DSST Business 2

Question 1

Which financial statement shows a company's revenues, expenses, and net income over a specific period?

Accepted Answer

Income statement

Answer

The income statement (profit and loss statement) reports revenues and expenses to show net income or loss over a reporting period.

Question 2

What is the term for the interest rate that a borrower pays to a lender expressed as a percentage of the principal per year?

Accepted Answer

Annual percentage rate (APR)

Answer

APR is the yearly cost of borrowing expressed as a percentage of the loan principal, including fees and interest.

Question 3

In business, 'economies of scale' refers to:

Accepted Answer

Cost advantages gained as output increases

Answer

Economies of scale occur when average costs per unit decline as a company increases its production volume.

Question 4

A company's 'accounts receivable' represents:

Accepted Answer

Money owed to the company by customers

Answer

Accounts receivable is a current asset representing amounts customers owe the company for goods or services already delivered.

Question 5

Which pricing strategy involves setting a high initial price and gradually lowering it over time?

Accepted Answer

Price skimming

Answer

Price skimming starts with a high price to capture maximum revenue from early adopters, then lowers it to attract more price-sensitive buyers.

DSST - DANTES Subject Standardized Tests Practice Test