FIN 315 CHAPTER 1

WHICH OF THE FOLLOWING ARE CONSIDERED STAKEHOLDERS IN A COMPANY

1) SUPPLIERS 2)GOVERNMENT 3)EMPLOYEES

THE LIFE OF A CORPORATION

IS UNLIMITED

A SOLE PROPRIETORSHIP IS A BUSINESS THAT

OWNED BY ONE PERSON

THE OWNERS OF A CORPORATION ARE CALLED

SHAREHOLDERS

A SOLE PROPRIETOR HAS____PERSONAL LIABILITY FOR ALL BUSINESS DEBTS AND OBLIGATIONS

UNLIMITED

WHICH OF THE FOLLOWING IS INCLUDED IN WORKING CAPITAL

1)ACCOUNTS RECIVABLE 2)CURRENT (SHORT-TERM) ASSETS 3)ACCOUNTS PAYABLE

INVENTORY IS

1)PART OF WORKING CAPITAL 2)CURRENT ASSETS

THE SARBANES-OXLEY ACT REQUIRES CORPORATE OFFICERS TO DO WHICH OF THE FOLLOWING

1) CONFIRM THE VALIDITY OF THE ANNUAL FINANCIAL REPORT 2)ACCEPT RESPONSIBILITY FOR MATERIAL ERRORS IN THE ANNUAL REPORT 3)LIST ANY DEFICIENCIES IN INTERNAL CONTROLS

AN ORGANIZATION MUST PREPARE____ AND BYLAWS WHEN FORMING A CORPORATION

ARTICLES OF INCORPORATION

THE RULES USED BY A CORPORATION TO REGULATE ITS EXISTENCE ARE KNOWN AS

BYLAWS

IN A LARGE FIRMS FINANCIAL ACTIVITY IS USUALLY ASSOCIATED WITH WHICH TOP OFFICER

CHIEF FINANCIAL OFFICER

THE FEDERAL GOVERNMENT TAXES WHICH OF THE FOLLOWING

CORPORATE EARNINGS AND SHAREHOLDERS DIVIDENDS

SOME OF THE CASH FLOW GENERATED BY A FIRM GOES BACK TO THE FINANCIAL MARKETS IN THE FORM OF

DIVIDENDS AND DEBT PAYMENTS

TRUE OR FALSE: IT IS SOMETIMES ARGUED THAT LEFT TO THEMSELVES MANAGERS TEND TO MINIMIZE THE AMOUNT OF RESOURCES OVER WHICH THEY HAVE CONTROL

FALSE

TRUE OR FALSE: THE SARBANES-OXLEY ACT PROVIDES INCENTIVES FOR COMPANIES TO GO PUBLIC IN US MARKETS

FALSE

A CORPORATION IS A DISTINCT____ ENTITY AND AS SUCH CAN HAVE A NAME AND TAKE ADVANTAGE OF THE LEGAL POWERS OF NATURAL PERSONS

LEGAL

BUSINESSES ARE MOTIVATED TO ORGANIZE AS CORPORATIONS BECAUSE STOCKHOLDERS IN A CORPORATION HAVE ___ LIABILITY FOR CORPORATE DEBTS

