2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
1. What type of business is owned by stockholders who share the business's profits?
A. Sole proprietorship
C. Cooperative
B. Partnership
D. Corporation
1
2. The Clayton Act of 1914 was enacted to resolve legal issues related to
A. 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 avoid
A. conflict.
C. regulation.
B. competition.
D. publicity.
5. Some businesses need to select an appropriate channel of distribution because they lack the resources to
A. 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 to
A. 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 rules
B. 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. place
B. form
D. possession
12. One important function of the main business activity of marketing is the __________ of goods or services.
A. inventory
C. control
B. evaluation
D. promotion
Copyright © 2008 by Marketing Education Resource Center®, Columbus, Ohio
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
2
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. retaining
B. preventing
D. transferring
14. The amount of work that an individual can produce in a given period of time is a measure of
A. 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 of
A. 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 Act
B. Equal Credit Opportunity Act
D. Fair Credit Reporting Act
20. A business should not plan its marketing activities until it has
A. 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. Breakdown
B. 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 determine
A. supply and demand.
C. cause and effect.
B. output and profit.
D. assets and liabilities.
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
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
3
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 accurate
A. 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 of
A. 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
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
4
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 called
A. 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's
A. 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
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
50. Which of the following is an employee benefit of effective new-employee orientation:
A. Increased compensation
C. Added competition
B. Labor agreement
D. Job satisfaction
5
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 player
B. 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 future
B. The market with the most direct competitors
C. 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 determine
A. 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.
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
6
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 marketing
A. 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 by
A. 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 loss
B. 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 to
A. 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 people
B. Depends on others
D. Likes to seek out new challenges
73. Most businesses require their employees to have at least
A. 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.
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
7
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 pricing
B. 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. Dividends
B. 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 be
A. 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 into
A. 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 service
A. 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 sales
B. 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 licensing
B. Brand positioning
D. Descriptive name
2008 DECA Ontario Provincials
Test 963
ACCOUNTING APPLICATIONS
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.
8
89. A promotional mix usually contains a combination of
A. 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 spots
B. 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.
Test 963
ACCOUNTING APPLICATIONS — KEY
9
1. D
Corporation. 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:003
SOURCE: BA LAP 7—Own It Your Way
2. C
Competitive 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:005
SOURCE: Rue, L.W. & Byars, L.L. (2001). Business management: Real world applications & connections (pp. 90-93).
New York: Glencoe, McGraw-Hill.
3. A
Slotting 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:006
SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [p. 446]. Mason, OH:
Thomson/South-Western.
4. A
Conflict. 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:008
SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [pp. 357-358]. Upper Saddle River, NJ:
Prentice Hall.
5. B
Sell 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:010
SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 440-441]. Mason, OH:
Thomson/South-Western.
Test 963
ACCOUNTING APPLICATIONS — KEY
10
6. C
Letter 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:009
SOURCE: 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. D
Save 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:139
SOURCE: 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. B
Good 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:140
SOURCE: Locker, K.O. (2000). Business and administrative communication (5th ed.) [pp. 349-350]. Boston:
Irwin/McGraw-Hill.
9. D
Correct 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:010
SOURCE: HR LAP 23—Handling Customer Complaints
10. C
Government 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:017
SOURCE: EC LAP 1—Gross Domestic Product
11. B
Form. 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:004
SOURCE: EC LAP 13—Use It
Test 963
ACCOUNTING APPLICATIONS — KEY
11
12. D
Promotion. 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:071
SOURCE: EC LAP 19—Strictly Business
13. B
Preventing. 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:011
SOURCE: EC LAP 3—Lose, Win, or Draw (Business Risk)
14. A
Worker 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:013
SOURCE: EC LAP 18—Productivity
15. D
There 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:082
SOURCE: O'Sullivan, A., & Sheffrin, S.M. (2003). Economics: Principles in action (pp. 335-336). Upper Saddle River,
NJ: Prentice Hall.
16. D
Make 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:006
SOURCE: QS LAP 15—Stuff Happens
17. C
Carrying 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:037
SOURCE: EI LAP 5—Can You Relate? (Positive Working Relationships)
Test 963
ACCOUNTING APPLICATIONS — KEY
12
18. A
Informal 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:014
SOURCE: QS LAP 13—Gimme Five!
19. D
Fair 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:002
SOURCE: FI LAP 2—Credit and Its Importance
20. C
Identified 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:003
SOURCE: IM LAP 9—Have We Met? (Market Identification)
21. D
Financial. 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:084
SOURCE: BA LAP 2—Risk Management
22. A
Bottom-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:096
SOURCE: IM LAP 4—Forecasting Sales
23. D
Gross 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:098
SOURCE: 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.
