Business Degree Business Administration 5 — Questions and Answers
Question 1: Which stage of the business cycle is characterized by declining GDP, rising unemployment, and reduced consumer spending?
- Expansion
- Peak
- Recession (Correct answer)
- Trough
Correct answer: Recession
A recession is defined as a period of significant economic decline, typically marked by two consecutive quarters of negative GDP growth.
Question 2: A company practicing 'just-in-time' (JIT) inventory management aims to:
- Stockpile large amounts of inventory to prevent shortages
- Receive goods only as they are needed in the production process (Correct answer)
- Prioritize speed of delivery over production cost
- Ensure inventory is always available six months in advance
Correct answer: Receive goods only as they are needed in the production process
JIT inventory management minimizes holding costs by receiving materials only when needed for production, reducing waste and storage expenses.
Question 3: Which financial statement shows the sources and uses of cash during a specific period?
- Income statement
- Balance sheet
- Cash flow statement (Correct answer)
- Statement of stockholders' equity
Correct answer: Cash flow statement
The cash flow statement reports cash inflows and outflows from operating, investing, and financing activities over a given accounting period.
Question 4: Porter's Five Forces model is primarily used to:
- Evaluate employee performance across five dimensions
- Analyze the competitive forces shaping an industry (Correct answer)
- Develop a five-step marketing strategy
- Measure a company's financial strength
Correct answer: Analyze the competitive forces shaping an industry
Porter's Five Forces framework assesses industry competitiveness by examining rivalry, threat of new entrants, supplier power, buyer power, and threat of substitutes.
Question 5: What does 'accounts receivable' represent on a company's balance sheet?
- Money the company owes to its suppliers
- Cash the company has deposited in bank accounts
- Money owed to the company by its customers (Correct answer)
- Outstanding employee payroll obligations
Correct answer: Money owed to the company by its customers
Accounts receivable is an asset representing money customers owe the company for goods or services already delivered but not yet paid for.
Question 6: A company that pursues a differentiation strategy focuses primarily on:
- Offering the lowest prices in the market
- Creating unique products or services that justify a premium price (Correct answer)
- Targeting only niche market segments
- Reducing operational costs below competitors
Correct answer: Creating unique products or services that justify a premium price
A differentiation strategy, as defined by Michael Porter, seeks competitive advantage by offering products or services perceived as unique and superior, allowing for premium pricing.
Question 7: Which ethical theory evaluates the morality of an action based solely on its outcomes or consequences?
- Deontological ethics
- Virtue ethics
- Consequentialism (Utilitarianism) (Correct answer)
- Social contract theory
Correct answer: Consequentialism (Utilitarianism)
Consequentialism, including utilitarianism, judges actions as right or wrong based on their results, specifically whether they produce the greatest good for the greatest number.
Business Degree Business Administration 5
Which stage of the business cycle is characterized by declining GDP, rising unemployment, and reduced consumer spending?