moral policeman.

13. Zach spent several months developing a good relationship with a business client. The client is now buying a significant amount of product from Zach's company, resulting in high commissions for Zach, personally. After checking the sales records for the past six months, Ben (a sales colleague of Zach's) started visiting the same client in the hopes of capturing some of the client's business too. Although he considers it "legal and fair game", sales reps in his firm have begun to avoid him because they consider it a violation of: A. company-based ethics.B. compliance-based ethics.C. integrity-based ethics.D. whistleblowing-based ethics.

14. John was recently hired by Backstreet Books, an eclectic bookstore in a large college town. At the beginning of the first day on the job, his store manager handed him a small booklet consisting of company rules. He was asked to read it and sign and submit the last page, before starting work. Among other things, the rules explicitly discussed reprimands for grievous behavior and dismissal if the firm could prove that the employee was stealing product from the store. This booklet represented the ___________ of the store. A. company-based ethicsB. compliance-based ethicsC. integrity-based ethicsD. whistleblowing-based ethics

Chpt 5

15. Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business: A. Automatically continues under new management as a sole proprietorship.B. Automatically converts into a public corporation with stock sold to interested investors.C. Ceases to exist unless sold or taken over by Joe's heirs.D. Becomes the property of the most senior employee who wishes to continue operating the firm.

16. Maria has a lot of self-confidence and business knowledge. She recently opened a bakery as a sole proprietor. She is expecting a high level of profits and is looking forward to: A. The lower corporate tax rate paid by sole proprietorships.B. Keeping all of the money she earns except for the taxes she is required to pay.C. Keeping all of the money she earns since she does not have to pay taxes as a sole proprietor.D. Easily raising additional large sums of money from the capital markets since she is a sole proprietor.

17. Cali owns Dog Trotters, a dog-walking business that she started to earn money after school and supplement her allowance. She planned to keep all the profits, and kept things simple, by putting a flier on the bulletin board at the local grocery store announcing that she was available to provide this service. Cali's business is a: A. Sole proprietorship.B. Franchise.C. S-corporation.D. Partnership.

18. Nick wants to start his own business. Nick should consider a sole proprietorship if he: A. Expects rapid growth and want to be able to raise a large sum of money.B. Wants to make it easy to attract qualified employees.C. Wants to be his own boss and can accept unlimited liability.D. Wants to minimize the financial risk he must accept as the owner of a business.

19. Javier is the sole proprietor of a golf shop. Because he is a sole proprietor, any profit Javier's business earns is: A. Totally tax-free.B. Taxed only as Javier's personal income.C. Taxed twice, once as business income, then again as Elroy's personal income.D. Taxed only if and when it is distributed to investors.

20. Finley is a limited partner in Gettout & Associates. Heywood U. Gettout, one of the general partners in the company, must temporarily leave the company to attend to some personal matters. Heywood has asked Finley to perform his managerial duties while he is gone. As a limited partner, Finley: A. Can fill in as a manager whenever necessary, as long as it is for only a limited time.B. Can make managerial decisions as long as they do not involve the payment of money.C. Cannot participate in the management of the partnership.D. Can manage the firm as long as he gets approval from the company's other general partners.

21. Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types. One their goals is to maintain the loving relationship they currently enjoy so they are following the Model Business Corporation Act recommendations as they write the partnership agreement. Which of the following is an accurate recommendation of the Act? A. The business should be actively operating for an extended period before the partners decide who is responsible for what business functions.B. Family businesses never take on outside partners, so no discussion of this need take place.C. There should be discussion and well-understood ways that the partners will handle disagreements.D. Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business, retire, or die.

22. Maya plans to open a shop specializing in foods and cultural items from the Middle East. She wants to be the firm's only general partner, but she is trying to get several friends to participate as limited partners. Apparently Maya wants to: A. Limit her personal liability to the amount she personally invests in the company.B. Keep all of the firm's profits.C. Obtain a strong financial base for the firm while maintaining personal control over the firm's management.D. Meet the legal requirements of the Uniform Partnership Act.

