Major Field Test Business Study Set

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Balance Sheet

Attempts to describe the financial condition of the firm at a point in time. Includes: Assets, Liabilities, & Equity – "net assets" what remains after deducting liabilities from assets..

Income Statement

Presents the results of the operations of an entity over a peroid of time. Includes: Revenues, Expenses, Income, Gains & Losses

Statement of Equity or Statement of Retained Earnings (Capital)

Bridges the gap between the income statement and the balance sheet. Arrangement depends on type of organization: Proprietorship: Statement of Owners Equity Partnership: Statement of Partners Equity Corporation: Statement of Stockholders Equity In addition, it contains: Investments by Owners and Distribution to owners

Statement of Cash Flows

Provides information about a company’s cash receipts and cash payments during a specific period of time. Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income, gains, losses, Statement of ‘X’ Equity, Investments by Owners, Distributions to Owners.

Cash Basis Accounting

Revenue is recognized in the accounting period in which the associated cash is received and Expenses are recognized in the accounting period that the cash is paid.

Accrual Basis Accounting

Revenue is recognized in the accounting period in which the revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is made, not when it is paid for.)

Depreciation

A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes.

Straight-Line Deprecation

Straight Line Depreciation – (estimated value/useful life) Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not disposed of prior to the end of estimated useful life. The value is divided among estimated life of item.

Double Declining Balance Depreciation

Double Declining Balance An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and less in the later periods.)

Basic Inventory Equation for Goods

Beginning Inventory + Purchases = Goods

Basic Inventory Equation for Cost of Goods Sold (COGS)

Goods Available for Sale – Ending Inventory = Cost of Goods Sold (COGS)

Basic Inventory Equation for Ending Inventory

Beginning Inventory + Purchases = Goods Available for Sale – Cost of Goods Sold (COGS) = ending inventory

Periodic Inventory Accounting

No transactions are recorded in the inventory account until the end of the accounting period. Merchandise purchases are recorded in a purchases account. Inventory is counted and costed at the end of each accounting period. The inventory account beginning balance is adjusted to physical inventory amount and the difference is added to or subtracted from periodic Cost of Goods Sold.

Perpetual Inventory Accounting

Merchandise purchases are added to the inventory account when the merchandise is received. Cost of Goods Sold is computed and subtracted from the inventory account as sales are recorded.

FIFO (Inventory)

Inventory Oldest items inventory are sold first .(Example: Fruit)

LIFO (Inventory)

Most recent items added to inventory are sold first. (Example: Ore from Mining)

Average Cost (Inventory)

Ending inventory units are costed using an average cost of goods available divided by the units available for sale. (Example: Rope)

Specific Identification (Inventory)

Inventory items are tagged with their cost. (Example: automobiles)

Generally Accepted Accounting Principles (GAAP)

A framework of accounting standards, rules and procedures defined by the professional accounting industry, which has been adopted by nearly all publicly traded U.S. companies.

Securities Act of 1935

Established the SEC Securities and Exchange Commission with the explicit authority to establish the rules, standards, and procedures used to account for transactions and events. Also to establish the form and content of published financial reporting.

Management Accounting

Concerned with identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used my management to plan and evaluate and control within an organization to assure appropriate use of and accountability of resources.

Cost Accounting

Concerned only with the cost of a product or service.

Product Costs

Cost of the various products manufactured and sold by a company. (Examples: Inventory Costs or Cost of Prodcution

Period Cost

ll costs incurred by a company that are not considered product costs. (Examples: Administration Expenses or Selling Expenses)

Direct Costs

A cost that is easily traceable to the cost object and is a result solely of the cost object. (Example: Lye used to make bars of soap.)

Indirect Cost

A cost that supports more than one cost objects, and must be "allocated" to those various cost objects (Example: Electricity used at a plant.)

Direct Material

Cost of materials used in production. (Examples: sheet metal, tires, fabric, etc.)

