FIN 226 Mid-Term Multiple Choice

Which one of the following applies to a general partnership?

Any one of the partners can be held solely liable for all of the partnerships debt.

Which of the following is not a basic area of finance as described by the text?

Accounting

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

Average tax rate

Deandre and Mason both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Deandre and Mason will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?

General Partnership

The primary goal of financial management is most associated with increasing the:

Market value of a firm

The financial statement that summarizes a firms accounting value as of a particular date is called the

balance sheet

A corporation

is a legal entity separate from its owners

The market value of a firms fixed assets

is equal to the estimated current cash value of those assets

Paid-in surplus is classified as

owner's equity

Raleigh BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts are referred to as:

Working Capital Management

Based on the recognition principle, revenue is recorded on the financial statements when the: I. payment is collected for the sale of a good or service. II. earnings process is virtually complete. III. value of a sale can be reliably determined. IV. product is physically delivered to the buyer.

2 and 3 only

In 2021, what was the maximum tax rate for corporations?

21%

The concept of marginal taxation is best exemplified by which of the following?

Burke's grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes

Which one of the following functions is generally a responsibility assigned to a corporate treasurer?

Capital expenditures

Which of the following is most apt to align management's priorities with shareholders interest?

Compensating managers with shares of stock that must be held for a minimum of 3 years

Which one of the following is an intangible fixed asset?

Copyright

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Limited Partnership

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):

Stakeholder

Which one of the following correctly defines a common chain of command within a corporation?

The controller reports directly to the chief financial officer

The passage of the Tax Cuts and Jobs Act of 2017 created a revised progressive tax structure, which applies to all of the following except:

corporations

An agency issue is most apt to develop when:

the control of a firm is separated from the firm's ownership