Test 963
ACCOUNTING APPLICATIONS — KEY
13
24. B
Output 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:358
SOURCE: Clayton, G.E. (2005). Economics: Principles & practices (pp. 130-131). New York: Glencoe/McGraw-Hill.
25. A
To 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:107
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions (p.
122). Orlando, FL: Harcourt.
26. C
Number. 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:110
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 942-943). Orlando, FL: Harcourt.
27. C
Inventory 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:112
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 134-135). Orlando, FL: Harcourt.
28. A
Counting 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:114
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 387-388]. Cincinnati: South-Western.
Test 963
ACCOUNTING APPLICATIONS — KEY
14
29. C
To 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:116
SOURCE: Pinson, L., & Jinnett, J. (1998). Keeping the books: Basic recordkeeping and accounting for the small
business (4th ed.) [pp. 42-43]. Chicago: Upstart.
30. B
To 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:118
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[p. 458]. Cincinnati: South-Western.
31. D
To 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:121
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 538-539). Orlando, FL: Harcourt.
32. B
Valuing 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:123
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 795-796). Orlando, FL: Harcourt.
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:126
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 171-173). Orlando, FL: Harcourt.
Test 963
ACCOUNTING APPLICATIONS — KEY
15
34. B
To 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:129
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 490-492]. Cincinnati: South-Western.
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:131
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 490-492]. Cincinnati: South-Western.
36. A
Writes 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:133
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 427-428). Orlando, FL: Harcourt.
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:136
SOURCE: 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:141
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[p. 414]. Cincinnati: South-Western.
Test 963
ACCOUNTING APPLICATIONS — KEY
16
39. D
Depreciation. 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:143
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions (p.
742). Orlando, FL: Harcourt.
40. A
Income 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:147
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 170-171). Orlando, FL: Harcourt.
41. A
Cost 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:148
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 283-286). Orlando, FL: Harcourt.
42. D
Expenses. 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:152
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 475-477). Orlando, FL: Harcourt.
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:154
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 466-467). Orlando, FL: Harcourt.
Test 963
ACCOUNTING APPLICATIONS — KEY
17
44. B
Several 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:156
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 89-90). Orlando, FL: Harcourt.
45. A
Inventory 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:158
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 395-396]. Cincinnati: South-Western.
46. C
To 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:160
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions (p.
102). Orlando, FL: Harcourt.
47. B
20%. Businesses use financial ratios to evaluate the company's performance. One important ratio is the return-onsales 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:163
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 418-419]. Cincinnati: South-Western.
48. B
Evaluating 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:167
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions
(pp. 795-797). Orlando, FL: Harcourt.
Test 963
ACCOUNTING APPLICATIONS — KEY
18
49. C
Standard. 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:357
SOURCE: Mathis, R.L., & Jackson, J.H. (2002). Human resource management: Essential perspectives (2nd ed.) [pp.
92-94]. Cincinnati: Thomson/South-Western.
50. D
Job 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:360
SOURCE: Mathis, R.L., & Jackson, J.H. (2003). Human resource management (10th ed.) [pp. 286-288]. Cincinnati:
Thomson/South-Western.
51. A
Competition 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:367
SOURCE: MN LAP 55—Managing Diversity in the Workplace
52. B
Marketing. 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:001
SOURCE: IM LAP 2—Marketing-Information Management
53. C
CD 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:001
SOURCE: BA LAP 11—Have It Your Way!
54. B
The 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:002
SOURCE: MK LAP 1—Work the Big Six (Marketing Functions)
Test 963
ACCOUNTING APPLICATIONS — KEY
19
55. D
Plan 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:001
SOURCE: IM LAP 7—Pick the Mix (Marketing Strategies)
56. D
Intermarket 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:002
SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [p. 214]. Upper Saddle River, NJ:
Prentice Hall.
57. B
Introducing 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:080
SOURCE: 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. D
The 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:005
SOURCE: 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. C
Downturn 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:008
SOURCE: 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.
Test 963
ACCOUNTING APPLICATIONS — KEY
20
60. D
External 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:010
SOURCE: IM LAP 8—Analyze This!
61. D
In 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:012
SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 66-67]. Mason, OH:
Thomson/South-Western.
62. A
Sales 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:013
SOURCE: IM LAP 3—Nature of Sales Forecasts
63. C
Keeps 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:015
SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [p. 42]. Mason, OH:
Thomson/South-Western.
64. D
Sales. 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:019
SOURCE: Kotler, P. (2000). Marketing management (10th ed.) [p. 699]. Upper Saddle River, NJ: Prentice Hall.