Direct Labor

Cost of Labor used in production. (Example: assembly line workers)

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured. (Examples: facility costs, indirect labor, machine set up costs, quality control, etc.)

Variable Costs

Expenses that vary directly with changes in activity or changes in volume.

Fixed Cost

Expenses that do not change as a function of the activity of a business, within the relevant period. (Examples: Rent, Utilities, etc.)

Adam Smith

Father of Economics Responsible for Division of Labor 1776: Tasks are subdivided into individual jobs Employees perform only the tasks relevant to their specialized function Jobs tend to be small, but they can be performed efficiently Proposes that production can be increased by dividing labor on to similar tasks

Frederick Winslow Taylor

Scientific Management 1911: Developed standard method for performing each job Selected workers with appropriate abilities for each job. Trained workers in standard method. Provided wage incentives to workers for increased output. Did not acknowledge variance among workers. Did not appreciate social context of work and higher needs of workers.

Max Weber

Bureaucracy: Focused on the organization as a whole Organizations needed division of labor with clear definitions of authority and responsibility. Positions organized in a hierarchy of authority.

Henri Favol

Developed the 14 General Principles of Management

14 General Principles of Management

Division of Labor, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of Individual Interests to the General Interest, Remuneration, Centralization, Scalar Chain, Order, Equity, Stability of Tenure of Personnel, Initiative, and Esprit de Corps

Division of Labor or Work (Management)

When employees are specialized, output can increase because they become increasingly skilled and efficient.

Authority (Management)

Managers must have the authority to give orders, but they must also keep in mind that with authority comes responsibility.

Discipline (Management)

Discipline must be upheld in organizations, but methods for doing so can vary.

Unity of Command (Management)

Employees should have only one direct supervisor.

Unity of Direction (Management)

Teams with the same objective should be working under the direction of one manager, using one plan. This will ensure that action is properly coordinated.

Subordination of Individual Interests to the General Interest (Management)

he interests of one employee should not be allowed to become more important than those of the group. This includes managers.

Remuneration (Management)

Employee satisfaction depends on fair remuneration for everyone. This includes financial and non-financial compensation.

Centralization (Management)

Centralization – This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance.

Scalar Chain (Management)

Employees should be aware of where they stand in the organization’s hierarchy, or chain of command.

Order (Management)

The workplace facilities must be clean, tidy and safe for employees. Everything should have its place.

Equity (Management)

Managers should be fair to staff at all times, both maintaining discipline as necessary and acting with kindness where appropriate.

Stability of Tenure of Personnel (Management)

Managers should strive to minimize employee turnover. Personnel planning should be a priority.

Initiative (Management)

Employees should be given the necessary level of freedom to create and carry out plans.

Esprit de Corps (Management)

Organizations should strive to promote team spirit and unity.

Abraham Maslow

Hierarchy of Needs: Proposes that individuals have a hiearchy of needs that need to be fulfilled in order. The hierarchy includes: physiological needs, safety, belongingness, esteem, and self-actualization

Maslow’s Hierarchy of Needs:

Physiological needs, Safety, Belongingness, Esteem, and Self-actualization

Douglas McGregor

Proposed Theory X and Theory Y view of management.

Theory X of Management

Employees dislike work and must be threatened with punishment.

Theory Y of Management

Employees like work, self-direction and seek responsibility and have creativity.

Dr. William Ouchi

Proposed Theory Z view of management; a so-called "Japanese Management" style popularized during the Asian economic boom of the 1980’s.

Theory Z of Management

Focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.

Tuckman’s Stages of Team Development

The process of (1) Forming – orientation break the ice, (2) Storming – marked by conflict disagreement, (3) Norming – establishment of order and cohesion, (4) Performing – marked by cooperation and problem solving.

Expectancy Theory of Motivation

Effort will lead to increased performance and that performance will lead to some expected outcome (bonus, promotion, etc.) the greater my motivation will be.

