College-Level Examination Program (CLEP) Business Flashcards

24 sample cards from the Business deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is the difference between current and long-term liabilities?

   Current liabilities are due within one year (accounts payable, wages payable); long-term liabilities are due in more than one year (bonds, mortgages).

2. What is depreciation, and why is it recorded?

   Depreciation is the systematic allocation of a fixed asset's cost over its useful life, matching the asset's expense to the periods it helps generate revenue.

3. How is the current ratio calculated and what does it measure?

   Current ratio = Current Assets / Current Liabilities; it measures short-term liquidity (ability to pay current debts).

4. How is return on equity (ROE) calculated?

   ROE = Net Income / Owners' (Stockholders') Equity; it measures profitability relative to shareholders' investment.

5. What are the four required elements of a valid contract?

   Offer, acceptance, consideration, and capacity (with a legal/lawful purpose).

6. What is consideration in contract law?

   Something of value exchanged between the parties (a bargained-for benefit or detriment) that makes a promise legally binding.

7. What is the difference between a void and a voidable contract?

   A void contract has no legal effect from the start; a voidable contract is valid but can be canceled (rescinded) by one party (e.g., a minor).

8. What does the Statute of Frauds require?

   That certain contracts (e.g., sale of land, contracts that can't be performed within one year, sales of goods $500+) be in writing to be enforceable.

9. What is the difference between a tort and a crime?

   A tort is a civil wrong against an individual remedied by damages (private lawsuit); a crime is a wrong against society prosecuted by the government with punishment (fines/imprisonment).

10. What are the four elements required to prove negligence?

    Duty of care, breach of that duty, causation, and actual damages/injury.

11. What is the difference between an intentional tort and negligence?

    An intentional tort involves deliberate harmful acts (assault, fraud, defamation); negligence involves unintentional harm caused by failure to exercise reasonable care.

12. Compare the liability of owners in a sole proprietorship, a general partnership, and a corporation.

    Sole proprietors and general partners have unlimited personal liability; corporate shareholders have limited liability (limited to their investment).

13. What is the principal advantage and the main disadvantage of a corporation?

    Advantage: limited liability and ease of raising capital; main disadvantage: double taxation (corporate profits and shareholder dividends are both taxed).

14. In an agency relationship, what is the relationship between a principal and an agent?

    An agent is authorized to act on behalf of and bind the principal in dealings with third parties; the principal is liable for the agent's authorized acts.

15. What are the four basic components of an information system (besides data)?

    Hardware, software, people (users), and procedures (with networks/data as additional components).

16. What is the difference between data and information?

    Data are raw, unprocessed facts; information is data that has been processed/organized to be meaningful and useful for decision-making.

17. What are the main phases of the Systems Development Life Cycle (SDLC)?

    Planning, analysis, design, development/implementation, and maintenance (testing included).

18. In a relational database, what is the difference between a primary key and a foreign key?

    A primary key uniquely identifies each record in a table; a foreign key is a field that links to the primary key of another table to establish relationships.

19. What does SQL stand for and what is it used for?

    Structured Query Language; it is used to manage, query, and manipulate data in relational databases.

20. What is the difference between a LAN and a WAN?

    A LAN (Local Area Network) connects devices in a small area like one building; a WAN (Wide Area Network) connects devices over large geographic areas (e.g., the internet).

21. What is the role of TCP/IP on the internet?

    TCP/IP is the suite of communication protocols that governs how data is packaged, addressed, transmitted, and received across the internet.

22. What is the difference between the internet, an intranet, and an extranet?

    The internet is the global public network; an intranet is a private internal network for an organization; an extranet extends limited intranet access to authorized outside parties (suppliers, customers).

23. What is the core principle of the CIA triad in information security?

    Confidentiality (restrict access to authorized users), Integrity (keep data accurate/unaltered), and Availability (ensure systems/data are accessible when needed).

24. What is phishing as an information-security threat?

    A social-engineering attack using fraudulent emails/messages that impersonate trusted sources to trick users into revealing sensitive information (passwords, account numbers).

What this deck covers

Business flashcards FAQ