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2008 DECA Ontario ProvincialsTest 963 ACCOUNTING APPLICATIONS 1

ACT

1. What type of business is owned by stockholders who share the business's profits?A. Sole proprietorship C. Cooperative B. Partnership D. Corporation

2. The Clayton Act of 1914 was enacted to resolve legal issues related toA. product safety. C. competitive behavior. B. consumer protection. D. environmental behavior.

3. A manufacturer paying a substantial fee to a business to get the business to carry the manufacturer's new product is an example of a

A. slotting allowance. C. buying procedure.B. promotional strategy. D. marketing plan.

4. A channel of distribution that has strong leadership is often able to avoidA. conflict. C. regulation. B. competition. D. publicity.

5. Some businesses need to select an appropriate channel of distribution because they lack the resources toA. manage the production function. C. contact a responsible intermediary. B. sell directly to the final customer. D. develop an appealing product.

6. When preparing a long, complex report, it is generally a good idea to include a background statement about the purpose of the report in the

A. executive summary. C. letter of transmittal.B. body of the report. D. writer's recommendations.

7. Managers who give good directions to employees usually are able toA. obtain data. C. take notes.B. review facts. D. save time.

8. What do managers need to develop to conduct an effective staff meeting?A. Formal motions C. Strict rulesB. Good agendas D. Timed debates

9. A customer made a mistake when placing an order. When the order arrived, the customer complained. How should the employee handle the situation?

A. Point out that it was the customer's error. B. Correct the error, using his/her best judgment. C. Insist that the customer pay for his/her mistake. D. Correct the mistake according to company policy.

10. Which of the following is used in the calculation of the gross domestic product:A. Transfer payments C. Government purchases B. Veterans' pensions D. Barter transactions

11. A lumber business cuts boards from tree trunks. This business gives the resource __________ utility.A. time C. placeB. form D. possession

12. One important function of the main business activity of marketing is the __________ of goods or services.A. inventory C. controlB. evaluation D. promotion

Copyright © 2008 by Marketing Education Resource Center®, Columbus, Ohio

2008 DECA Ontario Provincials2

13. A department store has decided to hire undercover security guards in an effort to reduce shoplifting losses. This is an example of __________ business risk.

A. ignoring C. retainingB. preventing D. transferring

14. The amount of work that an individual can produce in a given period of time is a measure ofA. worker productivity. C. division of labor.B. job simplification. D. specialization.

15. A large number of underemployed workers indicates that there is a problem in the economy because underemployment means that

A. seasonal employees work only part of the year. B. many people have stopped looking for work. C. some workers are taking time off between jobs. D. there are not enough jobs for qualified people.

16. What should a person always do when adapting to a new situation?A. Learn from another person's mistakes C. Resolve a difficult problem B. Control undesirable circumstances D. Make a choice

17. Calling in sick only if you are truly sick is an example of what type of behavior that builds positive working relationships?

A. Having a good attitude C. Carrying your own weight B. Getting to know others on your work team D. Being cooperative

18. A positive comment from a teacher and a pat on the back from a coach are examples ofA. informal recognition. C. recognition that does not motivate. B. formal recognition. D. recognition that is ineffective.

19. Which credit legislation gives consumers the right to inspect their credit history files?A. Fair Credit Billing Act C. Truth-in-Lending ActB. Equal Credit Opportunity Act D. Fair Credit Reporting Act

20. A business should not plan its marketing activities until it hasA. established its buying plan. C. identified its target market.B. priced its products. D. determined its promotional mix.

21. One of the basic risks in marketing is the possibility of __________ loss.A. promotional C. impersonal B. political D. financial

22. What approach to sales forecasting is described in the following situation: A toy manufacturer is preparing a sales forecast by asking for separate forecasts for specific lines of toys, for specific territories, and for specific sales representatives. This information will then be combined into a forecast for the entire company.

A. Bottom-up C. BreakdownB. Top-down D. Jury of executive opinion

23. When developing an operating budget, a business estimates total expenses and sales for a period of time in order to predict

A. market price. C. net worth.B. cash flow. D. gross profit.

24. Calculating total revenue and marginal revenue is one way for businesses to determineA. supply and demand. C. cause and effect. B. output and profit. D. assets and liabilities.


25. Why is it important for businesses to maintain accurate accounting systems?A. To make financial decisions C. To understand economic trends B. To pay employee bonuses D. To spend available funds

26. When a business develops a chart of accounts, it assigns a __________ to each account.A. price C. number B. value D. percentage

27. One reason businesses analyze daily sales transactions is to maintain an accurateA. depreciation list. C. inventory count. B. accounting system. D. conversion rate.

28. What type of cash-control procedures do businesses often evaluate?A. Counting change funds C. Monitoring sales budgets B. Calculating operating costs D. Determining stock dividends

29. Why do businesses verify the invoices they receive from creditors?A. To estimate revenue C. To authorize payment B. To calculate debt D. To process inventory

30. Which of the following is a reason why most businesses maintain check registers:A. To have a supply of checks on hand C. To estimate future revenue B. To keep a running count of available cash D. To prepare an operating budget

31. Which of the following is one of the functions of costing procedures:A. To reduce the costs of raw materials B. To evaluate the selling price of products C. To compare prices with the competition D. To apply costs to products as they are produced

32. A business assigning a monetary amount to a loan that will be paid off over a period of 10 years is an example ofA. calculating interest. C. analyzing cash flow. B. valuing long-term debt. D. reporting operating expense.

33. If a business had sales returns of 4% and allowances of 3.5% based on total sales of $675,250, what amount should the business deduct from sales revenue?

A. $52,421.00 C. $43,891.25 B. $47,267.50 D. $50,643.75

34. Which of the following is a reason why it is important for businesses that sell on credit to age accounts receivable:A. To monitor inventory levels C. To attract potential investors B. To track customer payments D. To calculate interest rates

35. Based on the following information, estimate the amount that a business may be unable to collect: $120 and $375 due less than 30 days; $250 and $185 due more than 30 but less than 60 days; $300 due more than 60 but less than 90 days; and $245 due for more than 90 days.

A. $245 C. $545 B. $300 D. $980

36. What does a business usually do when it decides that a receivable is uncollectible?A. Writes off the debt C. Reports a liability B. Contacts the customer D. Decreases an investment

37. Calculate an employee's base pay for a two-week period if the employee works 40 hours a week at a rate of $12 an hour and takes two 15-minutes breaks each day.

A. $900 C. $920 B. $960 D. $940


38. Calculate the cost of goods sold if a business buys $3,500 worth of office supplies, $236,450 worth of goods to resell, and negotiates a 4.5% discount on the goods to resell.

A. $229,152.25 C. $222,467.25 B. $225,809.75 D. $226,364.75

39. A decline in the value of business equipment is calledA. conversion. C. capital investment.B. shrinkage. D. depreciation.

40. If a business has a sales policy of offering discounts to customers for paying invoices within a certain period of time, this policy has an impact on the business's

A. income statement. C. accounts payable. B. depreciation report. D. credit rating.

41. The type of inventory system that a business uses has an effect on the value of __________ that is reported on financial statements.

A. cost of goods sold C. accounts payable B. operating equipment D. sales revenue

42. Because taxes are monies that a business owes, they often have a significant impact on the business'sA. transactions. C. investments. B. assets. D. expenses.

43. Convert $550 Canadian dollars to U.S. dollars if the Canadian dollar is worth $.85 in the U.S.A. $647.00 C. $610.50 B. $467.50 D. $485.00

44. What do businesses need to develop in order to gather all the information to prepare a master budget?A. Accounts payable schedules C. Source documents B. Several specific budgets D. Investment procedures

45. What do businesses consider when preparing purchases budgets?A. Inventory levels C. Interest rates B. Delivery dates D. Shipping methods

46. Why is it important for businesses to evaluate projected income statements?A. To use appropriate depreciation methods B. To calculate future cash dividends C. To determine if revenues will cover expenses D. To write off uncollectible accounts

47. A business has sales of $750,000, a net profit of $150,000, and assets worth $370,000. Calculate the return-on-sales ratio.

A. 15% C. 25% B. 20% D. 30%

48. A business calculating the actual cost of purchasing a $250,000 piece of equipment and paying for it over a period of 10 years is an example of

A. controlling disbursements. C. monitoring investments. B. evaluating liabilities. D. projecting receivables.

49. When conducting exit interviews, businesses often obtain useful information by asking __________ questions.A. probing C. standard B. personal D. technical


50. Which of the following is an employee benefit of effective new-employee orientation:A. Increased compensation C. Added competitionB. Labor agreement D. Job satisfaction

51. Which of the following has resulted because many workers have entered the country illegally:A. Competition for entry-level jobs has increased.B. The Social Security system is short of funds.C. The number of skilled workers has grown.D. More lawsuits have been filed against businesses.