Equity Theory of Motivation

Effort and rewards is affected by perception of others in the organization…when receiving rewards, it does not appear equitable, motivation drops. (based on perceived value of rewards)

Transactional Leadership

Leadership is a transaction or exchange process between leaders and followers. Could mean more work for more pay or more work for additional time off.

Transformational Leadership

Characterized by the ability to bring about significant change in followers and the organization.

Great Man Approach

Leadership perspective that sought to identify the inherited traits leaders possessed that distinguished them from people who were not leaders.

Leader Member Exchange

Belief that leadership is individualized for each subordinate. Each dyad involves a unique exchange independent of other dyads. Puts employees into either in-group or out-group categories.

In-Group

A group in which a manager, often subconsciously, classifies team members as proven to be loyal, trustworthy, and skilled. Managers give this group most of their attention, providing challenging and interesting work, and offering opportunities for additional training and advancement. This group also gets more one-to-one time with the manager. Often, people in this group have a similar personality and work-ethic to their manager. (Theory Y)

Out-Group

A group in which a manager, often subconsciously, classifies team members as either untrustworthy, unmotivated, or incompetent. This group’s work is often restricted and unchallenging. Group members tend to have less access to the manager, and often don’t receive opportunities for growth or advancement. (Theory X)

Fiedler’s Contingency Model

Model designed to diagnose weather a leader is task-oriented or relationship-oriented and match leader style to the situation

Path-Goal Theory

Contingency approach to leadership on which the leaders responsibility is to increase subordinates motivation by clarifying the behaviors necessary for task accomplishment and rewards.

Vision

A picture of a ambitious, desirable future for the organization or team

Locus of Control

Defines whether a person places the primary responsibility for what happens to him or her within himself/herself or on outside forces.

Authoritarianism

The belief that power and status differences should exist in an organization.

Interdependence

The extent to which team members depend on each other for information, resources, or ideas to accomplish their tasks.

Corporate Culture

The set of key values, assumptions, understandings, and norms that is shared by members of an organization and taught to new members as correct.

Mission

An organizations reason for existing.

Mission Statement

Broadly states the basic scope and operations that distinguishes it from similar types of organizations.

Goal

A desired future that the organization attempts to realize.

Plan

A blueprint specifying the resource allocations, schedules, and other actions, necessary for attaining goals.

Planning

Determining the organizations goals and the means for achieving them the most fundamental management function; the most controversial management function.

Strategic Management

Set of decisions and actions used to implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

Emotional Intelligence

Ability to perceive and express emotion, assimilate emotion in thought, understand and reason with emotion, and regulate emotion in oneself and others.

Virtual Team

A team made up of geographically or organizationally dispersed members who share a common purpose and are linked primarily through advanced information technologies.

Individualism

Extent that people value independence and person uniqueness. Individualists tend to value personal freedom, self-sufficiency, control over themselves, being appreciated for unique qualities.

Collectivism

Extent that people value duty to groups to which they belong, and value group harmony. Collectivists tend to identify themselves by group membership and value harmonious relationships with their members.

Power Distance

Extent that people accept unequal distribution of power in a society.

Attribution Theory

Making inferences about the causes of an individuals behavior. Examples: Internal-failure due to self motivation External- failure due mailly to factors beyond control: luck, resources

Fundamental Attribution Error

Attributing own actions to external factors and others actions to internal factors.

Self Serving Bias

Attributing our successes to internal factors and our failures to external factors.

Ethics

Principals and standards that guide behavior within the business community. Ethical or unethical behavior is often determined by the organizations stakeholders.

Primary Stakeholders

Those whose continued association is absolutely necessary for a firms survival. Employees, customers, investors, government, etc.

Secondary Stakeholders

Do not typically engage in transactions with a company and thus are not essential for its survival. Media, trade associations, special interest groups, community

Conflict of interest

Exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group.

Corporate Governance

A general term relating to a formal system of accountability, oversight, and control to limit unethical behavior in corporations.

