21.Last summer, Regina operated a house cleaning service to earn money for college. To start the business, she invested $700 of her savings which she used to rent equipment and buy supplies. At the end of the summer, all the supplies had been consumed and the equipment had been returned. Regina's income statement for the summer reported a profit of $5,000. If Regina withdraws $5,700 from the business, we can determine that Regina's "return on investment" and "return of investment" were
Return on Investment Return of Investment
a.$700 $5,000
b.$4,300 $700
c.$5,000 $700
d.$5,000 cannot be determined
22.A business that is successful in providing goods and services demanded by customers is
a.profitable
b.risky
c.efficient
d.effective
23.A business that provides goods and services at low costs relative to their selling prices is
a.risky
b.efficient
c.effective
d.ineffective
24.You have been left a substantial inheritance of many millions. Advisors have recommended that you only invest in companies earning at least a 13% rate of return on sales. Two potential investments have come to your attention and information for each company is shown below:
Average Sales Average Expenses
Ace Company $375,000 $305,000
Good Foods $50,000 $45,000
According to the investment criterion stated above, which of these two companies should you invest in?
Ace Company Good Foods
a.Yes Yes
b.Yes No
c.No Yes
d.No No
25.Singer Company and Triton Company both sell used books. Singer Company buys books at an average cost of $10 per book and sells them for $15 each. Triton Company buys books for $10 each and sells them for $17 each. This year, Singer Company sold 3,500 books and Singer Company sold 1,000 books. Indicate which company was more effective and which company was more efficient.
More Effective More Efficient
a.Triton Triton
b.Triton Singer
c.Singer Triton
d.Singer Singer
26.Determine the profit earned by a business owner that engaged in the following transactions during May:
1.sold $8,000 of merchandise that had cost the company $5,500
2.paid $600 rent for May
3.used $300 of supplies during May
a.$1,600
b.$1,900
c.$2,500
d.$7,100
27.A corporation can:
a.be a sole proprietorship
b.not enter into contracts
c.hold stockholders liable for its debts
d.buy, own, or sell property
28.Which of the following types of business organizations has a legal identity separate from its owners?
a.partnerships
b.associations
c.proprietorships
d.corporations
29.Mutual agency is a concept that applies to
The Partners The Shareholders
in a Partnership of a Corporation
a.Yes Yes
b.Yes No
c.No Yes
d.No No
30.The advantages of the corporate form of business organization include
a.ready transferability of shares
b.limited liability
c.continuity of existence
d.all of the above