52. A cereal manufacturer that is conducting a survey to determine its consumers' cereal preferences is gathering __________ information.

A. operating C. internal B. marketing D. secondary

53. Which of the following is an example of a durable good:A. Shampoo C. CD playerB. Haircut D. Pizza

54. Which of the following statements about marketing functions is true:A. Risk management is concerned with raising capital for a business.B. The promotion function can create and/or increase consumer demand.C. A small business needs only a few marketing functions in order to be successful.D. Purchasing enables businesses to determine the availability of financial resources.

55. The XYZ Corporation has set a goal to increase profitability by 15% within the next two years. To achieve that goal, the corporation has decided to open a new location. This strategy is the corporation's

A. financial plan. C. type of risk.B. marketing mix. D. plan of action.

56. What international marketing strategy targets consumers with similar buying behavior, but who are located in several countries or on different continents?

A. Indirect classification marketing C. Universal niche segmentation B. Undifferentiated marketing D. Intermarket segmentation

57. Which one of the following speculative risks would most likely increase a business's income:A. Implementing a safety program C. Hiring a security guard B. Introducing a new product D. Buying liability insurance

58. A start-up business is most likely to enter which of the following target markets:A. All of the potential target markets the business might have in the futureB. The market with the most direct competitorsC. The international market in undeveloped countries D. The target market that most closely matches its customer profile

59. Which of the following is a possible external threat that a business might identify as a result of conducting a situational analysis during the marketing-planning process:

A. Contract with a new supplier C. Downturn in the economy B. Change in pricing structure D. Decrease in operating expense

60. Once a SWOT analysis identifies an internal strength, a business can use that strength to take advantage of a(n)A. promotional technique. C. marketing strategy. B. operating procedure. D. external opportunity.

61. As a result of conducting a competitive analysis, businesses are often able to determineA. the overall health of the economy. C. how the government controls competition. B. the number of employees to hire. D. in which markets to compete.


62. Predicting the number of units of a good or service that a business will sell during a given time is referred to as a(n)A. sales forecast. C. test market. B. marketing strategy. D. economic outlook.

63. Why is it important for businesses to include specific time frames when setting marketing goals and objectives?A. Guides the business in hiring more staff. C. Keeps the business focused on the goal. B. Helps the business predict the future. D. Allows the business to identify the market.

64. One way that businesses analyze the effectiveness of marketing plans is by measuring the cost of marketing in relation to

A. publicity. C. wages.B. advertising. D. sales.

65. A factor that businesses consider when conducting marketing audits is marketingA. strategies. C. concepts.B. research. D. technology.

66. Which of the following computer programs allows businesses to simplify their budgeting processes:A. Database C. Communications B. Spreadsheet D. Presentation

67. Purchasing can minimize a business's investment in inventory byA. using a central merchandise plan. C. buying directly from manufacturers.B. setting high standards for product. D. buying just the quantities that are needed.

68. What is often the role of management in the achievement of quality in a business?A. To judge the staff C. To lead the effort B. To assign blame D. To eliminate conflict

69. Which of the following might result if a company had good sales but ignored expenses:A. Reduced overhead C. Inventory lossB. Increased profit D. Business failure

70. What do businesses need to maintain in order to produce goods and services for customers?A. Schedule of accounts C. Inventory of supplies B. List of vendors D. Copies of invoices

71. Before identifying the right people to work on a project, it is important toA. ask organizations for contributions. C. develop accurate job descriptions. B. select necessary supplies. D. prepare construction specifications.

72. Which of the following is usually a characteristic of a creative person:A. Prefers working under supervision C. Is patient with other peopleB. Depends on others D. Likes to seek out new challenges

73. Most businesses require their employees to have at leastA. specific job training. C. technical ability.B. basic academic skills. D. college diplomas.

74. Which of the following situations is an example of a business engaging in an unethical pricing practice:A. The XYZ Company increases its prices in a location that is experiencing a natural disaster. B. The Kipling Corporation prices its goods and services in accordance to industry standards. C. The Cunningham Company's standard pricing policy is to mark up its products 50 percent. D. The TUV Corporation considers its competitors when it is establishing pricing for new products.


75. Which of the following is a type of regulation that discourages predatory pricing practices and encourages fair trade:A. Anti-captive C. Anti-dumping B. Anti-puffery D. Anti-skimming

76. What pricing objective would be most effective for a new business that wants to establish a market share, be competitive, and create a specific image?

A. Return on sales percentage C. Profit-oriented pricingB. Sales-oriented pricing D. Return on investment percentage

77. What do sales beyond the break-even point provide to a business?A. Variable-cost margin C. DividendsB. Profit D. Initial markup

78. When a business considers the feasibility of a product idea, it should determine if the product idea is consistent with the company's

A. warranties. C. image. B. advertising. D. policies.

79. What is a potential benefit to a business that implements an ongoing product opportunity recognition process?A. Commercialization C. Strong economy B. Competitive advantage D. Attainable goals

80. Which of the following is a standard that is recognized internationally:A. USDA Prime C. SAE 10W40 B. ISO 9000 D. NMFS Best

81. Two characteristics of a good guarantee are that it should beA. unconditional and difficult to collect. C. conditional and understandable. B. conditional and easy to implement. D. unconditional and understandable.

82. Which of the following is an action that can negatively affect a customer's experience with a business:A. Suggestion selling C. Multiple phone-call transfers B. Knowledgeable employees D. Secure order process

83. Coca-Cola, Minute Maid frozen orange juice, Fruitopia, and Powerade sports drink are all examples of the Coca-Cola Company's product

A. recalls. C. mix.B. items. D. lines.

84. Launching a brand in other countries requires extensive research intoA. foreign customs, values, and languages. C. brand licensing laws.B. co-branding practices in those countries. D. the history of branding in those countries.

85. A business should consider eliminating a specific customer service when the serviceA. is making a larger profit than ever before.B. becomes essential to completing the sale of some items.C. becomes too expensive, or no longer serves the intended purpose.D. is being used by a majority of the business's customers.

86. Which of the following is a strategy that a business might use to position an existing product that is losing popularity:A. Promote new uses C. Increase salesB. Analyze attributes D. Identify competitors

87. Fisher Industries wanted to protect its new CD player for automobiles by listing it with the appropriate government agency. What kind of protection is this?

A. Registered trademark C. Brand licensingB. Brand positioning D. Descriptive name


88. Why are businesses often willing to pay the price for national brands that are well-known?A. Shelf space is limited. C. Quality is worth the cost. B. There is less competition. D. Availability is limited.

89. A promotional mix usually contains a combination ofA. display, advertising, publicity, and pricing.B. pricing, personal selling, advertising, and display.C. advertising, display, publicity, and personal selling.D. customer services, pricing, publicity, and personal selling.

90. Which of the following would be used to promote special sales events only to customers who live in a specific location:A. Specialty advertising C. Radio spotsB. Suburban newspapers D. Utility direct mail

91. Using which form of direct advertising is an advantage to marketers because it is inexpensive to execute:A. Direct mail B. Infomercial C. E-mail D. Billboard

92. Which of the following is a reason why businesses coordinate their promotional activities:A. To expand operations C. To attract customers B. To increase advertising D. To develop strategies

93. Which of the following is a source of product information that can be found on or with the product itself:A. Product label B. Consumer feedback C. Production method D. Sales reports

94. Salespeople who strive to provide superior service are more likely to A. develop long-term contracts with vendors. C. earn the respect of their competitors. B. meet challenging operating quotas. D. build long-lasting customer relationships.

95. Jack has been the owner/operator of a suburban business for 20 years. Many of his customers have done business with Jack since the beginning. This fact indicates that Jack has been successful in

A. building a clientele. C. promoting his business.B. offering good service. D. selecting marketing strategies.

96. Salespeople write sales letters and sales proposals for their customers by using __________ computer software.A. territory mapping C. word processing B. presentation D. database

97. Which of the following is an example of a product's being sold directly to the user for ultimate consumption:A. A grocer sells powdered sugar to a bakery for its doughnuts. B. A perfume maker sells perfume to a boutique to sell to its customers. C. A person sells bouquets of roses on the side of the road. D. A car dealership sells a van to a plumber for visiting customers' homes.

98. Advertisements, marketing plans, marketing-research reports, information sheets, and product manuals can all be used by salespeople to

A. determine customer buying motives. B. obtain product information. C. overwhelm indecisive consumers.D. trick customers into buying a substandard product.

99. Managers need to be familiar with the latest technology, government regulations, innovations and trends within the industry, and competitors' activities. What category of resource is this?

A. Human B. Information C. Material D. Financial

100. One of the benefits to the business of studying the external factors in the business's environment is that this kind of study

A. may help the business to lower prices. C. can take the place of continuous planning.B. can be a valuable forecasting tool. D. may help the business to obtain a subsidy.


