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Scenario 13-2 You Are the Owner of a Huge Paper Goods Company

question 30

Multiple Choice

Scenario 13-2
You are the owner of a huge paper goods company. You head into company headquarters one morning and no one greets you as you walk down the halls. In fact, people seem to be actively avoiding you. Immediately you sense something is wrong, because on a normal morning, there's a steady stream of people brownnosing and kowtowing to you. You get to your office and your suspicions are confirmed. A nationally circulated newspaper with an article circled in red sits on your desk.
The article announces that radical environmentalists have chained themselves to trees in a forest in northern Wisconsin. It seems they are trying to protect an endangered animal, which virtually no one has ever heard of, from a logging operation. Some of the animals have already been killed by the heavy equipment the loggers use. You scan the article and see the problem. It's a forest that your company owns, and the environmentalists are in a standoff with the managers of your logging division.
The logging operation is critical to the success of your company, and if the environmentalists win the support of the general public, including many in your workforce, your company's profits will nose-dive. It is bad enough that this morning you look like killers of defenseless little creatures. You immediately phone your public relations agency and call a meeting.
-(Scenario 13-2) The situation is not as bad as it could be, because your public relations agency had already identified environmental issues as a weak area for your company. As a result, the agency had been in contact with important constituent groups before the furor erupted. A weak area is referred to as ____ by people in the public relations industry.

Definitions:

Reversing Entries

Entries made in accounting to reverse or cancel out adjusting entries made at the end of a reporting period, often used to simplify recordkeeping.

External Transactions

Financial transactions between a business and an outside party, which can include buying from or selling to another company.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends, but rather kept by the company for reinvestment in its operations or to pay debt.

Closing Process

The accounting procedures used to close out business accounts at the end of an accounting period.