Federal Sentencing Guidelines for Organizations

Passed by congress in 1991 focused on guidelines for organizations; Exempts organizations from extreme penalties based the unethical actions of individual employees.

Fraud

Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression.

Moral Philosophy

Refers in particular to the principles or rules that people use to decide what is right or wrong.

Sarbanes Oxley Act

Public Company Accounting Reform and Investor Protection Act Adopted by congress in 2002 to address the loss of corporate regulations necessary to protect the public. Also to addresses the loss in confidence in financial reporting and corporate ethics.

Dodd-Frank Act

Wall Street Reform and Consumer Protection Act Adopted by congress in 2010 to address financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

Social Responsibility

Refers to an organizations obligation to maximize its positive impact on stakeholders and to minimize its negative impact.

Whistle-Blowing

Exposing an employer’s wrongdoing to individuals outside the organization/company. Thee outsiders may be the media or government regulators.

Teleology

A general or moral philosophy which states that acts are morally right or acceptable if they produce some desired result, such as realization of self interest or unity. (egoism (good for oneself) or utilitarianism (good for the group))

Deontology

Focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on its consequences.

Relativist

Takes cultural norms into consideration and therefore there can be no absolute right or wrong.

Virtue Ethics

Assumes that what is moral in a given situation is not only what conventional morality requires, but also what the mature person with a good moral character would deem appropriate. Immanuel Kant argued that there are some things that ought to be done, and others that ought not to be done merely by virtue of being rational.

Business Finance: The goal of the firm?

In finance, the commonly accepted goal of profit maximization is replaced with the more complete goal of the maximization of shareholder wealth.

Current Ratio

Measures whether or not a firm has enough resources to pay its debts over the next 12 months. (Liquidity Ratio) _____ = Current Assets/Current Liabilies

Quick Ratio (Acid Test Ratio)

Gauges a company’s liquidity. (Liquidity Ratio) _____ = (Cash + Marketable Securities + Accounts receivable) / Current Liabilities

Cash Ratio

Measures the ability of a company to pay its current liabilities using cash and marketable securities. Marketable securities are short-term debt instruments that are as good as cash. (Liquidity Ratio) _____ = ( Cash + Marketable Securities ) / Current Liabilities

Net Working Capital

Determines if a company can meet its current obligations with its current assets; and how much excess or deficiency there is. (Liquidity Ratio) _____ = Current Assets – Current Liabilities

Gross Profit Rate

Evaluates how much gross profit is generated from sales. Gross profit is equal to net sales (sales minus sales returns, discounts, and allowances) minus cost of sales. (Profitability Ratio) _____ = Gross Profit / Net Sales

Return on Sales

Also known as "net profit margin" or "net profit rate", it measures the percentage of income derived from dollar sales. Generally, the higher the ROS the better. (Profitability Ratio) _____ = Net Income / Net Sales

Return on Assets

Measures return on investment and is used in evaluating management’s efficiency in using assets to generate income. (Profitability Ratio) _____ = Net Income / Average Total Assets

Return on Stockholders’ Equity

Measures the percentage of income derived for every dollar of owners’ equity. (Profitability Ratio) _____ = Net Income / Average Stockholders’ Equity

Receivable Turnover

Measures the efficiency of extending credit and collecting the same. It indicates the average number of times in a year a company collects its open accounts. A high ratio implies efficient credit and collection process. (Operating/Efficiency Ratio) _____ = Net Credit Sales / Average Accounts Receivable

Days Sales Outstanding (Receivable Turnover in Days)

Measures the average number of days it takes a company to collect a receivable. The SHORTER the number of days, the better. Take note that some use 365 days instead of 360. (Operating/Efficiency Ratio) _____ = 360 Days / Receivable Turnover