1. DCorporation. A corporation is an artificial entity with legal status owned by stockholders who have purchased stock. Sole proprietorships are owned by one person who receives all profits. Partnerships are owned by two or more people who share the profits. A cooperative is owned and operated by its users/owners, and it is designed to supply goods and services to its members, not necessarily to make a profit.

SOURCE: BL:003SOURCE: BA LAP 7—Own It Your Way

2. CCompetitive behavior. The Clayton Act makes it illegal to charge different prices to different wholesalers for the same good or service. It also made it illegal to require a customer to purchase a second good or service in order to receive the first. The Clayton Act does not deal with consumer protection, product safety, or environmental behavior.SOURCE: CM:005SOURCE: Rue, L.W. & Byars, L.L. (2001). Business management: Real world applications &

connections (pp. 90-93). New York: Glencoe, McGraw-Hill.

3. ASlotting allowance. A slotting allowance is a cash premium that manufacturers pay to businesses to cover the costs involved in carrying a new product. In many cases, the cash premium is substantial because there is a lot of competition among manufacturers to encourage businesses to carry their products. Often, the manufacturer that offers the largest allowance is the one that gets shelf space for its new product. This may be unethical because small manufacturers that cannot afford to pay large slotting allowances do not have an equal opportunity to distribute their products. A marketing plan is a set of procedures or strategies for attracting the target customer to a business. Promotional strategies are plans of action for achieving promotional goals and objectives. A buying procedure is the steps taken by purchasing personnel to buy goods and services.SOURCE: CM:006SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [p. 446]. Mason,

OH: Thomson/South-Western.

4. AConflict. A channel of distribution that has strong leadership is often able to manage or avoid conflict because the leadership has the power to assign specific responsibilities to each channel member. Strong leadership has the authority to set goals for the entire channel and demand cooperation, which reduces the possibility of conflict. In this situation, channel members work for the good of the channel rather than for their individual goals. A certain amount of competition is healthy for a channel of distribution. Depending on the type of goods and services being distributed, it may not be possible to avoid some regulation or publicity regardless of the strength of the leadership.SOURCE: CM:008SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [pp. 357-358].

Upper Saddle River, NJ: Prentice Hall.


5. BSell directly to the final customer. Indirect is a channel of distribution in which goods and services move from the producer to the channel members and then to consumers or industrial users. Some businesses are not equipped to sell directly to the final customer and need to select an appropriate channel of distribution. For example, some businesses do not have the financial sources to maintain warehouses or own trucks. Selling products to intermediaries that in turn sell to retailers is one way that these businesses distribute their products. Businesses do not select a channel of distribution because they lack the resources to manage the production function, contact a responsible intermediary, or develop an appealing product. SOURCE: CM:010SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 440-441].

Mason, OH: Thomson/South-Western.

6. CLetter of transmittal. The letter of transmittal introduces the report, and it includes the reasons for preparing the report as well as acknowledgements of those who helped in its preparation. The summary is a brief presentation of the findings, which saves time for busy executives who have to read a great many reports. The body is a detailed presentation of the pertinent facts that have been gathered. The writer's recommendations are simply statements of the writer's opinions.SOURCE: CO:009SOURCE: Lesikar, R.V., Pettit, J.D., Jr., & Flatley, M.E. (1999). Lesikar's basic business

communication (8th ed.) [pp. 353-355]. Boston: Irwin/McGraw-Hill.

7. DSave time. Managers who give good directions to employees usually are able to save time because they do not need to keep repeating the instructions. The employees understand their assignments and are able to complete them without asking questions or needing assistance from the managers. When managers give good directions, the business benefits because everyone spends less time doing their jobs. When managers give directions, they do not obtain data or take notes. Employees may ask managers to review facts when they are giving directions.SOURCE: CO:139SOURCE: Hyden, J.S., Jordan, A.K., Steinauer, M.H., & Jones, M.J. (1999). Communicating for

success (2nd ed.) [pp. 108-112]. Cincinnati: South-Western Educational.

8. BGood agendas. An agenda is an outline of the issues and topics that will be discussed or considered during a meeting. Managers develop agendas in advance of the meeting and often make them available to staff members. The agendas usually list each item that will be discussed and specify the amount of time to spend on each item. Formal motions are presented during the staff meeting. Managers may put time limits on discussions, but usually do not prepare for formal debates. Strict rules are often followed during formal meetings rather than during staff meetings, which are more informal.SOURCE: CO:140SOURCE: Locker, K.O. (2000). Business and administrative communication (5th ed.) [pp. 349-

350]. Boston: Irwin/McGraw-Hill.

9. DCorrect the mistake according to company policy. Company policies should be directed toward customer satisfaction. If no company policy exists concerning customer mistakes, it is generally accepted practice to correct errors in as fair a manner as possible. Allowing employees to use their best judgment in correcting errors could result in unequal, unfair, or inconsistent treatment of customers.SOURCE: CR:010SOURCE: HR LAP 23—Handling Customer Complaints


10. CGovernment purchases. Gross domestic product is the final total of all goods and services produced within a country's geographic boundaries during a year's time. There are five components used in the calculation of the gross domestic product: government purchases, imports, exports, business investments, and consumer spending. Transfer payments, such as veterans' pensions and welfare benefits, are not counted because no goods or services are received from them. Barter transactions do not involve a medium of exchange since one good or service is traded for another.SOURCE: EC:017SOURCE: EC LAP 1—Gross Domestic Product

11. BForm. Form utility is usefulness created by altering or changing the form or shape of a good to make it more useful to the consumer. The lumber business is creating form utility by turning tree trunks into boards that consumers can use. Place utility is usefulness created by making sure that goods or resources are available at the place where they are needed or wanted by customers. Time utility is usefulness created when products are made available at the time they are needed or wanted by consumers. Possession utility is usefulness created when ownership of a product is transferred from the seller to the user.SOURCE: EC:004SOURCE: EC LAP 13—Use It

12. DPromotion. Marketing is a primary business activity that involves creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders. Promotion is one aspect of marketing that communicates information about goods, services, images, and/or ideas to achieve a desired outcome. Evaluating and controlling are functions of the business activity of management. Inventory is a function of the business activity of operations.SOURCE: EC:071SOURCE: EC LAP 19—Strictly Business

13. BPreventing. This is an example of recognizing a risk and trying to keep it from happening. Transferring risk means to shift the risk factor elsewhere, for example, to insurance. When a business retains risk, it does nothing to eliminate or reduce the risk because it is unaware of or wishes to ignore the risk.SOURCE: EC:011SOURCE: EC LAP 3—Lose, Win, or Draw (Business Risk)

14. AWorker productivity. Worker productivity is often measured by the amount of work produced in an hour or a day. Specialization, job simplification, and division of labor are methods of increasing worker productivity. Specialization is the process of making the best use of resources in the production of goods and services. Division of labor is dividing a large job into units, or job tasks, and assigning an individual to do each of the tasks. Job simplification is the process of making changes in a job task so that the job can be done more easily or quickly.SOURCE: EC:013SOURCE: EC LAP 18—Productivity


15. DThere are not enough jobs for qualified people. The underemployed include workers who are working part-time when they want to work full-time, or who are overqualified for the job they currently have, but cannot find a job that matches their skills. The underemployed are not included in the unemployment rate, because they are working. However, this category is an indication that there is a problem in the economy because there are not enough jobs for qualified workers. This might mean that the economy is in decline. Discouraged workers stop looking for employment. Taking time off between jobs is an example of frictional unemployment. By definition, seasonal employees work only part of the year. Discouraged workers are unemployed rather than underemployed. Seasonal workers are not necessarily underemployed. Workers taking time off between jobs is not an indication that there is a problem in the economy. SOURCE: EC:082SOURCE: O'Sullivan, A., & Sheffrin, S.M. (2003). Economics: Principles in action (pp. 335-336).

Upper Saddle River, NJ: Prentice Hall.

16. DMake a choice. A person facing a new situation must always make a choice by choosing to adapt or choosing not to adapt. A person cannot always control undesirable circumstances. New situations do not always involve difficult problems. When adapting to a new situation, it is possible to learn from another person's mistakes; however, this does not always occur.SOURCE: EI:006SOURCE: QS LAP 15—Stuff Happens

17. CCarrying your own weight. Calling in sick only if you are truly sick is an example of carrying your own weight in the process of building positive working relationships. When you carry your own weight, you are not making your coworkers pick up unnecessary slack. Although calling in only when you're truly sick does not demonstrate getting to know others on your work team, your honesty does relate to having a good attitude and being cooperative. The example is best, however, for carrying your own weight as you foster positive working relationships.SOURCE: EI:037SOURCE: EI LAP 5—Can You Relate? (Positive Working Relationships)

18. AInformal recognition. Informal recognition is offered outside formal systems, and often is something spontaneous, such as a positive comment from a teacher or a pat on the back from a coach. Formal systems of reward and recognition are usually planned and well-thought-out. The examples might indeed serve as motivators and are often very effective.SOURCE: EI:014SOURCE: QS LAP 13—Gimme Five!