23. Zach and Mac own an auto repair business which they operate as co-owners. Both take an active role in the management of the business, and each accepts unlimited liability. Zach and Mac operate as a __________. A. joint ventureB. general partnershipC. limited partnershipD. cooperative

24. Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, the company is a chartered C-corporation, but the owners are interested in switching to an S corporation. After consulting a lawyer, they learned that Zorn Enterprises does not qualify to be designated as an S corporation. Which of the following characteristics of Zorn Enterprises would prevent it from becoming an S corporation? A. The firm has fewer than 75 stockholders.B. The firm is chartered in one state, but owns property in another.C. The firm has only one class of stock, all owned by U.S. citizens.D. The firm receives more than 70 percent of its income from rents and other passive sources.

25. Emily wants to open a chain of hair styling salons and hopes to attract investors to help finance growth. She considered forming a C corporation, but wants to have more flexibility about how the new business will be taxed. She also wants to offer investors/owners limited liability. Emily can satisfy her objectives by setting up a(n): A. Limited liability company.B. S corporation.C. Alien corporation.D. General partnership.

26. A few years back, your three U.S. born friends that live in the State of Wyoming inherited a dude ranch that they plan to turn into a retirement haven for race horses. Peaceful Pastures wants to open its doors by spring, 2010. After attending several small business seminars, the three friends are certain they need limited liability. The high-risk, labor-intensive business will require a sizeable investment including an air-conditioned barn, several fenced-in pastures and loads of animal feed. You recently heard that one form of business ownership requires owners to pay self-employment taxes on the entire amount of earnings. You are fairly certain this is one tax loophole your friends would like to avoid. You recommend: A. Sole ProprietorshipB. General PartnershipC. Limited Liability CompanyD. S-Corporation

27. "Vermont Wants to be the Home of Your New Virtual Company" talks about: A. A new form of LLC offered in the state of Vermont, where all members can operate virtually.B. The fact that it is difficult to ask firms to commit to one form of business ownership since "global is now local".C. A new law that says your firm can be a corporation in the U.S., an LLC in England, and a sole proprietorship in China.D. How states are competing for your business, particularly individuals who want to start sole proprietorships.

Chpt. 6

28. Kenya recently quit a job with a large corporation to start her own business. While she realizes that her decision comes with risk, she is excited for the chance to be independent and by the challenges of running her own firm. Kenya is an example of a(n): A. intrapreneur.B. entrepreneur.C. venture capitalist.D. raconteur.

29.  Erin developed a new type of exercise equipment she calls the Tush N' Tone. After unsuccessfully searching for potential investors, she arranged a personal loan and borrowed additional money from her parents. Her willingness to continue believing in her idea and remain enthusiastic shows that Erin is: A. characteristically self-nurturing.B. better suited to managing a nonprofit organization.C. unaware of the risks she was taking.D. not a true entrepreneur.

30. Apple Computer's "smart team" is an example of a firm that succeeded by: A. encouraging each manager to focus on a well defined area of the business and build his own specialized department.B. bringing together a group of talented and experienced managers to conceive, develop, and market products.C. emphasizing a low price and low cost strategy right from the beginning.D. assembling a group of employees whose inexperience was a plus, because they did not come with the baggage and institutional ideas of larger companies.

31. Anna recently left a large insurance firm and opened a home-based business preparing medical transcriptions for doctors. Based on recent statistics, she can expect: A. a negative reaction from friends and family who wonder when she will get a "real" job.B. the emergence of affordable technology will make it less challenging for her to compete with larger firms offering the same service.C. the government will discourage her attempts to create a home-based business in the hopes that she will opt for locating in an enterprise zone.D. to find security, routine and a paycheck from her new enterprise.

32. After graduation, Manny focused his attention on finding full time employment. He has decided to narrow his job search to jobs with a major corporation. His job search strategy: A. makes sense because managerial skills are best developed by working for big firms.B. is smart because major corporations represent the most important source of employment growth in the United States.C. indicates that Manny's passion is to fulfill his dream of owning his own business.D. will likely limit his job prospects since most new jobs are with small businesses.

33. After several years of working as a regional manager for a nationally known nonprofit, Janelle landed a management position with an innovative small business. If she accepts the job offer, she is likely to find that: A. due to the significant differences in large and small firms, her previous experience will be of little value in her new position.B. the principles of management are much the same at large and small firms.C. nonprofit organizations are motivated by their desire to help people and so financial management is of little concern.D. planning is more important to a nonprofit organization and less important to a small business so she will need to adjust the time she spends on the planning function.