Inventory Turnover

Represents the number of times inventory is sold and replaced. Take note that some authors use Sales in lieu of Cost of Sales in the above formula. A high ratio indicates that the company is efficient in managing its inventories. (Operating/Efficiency Ratio) _____ = = Cost of Sales / Average Inventory

Days Inventory Outstanding (Inventory Turnover in Days)

Represents the number of days inventory sits in the warehouse. In other words, it measures the number of days from purchase of inventory to the sale of the same. The SHORTER the number of days, the better. Take note that some use 365 days instead of 360. (Operating/Efficiency Ratio) _____ = 360 Days / Inventory Turnover

Accounts Payable Turnover

Represents the number of times a company pays its accounts payable during a period. A low ratio is favored because it is better to delay payments as much as possible so that the money can be used for more productive purposes. (Operating/Efficiency Ratio) _____ = Net Credit Purchases / Ave. Accounts Payable

Days Payable Outstanding (Accounts Payable Turnover in Days or Payment Period)

Measures the average number of days spent before paying obligations to suppliers. The LONGER the number of days, the better. Take note that some use 365 days instead of 360. (Operating/Efficiency Ratio) _____ = 360 Days / Accounts Payable Turnover

Operating Cycle

Measures the number of days a company makes 1 complete cycle; i.e. purchase merchandise, sell them, and collect the amount due. A shorter cycle means that the company generates sales and collects cash faster. (Operating/Efficiency Ratio) _____ = Days Inventory Outstanding + Days Sales Outstanding

Cash Conversion Cycle

Measures how fast a company converts cash into more cash. It represents the number of days a company pays for purchases, sells them, and collects the amount due. The SHORTER the number of cycle, the better. (Operating/Efficiency Ratio) _____ = Net Sales / Average Total Assets

Total Asset Turnover

Measures overall efficiency of a company in generating sales using its assets. The formula is similar to ROA, except that net sales is used instead of net income. (Operating/Efficiency Ratio) _____ = Net Sales / Average Total Assets

Debt Ratio

Measures the portion of company assets that is financed by debt (obligations to third parties). Debt ratio can also be computed using the formula: 1 minus Equity Ratio. (Leverage Ratio) _____ = Total Liabilities / Total Assets

Equity Ratio

Determines the portion of total assets provided by equity (i.e. owners’ contributions and the company’s accumulated profits). Equity ratio can also be computed using the formula: 1 minus Debt Ratio. (Leverage Ratio) _____ = Total Equity / Total Assets

Equity Multiplier

The reciprocal of equity ratio. (Leverage Ratio) _____ = Total Assets / Total Equity.

Debt-Equity Ratio

Evaluates the capital structure of a company. A ratio of more than 1 implies that the company is a leveraged firm; less than 1 implies that it is a conservative one. (Leverage Ratio) _____ = Total Liabilities / Total Equity

Times Interest Earned

Measures the number of times interest expense is converted to income, and if the company can pay its interest expense using the profits generated. EBIT is earnings before interest and taxes. (Leverage Ratio) _____ = EBIT / Interest Expense

Earnings per Share

Shows the rate of earnings per share of common stock. Preferred dividends is deducted from net income to get the earnings available to common stockholders.(Valuation and Growth Ratio) _____ = ( Net Income – Preferred Dividends ) / Average Common Shares Outstanding

Price-Earnings Ratio

Used to evaluate if a stock is over- or under-priced. A relatively low ratio could indicate that the company is under-priced. Conversely, investors expect high growth rate from companies with high ratio.(Valuation and Growth Ratio) _____ = Market Price per Share / Earnings per Share

Dividend Pay-out Ratio

Determines the portion of net income that is distributed to owners. Not all income is distributed since a significant portion is retained for the next year’s operations. (Valuation and Growth Ratio) _____ = Dividend per Share / Earnings per Share

Dividend Yield Ratio

Measures the percentage of return through dividends when compared to the price paid for the stock. A high yield is attractive to investors who are after dividends rather than long-term capital appreciation. (Valuation and Growth Ratio) _____ = Dividend per Share / Market Price per Share

Book Value per Share

Indicates the value of stock based on historical cost. The value of common shareholders’ equity in the books of the company is divided by the average common shares outstanding. (Valuation and Growth Ratio) _____ = Common SHE / Average Common Shares

Time Value of Money

A dollar received today is worth more than a dollar received in the future.