19. DFair Credit Reporting Act. This legislation gives consumers the right to inspect and correct, if necessary, the files of their credit history. Errors can easily occur, and it is very important that consumers know what is in these files and that they are kept up-to-date. The Fair Credit Billing Act gives businesses that extend credit specific deadlines by which they must respond to customer complaints about billing errors. The Equal Credit Opportunity Act prohibits the denial of credit based on the applicant's gender, race, age, marital status, or national origin. The Truth-in-Lending Act requires businesses to give customers specific credit information.SOURCE: FI:002SOURCE: FI LAP 2—Credit and Its Importance


20. CIdentified its target market. The identification and selection of markets for a business or a product is known as target marketing. A business should identify its target market before it plans such marketing activities as establishing the buying plan, pricing products, or determining the promotional mix.SOURCE: MP:003SOURCE: IM LAP 9—Have We Met? (Market Identification)

21. DFinancial. Financial loss, or the loss of money, is the basic risk in marketing. While it is impossible to eliminate all risk in marketing, there are several ways to reduce risk including developing effective marketing plans, information systems, financial plans, and loss-prevention plans. To the owner of a marketing business, any risk is personal rather than impersonal. Promotional expenditures could cause financial loss in some cases. Most marketing businesses are not involved in political activities.SOURCE: FI:084SOURCE: BA LAP 2—Risk Management

22. ABottom-up. The bottom-up sales forecasting approach is prepared by starting with separate forecasts for specific lines which may then be combined into a forecast for the entire company. The top-down sales forecasting approach is prepared for the company as a whole and then broken down into forecasts for specific products, salespersons, territories, product lines, departments, or for any other area for which the business needs to forecast sales. Breakdown is another name for the top-down approach. Jury of executive opinion is a qualitative sales forecasting method which gathers opinions from company executives.SOURCE: FI:096SOURCE: IM LAP 4—Forecasting Sales

23. DGross profit. An operating budget predicts the amount of gross profit (income before taxes) for a certain period of time, usually a year, based on estimated total expenses and sales. The operating budget estimates sales so the business will know how much it will earn and how much of that amount will go for expenses. The goal of the operating budget is to control expenses so the business will earn a sufficient profit. The cash flow budget tracks cash flow. Net worth is the total value of the business. Market price is the actual price that prevails in a market at any particular moment.SOURCE: FI:098SOURCE: Longenecker, J.G., Moore, C.W., & Petty, J.W. (2003). Small business management:

An entrepreneurial emphasis (12th ed.) [pp. 291-293]. Cincinnati: Thomson/South-Western.

24. BOutput and profit. Outputs are the goods and services produced, and profit is the money the business receives for the sale of those outputs. Businesses determine output and profit by calculating total revenue and marginal revenue. Total revenue is all the revenue from the sale of outputs, and marginal revenue is the revenue received from producing and selling one additional unit of output. These calculations help a business decide if output is generating the desired profit. Calculating total revenue and marginal revenue is not a way to determine supply and demand, cause and effect, or assets and liabilities.SOURCE: FI:358SOURCE: Clayton, G.E. (2005). Economics: Principles & practices (pp. 130-131). New York:

Glencoe/McGraw-Hill.


25. ATo make financial decisions. An accounting system is the methods and procedures used in handling the business's financial information. This information is contained in the business's financial reports, such as the balance sheet, the income statement, and the cash flow statement. Businesses review the financial information contained in these reports in order to make financial decisions. If the accounting system provides inaccurate information, the business will be unable to make good decisions. Businesses do not maintain accurate accounting systems to pay employee bonuses, understand economic trends, or spend available funds.SOURCE: FI:107SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for

business decisions (p. 122). Orlando, FL: Harcourt.

26. CNumber. A chart of accounts is a numbering system that businesses use to facilitate the accounting process. Businesses assign a number to each account such as cash, sales revenue, advertising expense, etc. For example, a business might give its cash account the number of 101 and its accounts receivable account the number of 104. The numbers correspond to the specific account. When a business develops a chart of accounts, it does not assign a value, price, or percentage to each account.SOURCE: FI:110SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for

business decisions (pp. 942-943). Orlando, FL: Harcourt.

27. CInventory count. Businesses sell products on a daily basis. These products are subtracted from inventory and must be replaced regularly. As a result, businesses analyze daily sales transactions to track inventory and maintain an accurate count. Businesses often establish a minimum inventory level and analyze daily sales transactions to make sure they do not fall below that limit. An accurate accounting system helps a business analyze daily sales transactions. Businesses do not analyze daily sales transactions to maintain an accurate depreciation list or a conversion rate.SOURCE: FI:112SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


28. ACounting change funds. Evaluating cash-control techniques is important because ineffective methods often lead to losses for the business. One type of cash-control procedure that a business might evaluate is the method of counting change funds. For example, some businesses might require two employees to count the change fund to verify accuracy. The goal is to prevent loss. Calculating operating costs, monitoring sales budgets, and determining stock dividends are not types of cash-control procedures. SOURCE: FI:114SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)

[pp. 387-388]. Cincinnati: South-Western.

29. CTo authorize payment. Businesses often buy on credit and receive invoices for the amount due from creditors. Before businesses authorize the payment of invoices, they verify the information to make sure they are paying the correct amount for the number of items ordered. Once businesses are satisfied that the invoices are correct, they authorize payment. Businesses do not verify the invoices they receive from creditors to calculate debt, estimate revenue, or process inventory. SOURCE: FI:116SOURCE: Pinson, L., & Jinnett, J. (1998). Keeping the books: Basic recordkeeping and

accounting for the small business (4th ed.) [pp. 42-43]. Chicago: Upstart.


30. BTo keep a running count of available cash. Businesses usually keep track of each check by listing it in the check register. Businesses also list deposits in cash registers. This enables a business to keep a running count of the amount of money available in a checking account. It is important for businesses to know the amount of available cash in order to avoid writing checks for more than that amount. Check registers are separate from the supply of checks that businesses have on hand. Businesses do not maintain check registers to estimate future revenue or to prepare an operating budget. SOURCE: FI:118SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)

[p. 458]. Cincinnati: South-Western.

31. DTo apply costs to products as they are produced. Businesses need to keep track of the costs involved in producing products. To do this, they use some type of costing procedure such as applying costs to products during the various phases of production. For example, if there are three steps in the production process, a business might apply costs at each step. Then, the business knows the total costs for producing a product. Businesses often use this information to determine the selling price rather than to evaluate the selling price. Businesses do not use costing procedures to compare prices with the competition or to reduce the costs of raw materials.SOURCE: FI:121SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


32. BValuing long-term debt. Loans that will be paid off over a period of 10 years are long-term debts or liabilities. Businesses assign monetary amounts to such debts because the value changes yearly as the business pays off the debt. For example, a loan for $100,000 would be valued at $100,000 the first year. However, if the business pays $10,000 a year for 10 years, the value of the long-term debt decreases by $10,000 each year. Assigning a monetary amount to a loan that will be paid off over a period of 10 years is not an example of calculating interest, analyzing cash flow, or reporting operating expense.SOURCE: FI:123SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


33. D$50,643.75. Sales returns involve customers returning products, which result in no sale. Allowances involve giving customers additional discounts or refunds of part of the original purchase price. Both situations result in deductions from sales revenue. In this example, the business processed sales returns of 4% and allowances of 3.5% based on total sales. To calculate that amount, add the two percentages (4% + 3.5% = 7.5%) and multiply total sales by that percentage ($675,250 x 7.5% or .075 = $50,643.75).SOURCE: FI:126SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for



34. BTo track customer payments. Businesses age accounts receivable to track customer payments. Many businesses sell on credit and send invoices to customers. Some customers pay in a timely manner while others are slow. Businesses need to age accounts to track unpaid balances and contact delinquent customers when necessary. If they do not age accounts, businesses may be unable to collect receivables. Businesses do not age accounts receivable to monitor inventory levels, attract potential investors, or calculate interest rates. SOURCE: FI:129SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)


35. A$245. If an account is overdue more than 90 days, businesses often estimate that it will be difficult to collect because the customer may be experiencing financial problems. As a result, businesses age accounts in an attempt to monitor the status of each account and encourage customers to pay. If accounts become significantly overdue, such as for more than 90 days, businesses use more severe measures to collect on them, such as placing the account with an attorney. However, there is no guarantee that a customer will pay the account, and businesses often estimate that they will lose that amount. Businesses often are able to collect on accounts that are less than 90 days past due.SOURCE: FI:131SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)