Test 963
ACCOUNTING APPLICATIONS — KEY
21
65. A
Strategies. 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:024
SOURCE: Kotler, P. (2000). Marketing management (10th ed.) [pp. 709-711]. Upper Saddle River, NJ: Prentice Hall.
66. B
Spreadsheet. 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:017
SOURCE: Cunningham, B.M., Nikolai, L.A., & Bazley, J.D. (2000). Accounting: Information for business decisions (p.
392). Orlando, FL: Harcourt.
67. D
Buying 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:015
SOURCE: PU LAP 1—Purchasing
68. C
To 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:020
SOURCE: Kimbrell, G., & Vineyard, B.S. (2006). Succeeding in the world of work (pp. 282-286).
New York: Glencoe/McGraw-Hill.
69. D
Business 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:025
SOURCE: MN LAP 56—Employee Role in Expense Control
Test 963
ACCOUNTING APPLICATIONS — KEY
22
70. C
Inventory 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:031
SOURCE: Clark, B., Sobel, J., & Basteri, C.G. (2006). Marketing dynamics (p. 360). Tinley Park, IL: GoodheartWillcox.
71. C
Develop 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:003
SOURCE: QS LAP 19—Get What You Need
72. D
Likes 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:012
SOURCE: PD LAP 2—Creativity
73. B
Basic 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:025
SOURCE: PD LAP 15—Go For It!
74. A
The 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:015
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (p. 537).
New York: Glencoe/McGraw-Hill.
75. C
Anti-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:017
SOURCE: Answers.com. (n.d.) Dumping. Retrieved October 22, 2007, from http://www.answers.com/topic/dumping
Test 963
ACCOUNTING APPLICATIONS — KEY
23
76. B
Sales-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:002
SOURCE: PI LAP 3—Factors Affecting Selling Price
77. B
Profit. 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:006
SOURCE: PI LAP 4—Calculating Break-Even
78. C
Image. 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:129
SOURCE: Clark, B., Sobel, J., & Basteri, C.G. (2006). Marketing dynamics (p. 281). Tinley Park, IL: GoodheartWillcox.
79. B
Competitive 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:136
SOURCE: 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. B
ISO 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:019
SOURCE: PM LAP 8—Grades and Standards
81. D
Unconditional 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:020
SOURCE: PP LAP 4—Warranties and Guarantees
Test 963
ACCOUNTING APPLICATIONS — KEY
24
82. C
Multiple 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:138
SOURCE: Rokes, B. (2000). Customer service: Business 2000 (pp. 55-62). Mason, OH: South-Western.
83. B
Items. 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:003
SOURCE: PP LAP 3—Product Mix
84. A
Foreign 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:021
SOURCE: PM LAP 6—It's a Brand, Brand, Brand World! (The Nature of Branding)
85. C
Becomes 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:013
SOURCE: PM LAP 1—Customer Service Supersized!
86. A
Promote 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:043
SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 360-361]. Mason, OH:
Thomson/South-Western.
Test 963
ACCOUNTING APPLICATIONS — KEY
25
87. A
Registered 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:126
SOURCE: PM LAP 10—Building Your Business's Brand
88. C
Quality 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:202
SOURCE: Berman, B., & Evans, J.R. (2004). Retail management: A strategic approach (9th ed.)
[pp. 353-356]. Upper Saddle River, NJ: Prentice Hall.
89. C
Advertising, 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:003
SOURCE: PR LAP 1—Promotional Mix
90. B
Suburban 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:007
SOURCE: PR LAP 3—Ad-quipping Your Business (Types of Promotional Media)
91. C
E-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:089
SOURCE: 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. C
To 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:076
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)
[pp. 302-304]. Woodland Hills, CA: Glencoe/McGraw-Hill.
Test 963
ACCOUNTING APPLICATIONS — KEY
26
93. A
Product 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:062
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)
[pp. 578-579]. Woodland Hills, CA: Glencoe/McGraw-Hill.
94. D
Build 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:076
SOURCE: SE LAP 130—Go Beyond the Sale
95. A
Building 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:828
SOURCE: SE LAP 115—Keep Them Loyal (Building Clientele)
96. C
Word 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:107
SOURCE: Futrell, C.M. (2001). Sales management: Teamwork, leadership, and technology (6th ed.)
[p. 249]. Mason, OH: South-Western.
97. C
A 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:017
SOURCE: SE LAP 117—Sell Away (The Nature and Scope of Selling)
98. B
Obtain 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:109
SOURCE: SE LAP 113—Find Features, Boost Benefits (Feature-Benefit Selling)
Test 963
ACCOUNTING APPLICATIONS — KEY
27
99. B
Information. 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:001
SOURCE: BA LAP 6—Manage This!
100. B
Can 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:011
SOURCE: MN LAP 43—External Planning Considerations