AGEC 340 EXAM 1
accounting profit - correct answer-net income after all measurable costs are subtracted from
the total revenue... used as a performance measure of firm success
accounting profit = - correct answer-total revenue - actual costs
advantages of corporations - correct answer--stockholders are not personally liable
-transfer of ownership is easier
-relatively easier for them to raise large amounts of money
-death, withdrawal, or retirement of shareholders has little effect on life of corporation
advantages of partnerships - correct answer-require very little expense
bring more resources than a proprietorship
no business tax per se
advantages of sole proprietorship - correct answer-minimal legal requirements
owner has complete control
no income tax as a separate business entity
can conduct business in any of the states
benefits from doing business internationally - correct answer-expand sales
scale economies
global brand
reduce risk by diversifying across markets
lower costs of production
access lower-cost raw materials
broaden access to credit
board of directors - correct answer-supervises the affairs of the corporation
Challenges in international markets - correct answer-cultural differences
exchange rate fluctuations
accounting differences international law and property rights issues
sanitary and phytosanitary regulations
management challenges
cooperatives - correct answer-owned, operated, and controlled by members
corporation - correct answer-special legal entity endowed by law with the powers, rights,
liabilities, and duties of a person
derived demand - correct answer-demand that it based on the need for a product that
indirectly relates to consumer demand
disadvantages of corporations - correct answer--taxed on profit (double taxation)
, -lack of privacy
-costs of taxes, records, and operations can be higher
-in smaller corporations, limited liability is not always clear
disadvantages of partnerships - correct answer-unlimited liability of each general partner
usually a limited number of members
lack of continuity and stability
disadvantages of proprietorships - correct answer-personal liability
limited amount of capital funds
when taxed, the owner is personally taxed
depends so heavily on one person
dormant partner - correct answer-not active in managing the partnership and is not known by
the general public
economic profit - correct answer-agrees with accounting profit, but also considers
opportunity costs... helps look at the long term potential for an industry
economic profit = - correct answer-accounting profit - opportunity cost
economics - correct answer-studies how individuals/society combine scarce resources to
meet the needs of consumers
elasticity - correct answer-how quantity demanded responds to a change in price, income, or
price of other goods
factors of production - correct answer-land
labor
capital
management
food sector - correct answer-food processing, marketing, and distribution
GATT - correct answer-General Agreement on Tariffs and Trade
general partner - correct answer-active in management of the partnership
general partnership - correct answer-each individual partner has equal rights and liabilities,
unless stated otherwise
Human Resources management - correct answer-personnel administration and motivation
for the employees
input supply sector - correct answer-provide materials
junior partner - correct answer-typically younger and has not been in the business as long as
a senior partner
accounting profit - correct answer-net income after all measurable costs are subtracted from
the total revenue... used as a performance measure of firm success
accounting profit = - correct answer-total revenue - actual costs
advantages of corporations - correct answer--stockholders are not personally liable
-transfer of ownership is easier
-relatively easier for them to raise large amounts of money
-death, withdrawal, or retirement of shareholders has little effect on life of corporation
advantages of partnerships - correct answer-require very little expense
bring more resources than a proprietorship
no business tax per se
advantages of sole proprietorship - correct answer-minimal legal requirements
owner has complete control
no income tax as a separate business entity
can conduct business in any of the states
benefits from doing business internationally - correct answer-expand sales
scale economies
global brand
reduce risk by diversifying across markets
lower costs of production
access lower-cost raw materials
broaden access to credit
board of directors - correct answer-supervises the affairs of the corporation
Challenges in international markets - correct answer-cultural differences
exchange rate fluctuations
accounting differences international law and property rights issues
sanitary and phytosanitary regulations
management challenges
cooperatives - correct answer-owned, operated, and controlled by members
corporation - correct answer-special legal entity endowed by law with the powers, rights,
liabilities, and duties of a person
derived demand - correct answer-demand that it based on the need for a product that
indirectly relates to consumer demand
disadvantages of corporations - correct answer--taxed on profit (double taxation)
, -lack of privacy
-costs of taxes, records, and operations can be higher
-in smaller corporations, limited liability is not always clear
disadvantages of partnerships - correct answer-unlimited liability of each general partner
usually a limited number of members
lack of continuity and stability
disadvantages of proprietorships - correct answer-personal liability
limited amount of capital funds
when taxed, the owner is personally taxed
depends so heavily on one person
dormant partner - correct answer-not active in managing the partnership and is not known by
the general public
economic profit - correct answer-agrees with accounting profit, but also considers
opportunity costs... helps look at the long term potential for an industry
economic profit = - correct answer-accounting profit - opportunity cost
economics - correct answer-studies how individuals/society combine scarce resources to
meet the needs of consumers
elasticity - correct answer-how quantity demanded responds to a change in price, income, or
price of other goods
factors of production - correct answer-land
labor
capital
management
food sector - correct answer-food processing, marketing, and distribution
GATT - correct answer-General Agreement on Tariffs and Trade
general partner - correct answer-active in management of the partnership
general partnership - correct answer-each individual partner has equal rights and liabilities,
unless stated otherwise
Human Resources management - correct answer-personnel administration and motivation
for the employees
input supply sector - correct answer-provide materials
junior partner - correct answer-typically younger and has not been in the business as long as
a senior partner