36. AWrites off the debt. In certain situations, some accounts receivable will be determined to be uncollectible, possibly because the customer has declared bankruptcy or gone out of business. When a business decides that it will be unable to collect a receivable, it usually writes off the debt. When a business writes off a bad debt, it eliminates the customer's account receivable, and the customer's account now has a balance of zero (0). A business would contact the customer before deciding that the receivable was uncollectible. The uncollectible account was a liability that no longer exists because it has been written off as a bad debt. A business does not decrease an investment when it decides that a receivable is uncollectible.SOURCE: FI:133SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


37. B$960. When calculating payroll, businesses consider time for which they are required to compensate employees. In most situations, employees are entitled to rest periods during the day and businesses must pay them for that time. It is common to allow a 15-minute break in the morning and a 15-minute break in the afternoon. Therefore, the business must pay an employee for the two breaks for a total of 30 minutes a day, which amounts to 2 1/2 hours a week and 5 hours for a two-week period. As a result, the employee is paid for 40 hours a week or 80 hours for two weeks for a base pay of $960. To calculate base pay, multiply the hours worked by the hourly rate ($12 x 80 = $960).SOURCE: FI:136SOURCE: CCH Inc. (n.d.). Are incidental activities compensable? Business owner's toolkit.

Retrieved October 22, 2007, from http://www.toolkit.cch.com/text/PO_4117.asp


38. B$225,809.75. The cost of goods sold is the amount of money a business pays for the products it sells or for the raw materials from which it produces goods to sell. If a business receives a discount from a supplier, the cost of goods sold is lower than the listed price. In this example, a business receives a 4.5% discount. Calculate the cost of goods sold by multiplying the original price by the discount and subtracting that amount from the original price ($236,450 x 4.5% or .045 = $10,640.25; $236,450.00 - $10,640.25 = $225,809.75). The $3,500 worth of office supplies is not part of cost of goods sold because the supplies are used by the business rather than resold.SOURCE: FI:141SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)

[p. 414]. Cincinnati: South-Western.

39. DDepreciation. Businesses lower the value of, or depreciate, equipment over a period of years. Businesses calculate depreciation because it is a business expense. Shrinkage is a reduction in the inventory of a business. Capital investment increases the capital worth of a business. A decline in the value of business equipment is not called conversion.SOURCE: FI:143SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


40. AIncome statement. Offering discounts to customers for paying invoices within a certain period of time is a sales policy that impacts a business's income statement because it reduces sales revenue by the amount of the discount. Businesses include on the income statement only the amounts that customers actually pay for products rather than the original price. For example, if a business offers a 2% discount on a $1,500 invoice for paying within 10 days and the customer takes advantage of the discount, the business receives $1,470 instead of $1,500. The amount of income has been reduced by $30. Sales policies that offer discounts to customers do not have an impact on the business's depreciation report, accounts payable, or credit rating. SOURCE: FI:147SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


41. ACost of goods sold. Cost of goods sold is the amount of money a business pays for the product it will sell. The type of inventory system that a business uses has an effect on the value of cost of goods sold that is reported on a business's financial statements. For example, a business can value inventory according to the price it paid for the items, or it can value inventory according to replacement price. If the price increases and the business uses that price, the cost of goods sold will be higher. As a result, that increase will be reflected on a business's financial statements. The type of inventory system does not affect the value of operating equipment. Accounts payable are all monies owed by the business to others. Sales revenue is the money that comes into the business from the sale of goods and services.SOURCE: FI:148SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for



42. DExpenses. Taxes are a cost of doing business that impact company expenses because businesses must pay the taxes. These might be income tax, sales tax, payroll tax, property tax, etc. Depending on the business, taxes may be a significant expense. Businesses need to consider the amount of taxes they must pay in order to budget an adequate amount for that expense. Assets are anything of value that a business owns. Taxes do not have a significant impact on a business's investments or transactions.SOURCE: FI:152SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


43. B$467.50. If the Canadian dollar is worth $.85 in the U.S., then the Canadian dollar has less value than the U.S. dollar. Therefore, the Canadian dollar will convert to fewer dollars and have less purchasing power than the U.S. dollar. To convert $550 Canadian dollars to U.S. dollars, multiply the Canadian dollars by the value in U.S. dollars ($550 x $.85 or .85 = $467.50).SOURCE: FI:154SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


44. BSeveral specific budgets. The master budget is based on several specific budgets and is the business's overall financial plan. Businesses develop specific budgets, such as sales budgets and capital budgets, in order to gather all the information needed to prepare the master budget. Once a business has these estimates, it can plan its operations to stay within the financial limits. Accounts payable schedules are schedules for paying bills. Source documents verify transactions. Investment procedures focus on how a business will invest its profit.SOURCE: FI:156SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


45. AInventory levels. Businesses prepare purchases budgets to have the right amount of products on hand when needed. When preparing purchases budgets, it is important for businesses to consider inventory levels. Most businesses establish minimum and maximum inventory levels based on several factors such as storage space, turnover rate, etc. If a business wants to maintain at least a certain amount of inventory at all times, it must plan to budget a specific amount of money to make the necessary purchases. If the business does not budget sufficient funds, it risks running out of products. Businesses do not consider delivery dates, interest rates, or shipping methods when preparing purchases budgets.SOURCE: FI:158SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)



46. CTo determine if revenues will cover expenses. A projected income statement lists a business's expected expenses and revenues for a certain period. It is actually the plan the business hopes to follow to earn the desired level of profit. As a result of evaluating projected income statements, businesses might find that expenses are higher than projected while sales are lower. If projected revenues will not cover expenses, a business must revise its operating plan to cut expenses and find a way to increase sales. Businesses do not evaluate projected income statements to calculate future cash dividends, use appropriate depreciation methods, or write off uncollectible accounts. SOURCE: FI:160SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


47. B20%. Businesses use financial ratios to evaluate the company's performance. One important ratio is the return-on-sales ratio, which indicates a business's profitability. To calculate the return-on-sales ratio, divide net profit by sales ($150,000 ÷ $750,000 = 0.2 or 20%). In this example, the business is earning a 20% profit. By comparing this figure to industry averages, a business can determine if it is earning an acceptable amount of profit. The value of assets is not considered when calculating the return-on-sales ratio.SOURCE: FI:163SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)


48. BEvaluating liabilities. Many businesses have long-term liabilities, or debts, because they have borrowed money to purchase expensive equipment or property. These liabilities are paid off over a long period of time such as 10 years. As a result, the actual cost of the long-term liabilities is more than the original cost of the equipment or property. For example, a 10-year loan on $250,000 includes interest. Over the period of 10 years, the business pays significantly more than the $250,000. Businesses evaluate these liabilities in order to calculate the actual cost, and list the actual value of the liability on financial records. Calculating the actual cost of purchasing equipment and paying for it over a period of years is not an example of controlling disbursements, monitoring investments, or projecting receivables.SOURCE: FI:167SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for


49. CStandard. The purpose of conducting exit interviews is to obtain information that a business can use to make improvements and reduce employee turnover. One way to obtain useful information is to ask standard questions that all employees answer when they leave the business. It is often helpful for businesses to develop a standard exit interview form so human resource personnel always ask the same questions. Then, the standard information can be summarized and used to review the good and bad points that employees explain during the interview. Businesses usually do not ask personal or technical questions during an exit interview unless they pertain specifically to the business, such as reason for leaving or problems with equipment. Sometimes businesses probe for information if employees are reluctant to answer questions. However, asking standard questions often makes it easier for employees to answer honestly.SOURCE: HR:357SOURCE: Mathis, R.L., & Jackson, J.H. (2002). Human resource management: Essential

perspectives (2nd ed.) [pp. 92-94]. Cincinnati: Thomson/South-Western.


50. DJob satisfaction. Employees who go through orientation programs usually have greater job satisfaction because they are comfortable with their work environment and understand what is expected of them. Many businesses have extensive orientation programs designed to familiarize new employees with their jobs, coworkers, and aspects of the business. Orienting new employees helps them to better understand the business and to more effectively perform their assignments. Labor agreements are the result of negotiations between labor and management. Employee orientation does not increase competition. Increased compensation is an employee benefit but not a direct result of orientation.SOURCE: HR:360SOURCE: Mathis, R.L., & Jackson, J.H. (2003). Human resource management (10th ed.) [pp.

286-288]. Cincinnati: Thomson/South-Western.