Annuity

A series of equal dollar payments that continue for a specific number of years.

Ordinary Annuity

A series of equal dollar payments that occur at end of each period.

Annuity Due

A series of equal dollar payments that occur at the beginning of each period.

Perpetuity

An annuity that continues forever.

Law

A rule of conduct or action prescribed or formally recognized as binding or enforced by a court of law or other agency.

Stare Decisis

The doctrine under which courts adhere to precedent on questions of law in order to insure certainty, consistency, and stability in the administration of justice with departure from precedent permitted for compelling reasons (adhere to a precedent).

English Common Law

The system from which the US Court system developed.

Constitution

The supreme law of the United States

Branches of the Federal Government

Includes an Executive, Legislative, and Judicial divisions.

Treaties

Compacts or agreements made between our nation and other nations of the world.

Statutes

Written laws enacted by the legislative branch of either the federal or state governments.

Ordinances

These are laws of local government bodies

Executive Orders

Orders issued by the president in order to enforce the law.

Judicial Decisions

Decisions about an individual lawsuit by federal or state courts.

Administrative Law

Consists of the rules,orders, and decisions of administrative agencies. These agencies are often given rule making, investigation, and enforcement powers.

Criminal Law and Civil Law

What are the two types of law?

Criminal Law

A system of law concerned with the punishment of those who commit crimes; implies that perpetrators of crimes are subject to imprisonment.

Civil Law

The the system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs. Typically involves either money damages or changes in a person’s status or behavior.

Two divisions of criminal law

Includes: Felonies (punishment over a year) and Misdemeanors (punishment under a year)

Tort

A civil wrong committed against a individual. (negligence, malpractice, etc.)

Contract

An agreement between two or more persons to do, or to refrain from doing something in exchange for something of value.

Key Elements of a Binding Contract

Competent Parties (not drugged, mentally impared, etc.), excludes Minors (must be 18), Consideration (each side must contribute something of value), and Mutual Assent (each side must be clear – write it down).

Uniform Commercial Code (UCC)

One uniform act that has been promulgated in attempts to harmonize the law of sales and other commercial transactions in all 50 states. It covers things such as sale of goods, credit, and bank transactions. All states have adopted the entire UCC except Louisiana that only adopted parts of it.

Forward Integration

A vertical integration strategy that involves entry into value chain system activities closer to the end user (distribution chain focused).

Backward Integration

A vertical integration strategy that involves entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system (supply chain focused).

Horizontal Integration

A strategy in which a company acquires or merges in order to gain with additional business activities at the same level of the value chain (same level of production across multiple industries).

Vertical Integration

A strategy in which a company performs value chain activities along more than one stage of an industry’s value chain system (different stages of production and/or distribution in the same industry).

Market Penetration

A strategy adopted by companies for new and existing products to attract larger number of buyers and a larger market share.

Market Development

A strategy in which company focuses on expanding the potential market through new users or new uses.

Product Development

The process of designing, creating and marketing new products or services to benefit customers.

Concentric Diversification

A type of diversification strategy in which a company acquires or develops new products or services, closely related to its core business or technology in order to enter one or more new markets.

Conglomerate Diversification

A type of diversification strategy in which a company acquires or merges in order one or more new markets that are completely separate from the company’s core business or technology.

Horizontal Diversification

Type of diversification under which a firm develops or acquires new products that are different from its core business or technology, but which may appeal to its current customers.

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Retrenchment

A strategy used to cut expenses with the goal of becoming a more financial stable business by reducing the diversity or the overall size of the operations of the company.