34. As a result of corporate downsizing, Alex lost his job as an information systems manager for a large telecommunications company. A bonafide computer geek in his own right, Alex knew that several of his past company contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that: A. starting your own business can quickly provide security and profits.B. people always tend to hire people they know from past associations.C. the service sector is not an area of significant growth.D. successful big businesses often create profitable opportunities for small businesses.

35. After selling his software business for a sizeable profit, software engineer Gus Greene decided to try something different. He would become a general contractor on a large condo development in an upcoming area of Atlanta, Georgia. He invested several million and then borrowed another $30 million (or 75% of the project cost) from a lending institution. He based his borrowing risk on the assumption that the housing market would continue to appreciate for several years to come. As the housing market began a free-fall in early 2008 and continued into 2009, Gus saw his business crashing around him. Sales were very meager and the bank wanted its money back. Which of the following statements might best describe the reason Gus' business failed? A. Although Gus took some risk, it wasn't enough. In business, it is "more risk, more expected reward!"B. The bank let Gus down. It should not have lent him that much money.C. He should have designated himself as a passive investor. Therefore, his investment would not be in jeopardyD. Gus went into the business with very little knowledge about the industry or the market.

36. Jennifer, a talented photography major started a corporate photography business. She planned to solicit jobs from large corporations who needed pictures for their annual reports and websites. Although filling a unique niche, Jennifer needed the security that the business would thrive and that she would earn enough to support herself and her child. She also hoped that she would spend less time each day calling on potential clients and more time doing the actual shoots. As her small business consultant, which of the following suggestions would you have for Jennifer? A. Jennifer should either take the risk necessary to develop a small business, or go to work for someone else.B. In the beginning, it's doubtful that Jennifer will realize ease of entry, security, and good profits. She needs to make plans in the event that one or more of these does not materialize quickly.C. Photographers can take pictures of a multitude of things. It's probably not good strategy to limit her business to only photographing the needs of large corporations.D. Jennifer should definitely make time for herself each day so that she does not experience burn-out. If she plans well, leaping into her own business will provide with her several hours of unstructured time each day where she can perfect her craft even more.

37. Dr. Smiley White just graduated from dental school. He is hoping to acquire the necessary funding to start his own dental practice. One advantage of this type of business is: A. above average opportunity to borrow funds at a high interest rateB. nearly unlimited growth potentialC. the service is individualized and not easily mass-producedD. very low startup costs

38. Motivated by his desire to operate his own business, Nick considers purchasing an existing business. As he carefully weighs this option, he is likely to find that: A. very few owners of small businesses have any interest in selling.B. his potential for success would greatly improve if he started his own new firm.C. the value of an existing business is determined by what the business owns, what it earns, and what makes it unique.D. any entrepreneur willing to sell his/her business is experiencing serious financial problems.

39. Carrie, a student at Metropolitan Community College, dreams of starting her own business. In an effort to learn as much as she can about small business management, she talked to four friends who each offered their advice. Which of these suggestions is likely to help Carrie the most? A. The best way to learn about running a business is by getting hands-on experience. You should quit school and put your dream into action.B. Take courses related to small business management and look for a job with a successful businessperson, preferably in your field of interest.C. Since every business is unique, don't worry about advice from others. Go to a bank, get a business loan, and live your dream.D. Starting and managing a small business requires little more than common sense. If your idea is unique, hard work will guarantee your success.

40. Peppy is confident that Peppy's Pizzazzeria will be a success, but only if he has enough money to do things right. Since Peppy has very little personal wealth, he knows he must obtain financial assistance. In order prepare for meetings with bankers and potential investors, Peppy should: A. hire a public relations firm to develop promotional materials.B. develop a business plan.C. read a book on entrepreneurship.D. create a partnership contract.

41. Peppy has inquired about the possibility of obtaining a microloan from the SBA. This type of loan is awarded primarily on the basis of the: A. borrower's integrity and the soundness of the business idea.B. amount of collateral the borrower can pledge.C. borrower's credit history and record of previous business success.D. age of the borrower, since only senior citizens qualify.