51. ACompetition for entry-level jobs has increased. Workers who are willing to take the risks involved in entering the country illegally are so much in need of work that they are willing to accept any available job. Since they often have language problems or are lacking in job skills, they accept entry-level jobs, which leaves fewer jobs for U.S. citizens. Illegal immigrants are not eligible to participate in the Social Security program. They would not file lawsuits against businesses because that would call attention to their unauthorized presence in the country.SOURCE: HR:367SOURCE: MN LAP 55—Managing Diversity in the Workplace

52. BMarketing. Marketing information is all the marketing-related data available from inside and outside the business. Surveying customers to determine their cereal preferences is one way of gathering primary external information about the market that the business is trying to serve. Internal information is obtained from sources found within the business and includes operating information (e.g., production reports, budgets). Secondary information is data that has been collected for purposes other than the project at hand.SOURCE: IM:001SOURCE: IM LAP 2—Marketing-Information Management

53. CCD player. Durable goods are intended to last a relatively long period of time. Nondurable goods, such as pizza or shampoo, are eventually used up. A haircut is a service rather than a good.SOURCE: MK:001SOURCE: BA LAP 11—Have It Your Way!

54. BThe promotion function can create and/or increase consumer demand. Through promotion, consumers learn about goods or services, which can generate or increase demand for products. Even a small business needs to use most of the marketing functions if it is to be successful. Risk management and purchasing are operations functions rather than marketing functions.SOURCE: MK:002SOURCE: MK LAP 1—Work the Big Six (Marketing Functions)


55. DPlan of action. Businesses determine a plan of action for achieving their goals and objectives. This plan of action in marketing is known as a marketing strategy. In this example, the goal is to increase profitability, and the plan for achieving that goal is to open a new location. Marketing mix is the combination of the four elements of marketing. The plan of action is not a type of risk. Financial planning involves developing budgets, which includes predicting the company's sales and expenses for a specific period.SOURCE: MP:001SOURCE: IM LAP 7—Pick the Mix (Marketing Strategies)

56. DIntermarket segmentation. Segment marketing is the classification of customers into similar groups. Intermarket segmentation is the classification of people on the basis of similar needs, wants, and buying behavior, even though they are in different countries. Businesses use undifferentiated marketing strategies when they want to appeal to the entire market, rather than specific market segments. Universal niche segmentation and indirect classification marketing are not terms commonly used to define international marketing strategies.SOURCE: MP:002SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [p. 214]. Upper

Saddle River, NJ: Prentice Hall.

57. BIntroducing a new product. Introducing a new product is a speculative risk because there is a chance of loss, no change, or gain. However, selling a new product has the potential of increasing a business's income if it is the type of product that customers want and will buy. Businesses take risks when they introduce new products, but they do so because they hope to earn a profit. Implementing a safety program, hiring a security guard, and buying liability insurance are ways that businesses manage pure risks, which are chances of loss that carry with them only the possibility of loss or no loss.SOURCE: FI:080SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:

Teacher's manual (2nd ed.) [p. 377]. New York: Glencoe/McGraw-Hill.

58. DThe target market that most closely matches its customer profile. Start-up companies want to first focus on target markets where they will find it easiest to make sales. Those markets are the ones that match their customer profile. Then, these sales provide for future growth and expansion into other markets. The international market in undeveloped countries is appropriate only for certain businesses. A start-up business would look for a market that was not filled with direct competitors. Future markets are important after a business has successfully entered its original market.SOURCE: MP:005SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:

Teacher's manual (2nd ed.) [p. 94]. New York: Glencoe/McGraw-Hill.


59. CDownturn in the economy. A situational analysis involves examining and interpreting the environmental factors that affect a business. As a result of considering external environmental factors, a business often is able to identify potential threats in the marketplace such as increasing competition or a downturn in the economy. Once a business identifies the specific threats, it takes steps to turn them into opportunities. For example, if the economy is beginning to slow down, a business might revise its products or offer additional credit plans to appeal to a wider market. A change in pricing structure, a contract with a new supplier, and a decrease in operating expense are internal factors.SOURCE: MP:008SOURCE: Zikmund, W., & d'Amico, M. (2001). Marketing: Creating and keeping customers in an

e-commerce world (7th ed.) [pp. 41-42]. Mason, OH: South-Western.

60. DExternal opportunity. A SWOT analysis is the systematic evaluation of a business's internal strengths and weaknesses and external opportunities and threats. Once the analysis identifies an internal strength, businesses generally use that strength to take advantage of an external opportunity that has been identified. Being able to match strengths to opportunities is one of the advantages of conducting a SWOT analysis. For example, having modern production facilities is a strength that allows a business to take advantage of the opportunity to expand into new markets. A marketing strategy is a plan of action for achieving marketing goals and objectives. Operating procedures are the steps a business follows to perform certain tasks. Promotional techniques are methods of achieving promotional goals.SOURCE: MP:010SOURCE: IM LAP 8—Analyze This!

61. DIn which markets to compete. Not all businesses have the resources or capabilities to compete in all markets. Therefore, businesses should analyze the competitive environment to determine the markets that offer the most potential. Depending on the results of a competitive analysis, a business might decide to focus on a specific target market or to develop a unique product that will appeal to a niche market. The intent is to find the most appropriate markets that will give the business the opportunity to grow and be profitable. A business does not conduct a competitive analysis to determine the number of employees to hire. The government encourages competition rather than attempting to control it. A business conducts an economic analysis to determine the overall health of the economy. SOURCE: MP:012SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 66-67].


62. ASales forecast. A sales forecast is a prediction of what a firm's sales will be during a specific future time period using a certain marketing plan. A test market may provide data to be used in a sales forecast by indicating sales levels in a particular market. A marketing strategy is a plan of action for achieving marketing goals and objectives. The economic outlook is a projection of the economic climate, which will affect the sales forecast.SOURCE: MP:013SOURCE: IM LAP 3—Nature of Sales Forecasts


63. CKeeps the business focused on the goal. An effective marketing objective should include a specific time period. For example, achieving a 5% increase in sales this year over last year is an effective objective. The business knows that it wants to accomplish this within one year. Now, the business can focus on developing strategies and tactics to achieve the objective. If the objective is vague and doesn't set a time limit, the business does not have a clear goal. Then, it may take years to achieve the objective because the business is not focused on accomplishing it within a specific time period. Including specific time frames does not help the business predict the future, guide the business in hiring more staff, or allow the business to identify the market.SOURCE: MP:015SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [p. 42]. Mason,

OH: Thomson/South-Western.

64. DSales. Comparing the cost of implementing a marketing plan in relation to the actual sales is an effective way to evaluate the plan. The goal is to develop an effective marketing plan that will achieve sales goals without being overly expensive. If the marketing costs are out of line with sales results, the business is overspending and needs to make adjustments. Advertising is often a part of the marketing plan. Wages are a component of operating expenses and not a factor in analyzing marketing plans. Publicity is any nonpersonal presentation of ideas, goods, or services that is not paid for by the company or individual that benefits from or is harmed by it.SOURCE: MP:019SOURCE: Kotler, P. (2000). Marketing management (10th ed.) [p. 699]. Upper Saddle River, NJ:

Prentice Hall.

65. AStrategies. Marketing strategies are the plans of action for achieving marketing goals and objectives. Examining the existing marketing strategies is an important part of a marketing audit because a business needs to know if its strategies are effectively achieving its goals. If the business finds that its strategies are unclear or not appropriate based on the state of the economy, it can plan corrective action. Marketing research is the systematic gathering, recording, and analyzing of data about a specific issue, situation, or concern. The marketing concept is a philosophy of conducting business that is based on the belief that all business activities should be aimed toward satisfying consumer wants and needs while achieving company goals. Businesses do not consider technology when conducting marketing audits.SOURCE: MP:024SOURCE: Kotler, P. (2000). Marketing management (10th ed.) [pp. 709-711]. Upper Saddle River,

NJ: Prentice Hall.

66. BSpreadsheet. Advances in technology have resulted in a variety of computer programs that have an impact on the accounting processes such as budgeting. For example, spreadsheet programs calculate and analyze numerical information and allow businesses to experiment with different numbers before establishing a budget. The process that formerly required people to manually perform complicated calculations is now done quickly with the use of spreadsheet computer programs. Database programs store and organize information. Communications programs allow computers to communicate. Presentation programs are used to prepare audiovisuals.SOURCE: NF:017SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for



67. DBuying just the quantities that are needed. For example, buying a year's supply of products at a time ties up money that could be used for other purposes. Instead, the items could be purchased every six months or more often. Setting high quality standards could increase inventory investment. A central merchandise plan is a form of centralized buying in which the central buying authority takes total responsibility for buying, pricing, storing, and distributing merchandise lines to all individual stores. Centralized buying and purchasing directly from manufacturers may help to control the cost of purchases but not to minimize the amount of money invested in inventory.SOURCE: OP:015SOURCE: PU LAP 1—Purchasing

68. CTo lead the effort. Management sets the tone for quality in a business and leads the effort. If managers do their best to achieve quality and set an example for employees, the employees usually follow. Managers lead by setting clear goals, by making sure employees understand the goals, by giving employees the information and tools they need, and by being supportive. They also lead by behaving the way they expect employees to behave. The role of management in the achievement of quality in a business is not to assign blame or judge the staff. Management should direct and guide. It is not possible to eliminate conflict, although management often can control conflict.SOURCE: OP:020SOURCE: Kimbrell, G., & Vineyard, B.S. (2006). Succeeding in the world of work (pp. 282-286).

