Better Business Canadian 2nd Edition by Solomon – Test Bank

1) A company earns a profit when ________.

1. the company’s labour increases during the first five months of operation

Incorrect: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business).

1. the company’s revenue is greater than its expenses

Correct: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business).

1. the company successfully acquires a business loan

Incorrect: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business).

1. the company is able to keep pace with technological processes

Incorrect: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business).

Answer: b

Diff: 1

Type: MC

Page Reference: 3

Objective: 1.1 Define business and explain the importance of profit.

 

2) Which of the following will likely occur as a company generates more profit?

1. employees suffer

Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity. However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses.

1. productivity increases

Correct: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity. However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses.

1. business closure

Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity. However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses.

1. expenses are doubled

Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity. However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses.

Answer: b

Diff: 2

Type: MC

Page Reference: 4

Objective: 1.1 Define business and explain the importance of profit.

 

3) Roland’s law firm has had a successful year and made a significant profit. Which of the following actions could Roland take with his firm’s profit to increase productivity?

1. keep the profit for personal use

Incorrect: Keeping profit for personal use and paying expenses do not help the business grow and become more productive. Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis.

1. pay bills for utilities and office supplies

Incorrect: Keeping profit for personal use and paying expenses do not help the business grow and become more productive. Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis.

1. invest in a new computer system to digitize the firm’s paper records

Correct: Keeping profit for personal use and paying expenses do not help the business grow and become more productive. Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis.

1. pay income taxes

Incorrect: Keeping profit for personal use and paying expenses do not help the business grow and become more productive. Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis.

Answer: c

Diff: 3

Type: MC

Page Reference: 4

Objective: 1.1 Define business and explain the importance of profit.

 

4) The money a business earns is called _______.

1. revenue

Correct: Revenue is the total amount of money received for goods and services provided.

1. capital

Incorrect: Revenue is the total amount of money received for goods and services provided.

1. expenses

Incorrect: Revenue is the total amount of money received for goods and services provided.

1. debt

Incorrect: Revenue is the total amount of money received for goods and services provided.

Answer: a

Diff: 1

Type: MC

Page Reference: 3

Objective: 1.1 Define business and explain the importance of profit.

 

5) Successful businesses benefit society by providing one of the following:

1. goods and services that people need and want

Correct: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy.

1. employment discrimination for members of the community

Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy.

1. ever-growing business debts and liabilities

Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy.

1. lower standards of living for the entire society

Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy.

Answer: a

Diff: 2

Type: MC

Page Reference: 4

Objective: 1.2 Describe how business benefits the members of society.