Divestiture

The partial or full disposal of a business unit through sale, exchange, closure or bankruptcy; typically resulting from a management decision to no longer operate a business unit because it is not part of a core competency.

Liquidation

When a company’s operations are brought to an end, and its assets are divvied up among creditors and shareholders, according to the priority of their claims because said company can no longer pay its obligations.

Bankruptcy

Legal procedure for liquidating a business which cannot fully pay its debts out of its current assets.

(1) people face trade-offs; (2) the cost of something is what you give up to get it; (3) rational people think at the margin; and (4) people respond to incentives.

The Principles of Economic Decision Making assume that:

(1) trade can make everyone better off; (2) markets are usually a good way to organize economic activity; and (3) governments can sometimes improve market outcomes.

The Principles Concerning People’s Economic Interactions assume that:

(1) Convenience products, (2) Shopping products, (3) Specialty products, (4) Unsought products

The types of Consumer Products include _____.

Convenience products

Relatively inexpensive products that merit little shopping effort. Examples are soft drinks, aspirin, deodorant and snack food.

Shopping products

Products that require comparative shopping behavior because it is usually more expensive than a convenience product and is found in fewer stores. Examples are major appliances, furniture and clothing.

Specialty products

Particular products for which consumers search extensively and are reluctant to accept product substitutes. Examples are particular brands of perfumes, Steinway pianos and Rolls-Royce cars.

Unsought products

Products unknown to the potential buyer or a known product that the buyer does not actively seek. Examples are a product that is brand-new to the market and products like encyclopedias, burial plots and insurance policies that young consumers do not actively seek and buy.

Safety

McNeil Consumer Healthcare ran ads for its Tylenol brand pain reliever that claimed it was "least likely to interact with your prescription medicines." In terms of Maslow’s hierarchy of needs, the ad is most likely trying to show how it satisfies ________ needs.

Marketing

The management process through which goods and services move from concept to the customer.

(1) Product, (2) Place, (3) Price, and (4) Promotion

The 4 P’s of Marketing include:

temporal discrepancies.

By having Valentine’s Day candy on the store shelves four weeks before February 14th and not in July when customers are not buying it, a distributor overcomes:

Pulsing

Beatrice Foods, the maker of Reddi-Wip topping, spends almost 40 percent of its entire advertising budget during November and December. Its advertising budget is spent evenly over the next 10 months. Beatrice is using what kind of a media schedule?

elastic

When baking cookies, Monique can use real butter, margarine, vegetable oil, or shortening and create basically the same cookie. From this information, you know that demand for vegetable oil for baking is most likely _____.

Sustainability

_____ refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs.

a series of corporate scandals involving Enron, WorldCom, Global Crossing, Tyco and numerous others.

The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:

board of directors

A company’s _____ is (are) potentially the most effective instrument of good corporate governance.

Public Company Accounting Oversight Board (PCAOB)

In the US, the _____ has been given the power to adopt auditing, quality control, ethics, and disclosure standards for public companies and their auditors as well as investigate and discipline those involved.

accounting; financial management

The controller’s _____ responsibilities are primarily in nature, while the treasurer’s responsibilities are primarily related to _____ .

investment, financing, and asset management

The decision function of financial management can be broken down into the _____ decisions.

the creation of value for shareholders.

The focal point of financial management in a firm is:

individuals buying and selling the stock.

The market price of a share of common stock is determined by:

shareholder; manager

A(n) _____ would be an example of a principal, while a(n) _____ would be an example of an agent.

maximize the value of the firm’s common stock.

The long-run objective of financial management is to:

the market price per share of the firm’s common stock.

"Shareholder wealth" in a firm is represented by:

secondary data usually cost less.

In marketing research, a firm might consider using secondary data over primary data because

enforcement of internal policies

In organizational decision making, managers are able to exercise the greatest degree of discretion in the

proof of breach of a statutory or
common-law duty.

A tort of negligence of requires:

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