New York: Glencoe/McGraw-Hill.

69. DBusiness failure. Ignoring the amount of expenses, even though sales are good, might result in business failure. Uncontrolled expenses reduce profits and often lead to problems which might cause a business to fail. Controlling the amount of money a business spends is an effective way of remaining successful. Ignoring expenses tends to reduce profit and increase overhead. Inventory would not be affected.SOURCE: OP:025SOURCE: MN LAP 56—Employee Role in Expense Control

70. CInventory of supplies. All businesses need to maintain an inventory of supplies in order to produce goods and services for customers. Small businesses may only need office supplies while retailers also need supplies to wrap packages. Large manufacturing businesses need vast inventories of resources to produce products. Without an inventory of supplies, businesses will not be able to do even simple tasks. The result might be a loss of customers and a loss of income. Some businesses may need only one vendor rather than a list of vendors. Businesses do not need to maintain a schedule of accounts or copies of invoices to produce goods and services for customers.SOURCE: OP:031SOURCE: Clark, B., Sobel, J., & Basteri, C.G. (2006). Marketing dynamics (p. 360). Tinley Park,

IL: Goodheart-Willcox.

71. CDevelop accurate job descriptions. Before identifying the right people to work on a project, it is important to develop accurate descriptions of the jobs these people will need to perform. The descriptions should explain exactly what is involved such as qualifications, education, or experience. Then, match the skills of project members to the job descriptions to find the people who will be able to do the work. It is not important to select necessary supplies, ask for contributions, or prepare specifications before identifying the right people to work on a project.SOURCE: OP:003SOURCE: QS LAP 19—Get What You Need


72. DLikes to seek out new challenges. Creativity is the ability to generate unique ideas, approaches, and solutions. Creative people usually demonstrate independent behavior, prefer working with minimal or no supervision, and are often impatient with other people.SOURCE: PD:012SOURCE: PD LAP 2—Creativity

73. BBasic academic skills. Most businesses expect their employees to have at least basic academic skills that usually include reading, writing, and mathematics. These skills are necessary in order to succeed in business. Employees who are unable to read instructions, write short memos or reports, or do simple math calculations are often not able to do their jobs properly. These skills help employees to be productive and successful in the workplace. Most businesses do not require their employees to have college diplomas. Many businesses prefer to train employees to do specific jobs. Technical ability is necessary only if employees will be working in certain technical fields.SOURCE: PD:025SOURCE: PD LAP 15—Go For It!

74. AThe XYZ Company increases its prices in a location that is experiencing a natural disaster. It is unethical and, in some locations, it is illegal for businesses to increase prices for staple items (e.g., wood, food, and gasoline) during emergencies. Businesses that engage in price gouging are taking advantage of unfortunate circumstances, which society considers an unethical practice. Pricing goods according to industry standards, marking up goods by a certain percentage, and considering the competition's prices do not represent ethical dilemmas.SOURCE: PI:015SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (p. 537).

New York: Glencoe/McGraw-Hill.

75. CAnti-dumping. Predatory pricing is the practice of pricing and selling (“dumping”) goods below cost in order to reduce competition. Many countries (e.g., U.S. and Canada) encourage competition and fair trade and have laws that prohibit businesses from engaging in this type of pricing. Puffery is a promotion technique in which a product's benefits and/or attributes are exaggerated. Captive-product pricing is a strategy in which a business prices a primary product low and prices the supplies that are needed for the product very high so it can compensate for the low-priced primary product. Price skimming is a pricing strategy that involves setting prices higher than those of the competition. SOURCE: PI:017SOURCE: Answers.com. (n.d.) Dumping. Retrieved October 22, 2007, from

http://www.answers.com/topic/dumping

76. BSales-oriented pricing. Sales-oriented pricing objectives can be used to create a company image, be more competitive, and influence market share. These objectives are intended to increase a business's total amount of income from sales. Profit-oriented price objectives focus on creating profits for the business. Return on investment and return on sales are aspects of profit-oriented pricing objectives and focus on creating profits for the business.SOURCE: PI:002SOURCE: PI LAP 3—Factors Affecting Selling Price


77. BProfit. The break-even point is the level of sales at which revenues equal total costs. Therefore, any revenue beyond the break-even point is profit. Variable-cost margin is the amount of variable costs that apply to one unit. Dividends are sums of money paid to investors or stockholders as earnings on an investment. Initial markup is the difference between the cost of goods and their original selling price.SOURCE: PI:006SOURCE: PI LAP 4—Calculating Break-Even

78. CImage. Product research and development is an expensive process for a business. Before a business invests time, personnel, and money to take an idea and turn it into a product, it must determine if the product is feasible or practical to make and market successfully. One aspect that the business must consider is if the product idea is compatible with the company's image or brand. A business addresses advertising, warranties, and policies after the product idea is deemed feasible. SOURCE: PM:129SOURCE: Clark, B., Sobel, J., & Basteri, C.G. (2006). Marketing dynamics (p. 281). Tinley Park,

IL: Goodheart-Willcox.

79. BCompetitive advantage. A product opportunity is a situation in which a business acts on the chance to provide a good or service to a market segment that wants and is willing to pay for the product. Because circumstances are always changing, businesses must develop ongoing product opportunity processes to remain competitive in the marketplace. By acting on a product opportunity, the business may provide a market with a unique product, which gives the business a competitive advantage. The competitive advantage, or the edge achieved by offering something better than competitors, is a benefit to the business. Commercialization is the point that a product goes into full-scale production, the marketing plan is put into place, sales and service training are done, and the product's life cycle begins. Implementing a product opportunity recognition process does not strengthen a country's economy or mean that a business's goals are attainable.SOURCE: PM:136SOURCE: Zikmund, W., & d'Amico, M. (2001). Marketing: Creating and keeping customers in an

e-commerce world (7th ed.) [pp. 283-284]. Mason, OH: South-Western.

80. BISO 9000. Standards have become so important to manufacturers who trade internationally that manufacturers are adhering to international standards for quality known as ISO 9000. These standards guarantee that manufacturers have met certain requirements for producing and shipping their products. These standards are recognized internationally. The alternatives are grades rather than standards. SAE (Society of Automotive Engineers) has developed a system for grading automotive oil such as 10W40. USDA Prime is a grade of meat developed by the U.S. Department of Agriculture. NMFS (National Marine Fisheries Service) has a grading system for fish, such as best.SOURCE: PM:019SOURCE: PM LAP 8—Grades and Standards


81. DUnconditional and understandable. A good guarantee should be unconditional. In other words, there should be no conditions that the customer must meet in order for the guarantee to be in effect. It should be understandable. The language should be clear and the promises specific. The customer should not have to fill out a great many forms, see several different people, or travel to different locations in order to obtain satisfaction. It should be easy for the customer to implement and to collect. Whenever possible, the customer's money should be refunded on the spot.SOURCE: PM:020SOURCE: PP LAP 4—Warranties and Guarantees

82. CMultiple phone-call transfers. To compete effectively in today's market, a business must make sure that its customers are satisfied with the company's products, services, and experiences. A business that routinely transfers customers' telephone calls several times during a single transaction may negatively affect a customer's experience with a business. Customers who keep getting transferred from department to department when they want to ask a question, resolve a problem, or place an order, tend to become frustrated with the business. Therefore, a business must streamline telephone communications so that the customers are connected to the correct department quickly. Knowledgeable employees, suggestion selling, and secure ordering processes (e.g., web-site orders) do not have a negative affect on a customer's experience with a business.SOURCE: PM:138SOURCE: Rokes, B. (2000). Customer service: Business 2000 (pp. 55-62). Mason, OH: South-

Western.

