EOPA Study Guide Part 2

What type of corporation may be owned by just a few people and does not offer its shares for sale to the general public?

• Private

• General

• Public

• Limited

Answer explanation

Private. A private corporation may be owned by just a few people and does not offer its shares for sale to  the general public. It usually is not required to make its financial activities public. For tax reasons, it must  prepare reports for the states in which it operates. A public corporation usually sells millions of shares of  stock to many stockholders. Limited and general are types of partnerships. 

Providing marketing information is an important channel activity. Businesses rely on marketing information to determine

• how intermediaries are performing.

• their target markets' needs and wants.

• how much to charge for their products.

• what to name their products.

Answer explanation

Their target markets' needs and wants. Businesses rely on marketing information to determine their  target markets' needs and wants. Intermediaries are often able to provide producers with valuable  marketing information since they deal with final consumers more closely. Marketing information may or  may not help businesses determine how intermediaries are performing, how much to charge for their  products, or what to name their products.

What can a business do to determine if there are problems with its customer-service levels in relation to its product-distribution strategies?

• Conduct a break-even analysis

• Evaluate its channel members' performance

• Analyze the product's quality standards

• Examine the organizational chart

Answer explanation

Evaluate its channel members' performance. An important aspect of channel management is evaluating  the performance of channel members. If channel members are not performing efficiently, then customers  are not obtaining products when and where they need them, which affect customer-service levels, and  ultimately customer-satisfaction levels. Therefore, a business must continuously monitor and evaluate its  channel members' performance to ensure that customers' needs are met. If the business determines that  there are problems with certain channel members, it can take steps to help the channel members  improve their performance, end the relationship with the channel members, or change its distribution  strategies. Conducting a break-even analysis, analyzing product quality standards, and examining the  business's organizational chart will not help the business determine if there are problems with its  customer-service levels in relation to its product-distribution strategies.

A farmer with a produce stand in the yard is an example of a __________ distribution channel.

• producer to retailer to consumer

• producer to agent to consumer

• producer to consumer 

• producer to wholesaler to consumer

Answer explanation

Producer to consumer. When goods are sold directly from the producer to the consumer, this is a direct  channel of distribution. All of the other alternatives involve one or more intermediaries between the  producer and the consumer. These are examples of indirect channels of distribution.

An advantage of using satellite tracking technology in distribution is that it enables businesses to

• analyze the contents of packages.

• know where shipments are at all times.

• determine the delivery drivers' qualifications.

• obtain information about competitors.

Answer explanation

Know where shipments are at all times. Satellite tracking technology is based on the use of orbiting  satellites, and enables businesses to monitor the location of delivery trucks. Once a shipment is placed  on a truck, the shipment can be tracked by satellite so businesses know where the shipment is at all  times. This technology makes it possible for businesses to tell customers exactly where the shipment is  and when it will be delivered. Satellite tracking technology does not enable businesses to analyze the  contents of packages, determine the delivery drivers' qualifications, or obtain information about  competitors. 

What is another way to describe financial information that is true, complete, and faithfully represented?

• Timely

• Understandable

• Comparable

• Reliable

Answer explanation

Reliable. Useful financial information is typically transparent, timely, understandable, comparable, and  reliable. If data users are confident that their financial information is true, complete, and faithfully  represented, then the financial information is reliable. If the financial information is comprehensible and  presented in the simplest manner possible, then it is understandable. If one set of financial information  can be brought together with another set of financial information to determine similarities and differences  between the two sets, then the information is comparable. If the information is up to date, it is also timely.

Which of the following categories of information are found on a balance sheet:

• Assets, liabilities, owner's equity

• Income, expenditures, profit

• Assets, liabilities, margin

• Revenues, expenses, profit

Answer explanation

Assets, liabilities, owner's equity. A balance sheet is a financial statement that captures the financial  condition of the business at that particular moment. The statement first lists assets, anything of value that  a business owns; then liabilities, or debts that the business owes; and finally owner's equity, or the  amount the owner has invested in the business, plus or minus profits and losses. Revenues, or income;  expenses, or expenditures; and profit are components of an income statement, or profit-and-loss  statement. Margin is a term that describes the difference between net sales and cost of goods sold.

Using the cash accounting method, determine the amount of sales that a business would record for one day if it makes $2,300 in cash sales, has COD sales of $450, and places a $300 special order.

• $2,300

• $2,600

• $2,750

• $3,050

Answer explanation

$2,300. The cash accounting method involves recording income at the time the money changes hands.  In other words, the business enters the amount of a transaction into its records on the day the money is  received from the customer. If the customer doesn't pay for the item until a later time, the sale is not  recorded until that date. A business using the cash accounting method would record only the $2,300 that  it makes in cash sales that day. It would record the $450 in COD sales when the items are delivered and  the amount due is collected from the customers. The business would record the $300 special order after  the order arrives and the customer pays for and picks up the order. 

The administration of assets refers to decisions about

• spending

• accounting

• investments

• financing

Answer explanation

Investments. The administration of assets refers to decisions about investments. Each company has  assets—things it owns that are of value. Financial managers are responsible for determining what types  of assets the company should own, as well as the proper mix of those assets. Financial managers do not  necessarily make decisions about accounting. They do make decisions about company spending, but  this is not necessarily involved in the administration of assets. Financing decisions are referred to as the  acquisition of funds. 

Labor-union negotiations are part of which HR management activity?

• Staffing

• Compensation and benefits

• Training and development

• Employee relations

Answer explanation

Employee relations. Labor-union relations and negotiations are part of the HR management activity of  employee relations. Staffing involves making sure human resources needs are filled. Training and  development involves making sure employees are productive and knowledgeable. Compensation and  benefits involves making sure employees get paid.