83. BItems. Product items are the individual goods, services, or ideas that a business offers for sale. A product line is a group of related product items. Product mix is the particular assortment of products that a business offers in order to meet its market's needs and its company's goals. Product recalls remove defective or hazardous products from the marketplace.SOURCE: PM:003SOURCE: PP LAP 3—Product Mix

84. AForeign customs, values, and languages. Launching a brand in other countries requires knowledge, understanding, and sensitivity toward foreign cultures and taboos. Frequently, what is acceptable in one culture is not in another. Product names, promotional approaches, and sometimes even product features themselves may have to be adapted to make them acceptable—and saleable—to foreign customers. The history of brands in foreign countries may provide helpful context but is not a central issue in launching a brand internationally. Understanding brand licensing laws and co-branding practices in foreign countries may provide some helpful context, but are not central issues in launching a brand internationally, unless you one day plan to enter into a specific brand licensing or co-branding arrangement.SOURCE: PM:021SOURCE: PM LAP 6—It's a Brand, Brand, Brand World! (The Nature of Branding)

85. CBecomes too expensive, or no longer serves the intended purpose. If the service has proved profitable, management would want to continue that service as it is. When the service is being used by a great number of customers, the service should be kept, since changes might disrupt customer usage. If the service becomes an essential element in the completion of the sale of some items, the business would be unwise to alter it until that need no longer exists.SOURCE: PM:013SOURCE: PM LAP 1—Customer Service Supersized!


86. APromote new uses. When existing products start to lose popularity, businesses often try to develop new uses for those products and promote the new uses in order to position the product as current and worthwhile. Over the years, businesses have developed new ways to use many existing products and have positioned them as diverse and effective for several purposes. A good example is Arm & Hammer baking soda which the company promotes as also effective in eliminating odors in refrigerators. In the process of developing new uses to promote, a business would analyze the attributes of the product and identify possible competitors. Businesses use strategies, which are plans of action for achieving goals, to position existing products that are losing popularity in the hope of developing new markets and increasing sales. Increasing sales is a goal rather than a strategy.SOURCE: PM:043SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 360-361].


87. ARegistered trademark. A registered trademark is a brand that has been registered with the appropriate government agency for legal protection. In the U.S., trademark rights are protected by the Lanham Act of 1946. Brand licensing is legal authorization by the brand owner to allow another company to use the brand in exchange for a fee. Brand positioning refers to marketers creating a certain image or impression of a brand as compared to those of competitors' brands. Descriptive names are brand names which have fallen into everyday use so that the brand is used to describe every product in the brand's product category.SOURCE: PM:126SOURCE: PM LAP 10—Building Your Business's Brand

88. CQuality is worth the cost. When deciding on the quality of products to offer, businesses measure the costs involved. In some situations, businesses believe that paying the price for national brands that are well-known is worth the cost because of the quality of the products. The quality attracts customers who are familiar with the brands, prefer to buy national brands, and are willing to pay for them. The business will be able to sell the national brands for a price that will generate the desired profit. Businesses that sell national brands usually have a lot of competition. Businesses often allocate a lot of shelf space for national brands because they are well-known and popular. National brands are widely available.SOURCE: PM:202SOURCE: Berman, B., & Evans, J.R. (2004). Retail management: A strategic approach (9th ed.)

[pp. 353-356]. Upper Saddle River, NJ: Prentice Hall.

89. CAdvertising, display, publicity, and personal selling. The promotional mix is the combination, or blend, of marketing communication channels that a business uses to send its messages to consumers. Pricing is a marketing function that involves the determination of a price or an amount to charge a customer or client for a product or service. Customer services include such items as delivery and gift wrap.SOURCE: PR:003SOURCE: PR LAP 1—Promotional Mix


90. BSuburban newspapers. Suburban newspapers serve specific suburban areas. They are published regularly and provided to consumers for free or on a subscription basis. Utility direct mail is the functional part of a direct mailing such as a business-reply postcard. Radio spots are a form of broadcast advertising that cannot be limited to a specific area. Specialty advertising is categorized as "other media" and includes such items as pens, matchbooks, calendars, or key rings embossed with a company's name, logo, or promotional message.SOURCE: PR:007SOURCE: PR LAP 3—Ad-quipping Your Business (Types of Promotional Media)

91. CE-mail. An advantage to businesses that use electronic mail (e-mail) to promote products is that it is relatively inexpensive to produce and execute. An e-mail campaign is less expensive than many other forms of advertising, including traditional direct mail. E-mail messages can be sent quickly and simultaneously to a large audience, which lowers the business's promotional costs. An infomercial is a lengthy commercial (broadcast advertisement) that looks like a television program. Infomercials are more expensive to produce and execute than e-mail. Billboards are a form of outdoor advertising.SOURCE: PR:089SOURCE: O'Guinn, T.C., Allen, C.T., & Semenik, R.J. (2003). Advertising and integrated brand

promotion (3rd ed.) [p. 685]. Mason, OH: South-Western.

92. CTo attract customers. One of the main reasons why businesses coordinate their promotional activities is to attract as many customers as possible. Promotional activities such as advertising, special events, and visual merchandising are expensive; and businesses want to obtain the most benefit for their investment. Well-coordinated activities have a better chance of reaching the most customers. Increasing advertising, expanding operations, and developing strategies are not reasons for coordinating promotional activities.SOURCE: PR:076SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)

[pp. 302-304]. Woodland Hills, CA: Glencoe/McGraw-Hill.

93. AProduct label. The label often supplies such information as the content of the product, uses, hazard warnings, instructions for use, and the manufacturer's name. Salespersons should study the labels of the products they sell in order to learn as much about them as possible. The information that is found on the product itself usually does not explain the production method. Feedback from consumers who are users of the product is also valuable, but it is not found on the product. Sales reports are a type of internal information that is not found on or with products.SOURCE: SE:062SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)

[pp. 578-579]. Woodland Hills, CA: Glencoe/McGraw-Hill.

94. DBuild long-lasting customer relationships. Customer service refers to the activities and benefits provided by a business to its customers to create goodwill. Salespeople who service their customers by following up with them, answering questions, and showing appreciation for their business are fostering ongoing, positive relationships, which facilitates repeat sales and sales leads. Salespeople are often expected to meet sales quotas rather than operating quotas. Salespeople do not provide superior service in order to earn their competitors' respect or to develop long-term contracts with vendors.SOURCE: SE:076SOURCE: SE LAP 130—Go Beyond the Sale


95. ABuilding a clientele. A clientele is a body of customers upon which an organization can rely for considerable repeat business. The fact that Jack's customers have stayed with him for 20 years indicates that he has built a clientele. Jack may have built his clientele by offering good service, promoting his business, and selecting effective marketing strategies, but no evidence of that is given.SOURCE: SE:828SOURCE: SE LAP 115—Keep Them Loyal (Building Clientele)

96. CWord processing. Word processing software allows computer users to write documents on their computers. Salespeople use word processing software to write many types of sales documents, including sales letters and sales proposals. Presentation software allows salespeople to develop visual support for their sales presentations. Territory mapping software helps sales managers create territories or selling areas for salespeople. Database software helps businesses organize different types of information in a meaningful manner in a central location.SOURCE: SE:107SOURCE: Futrell, C.M. (2001). Sales management: Teamwork, leadership, and technology (6th

ed.) [p. 249]. Mason, OH: South-Western.

97. CA person sells bouquets of roses on the side of the road. A person's selling bouquets of roses on the side of the road is an example of a product's being sold directly to the user for ultimate consumption. The person who buys the roses is the ultimate consumer. A perfume-maker's selling perfume to a boutique is an example of a product's being sold to an organization for resale. A grocer's selling powdered sugar to a bakery for its doughnuts is an example of a product's being sold to an organization for use in producing other goods. A car dealership's selling a van to a plumber is an example of a product's being sold for use in general business operations.SOURCE: SE:017SOURCE: SE LAP 117—Sell Away (The Nature and Scope of Selling)

98. BObtain product information. Informed salespeople need to have excellent product information in order to match customer needs and wants to the appropriate products. There are many ways in which salespeople can obtain information about products, such as advertisements, marketing plans, marketing-research reports, information sheets, and product manuals. Other sources of information could include (but are not limited to) labels, displays, other salespeople, trade journals, or personal experience. Studying these materials will help a salesperson be better prepared to assist customers and help them to make wise buying decisions. Salespeople do not use these materials to determine customer buying motives, overwhelm indecisive consumers, or trick customers into buying a substandard product.SOURCE: SE:109SOURCE: SE LAP 113—Find Features, Boost Benefits (Feature-Benefit Selling)

99. BInformation. Information resources are made up of knowledge, facts, or data. All forms of information are an important resource for a business. Human resources are people who work to produce goods and services. Material resources are equipment and suppliers used by businesses in their operation. Financial resources are all the sources of money available to the business.SOURCE: SM:001SOURCE: BA LAP 6—Manage This!


100. BCan be a valuable forecasting tool. The information gathered in the process of conducting an environmental analysis can help the business in its forecasting efforts because it identifies the changes the business may be facing. The study does not take the place of continuous planning but should be a prerequisite for planning. Government subsidies are not granted on the basis of an environmental analysis but as the result of a recognized need for support. The business may decide to lower prices as a result of its analysis, but the analysis itself does not help the business to do so.SOURCE: SM:011SOURCE: MN LAP 43—External Planning Considerations

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