LIMITED

IN A LIMITED PARTNERSHIP A LIMITED PARTNERS LIABILITY FOR BUSINESS DEBTS IS ___

LIMITED TO THEIR CASH CONTRIBUTION TO THE PARTNERSHIP

CAPITAL BUDGETING IS CONCERNED WITH PLANNING AND MANAGING A FIRMS

LONG TERM INVESTMENTS

IN A SHAREHOLDER-MANAGER RELATIONSHIP WHO IS THE AGENT

MANAGERS

INDIRECT AGENCY COST ARE OFTEN DUE TO LOST

OPPORTUNITIES

WHICH OF THE FOLLOWING STATEMENTS ABOUT OWNERSHIP TRANSFER IN A CORPORATION IS CORRECT

OWNERSHIP IS TRANSFERRED BY GIFTING OR SELLING SHARES OF STOCK

A BUSINESS WITHOUT SEPARATE LEGAL AUTHORITY FORMED BY TWO OR MORE PEOPLE IS KNOWN AS A

PARTNERSHIP

A LIMITED COMPANY IS TAXED LIKE A ____ AND ITS OWNERS HAVE _____ LIABILITY

PARTNERSHIP; LIMITED

WHEN A CORPORATION RAISES FUNDS IN THE FINANCIAL MARKETS, THE TRANSACTION OCCURS ON THE

PRIMARY MARKETS

WHICH OF THE FOLLOWING PARTIES WOULD BE THE LAST PARTY TO RECEIVE PAYMENT IF A FIRM WERE TO CLOSE ASSUME ALL PARTIES HAVE A LEGITIMATE CLAIM ON THE FIRMS ASSETS

SHAREHOLDERS

____ ARE FREQUENTLY USED TO ENCOURAGE KEY MANAGERS TO MAXIMIZE THE VALUE OF THE FIRMS STOCK

STOCK OPTIONS

A CORPORATION RECIVES CASH FROM FINANCIAL MARKETS BY SELLING___ AND __

STOCKS AND BONDS

THE LIABILITY OF SHAREHOLDERS IN A CORPORATION IS LIMITED TO WHICH OF THESES

THE AMOUNT THE SHAREHOLDER INVESTED IN THE CORPORATION

ORGANIZED AUCTION MARKETS INCLUDE

THE NEW YORK STOCK EXCHANGE

WHICH ONE OF THESE MOTIVATES MANAGERS TO MAKE GOOD DECISIONS

THREAT OF HOSTILE TAKE OVER

FROM THE STOCKHOLDERS PERSPECTIVE WHAT IS THE PRIMARY PURPOSE OF AWARDING STOCK OPTIONS TO MANAGERS

TO INCREASE SHAREHOLDERS WEALTH

THE MAIN GOAL OF FINANCIAL MANAGEMENT

TO MAXIMIZE CURRENT VALUE PER SHARE OF EXISTING STOCK

THE OFFICER RESPONSIBLE FOR MANAGING THE FIRMS CASH FLOWS IS THE

TREASURER

CORPORATIONS IN OTHER COUNTRIES ARE OFTEN CALLED

1)JOINT STOCK COMPANIES 2)PUBLIC LIMITED COMPANIES

THE GOAL OF A BUSINESS IS TO ______ EXISTING OWNERS EQUITY

MAXIMIZE

WHICH OF THE FOLLOWING COMPANIES WERE INVOLVED IN CORPORATE SCANDALS THAT LED TO SARBANES OXLEY

1)WORLDCOM 2)ENRON 3)TYCO

THE POSSIBLE GOAL OF PROFIT MAXIMIZATION

1)WOULD PROBABLY BE THE MOST COMMONLY SHIFTED GOAL FOR A BUSINESS 2)CAN BE ACHIEVED BY COST CUTTING

WHICH ONE OF THESE IS AN IMPORTANT MECHANISM USED BY UNHAPPY STOCKHOLDERS TO REPLACE CURRENT MANAGEMENT

PROXY FIGHT

BECAUSE SHAREHOLDERS GET PAID LAST AFTER ALL OTHER OBLIGATIONS ARE SATISFIED, THEY ARE OFTEN CALLED

RESIDUAL OWNERS

WHEN A CORPORATION IS FORMED IT IS GRANTED WHICH OF THE FOLLOWING RIGHTS

1) LEGAL POWER TO SUE 2)THE ABILITY TO ISSUE STOCK 3)STATE CITIZENSHIP FOR JURISDICTIONAL PURPOSES

WHICH OF THE FOLLOWING ARE AMONG THE MOST IMPORTANT QUESTIONS TO BE ASKED WHEN A BUSINESS IS STARTED

1) WHERE WILL LONG TERM FINANCING BE OBTAIN TO PAY FOR INVESTMENTS 2)WHAT LONG TERM INVESTMENTS SHOULD BE MADE 3)HOW WILL EVERYDAY FINANCIAL ACTIVITIES BE HANDLED

WHAT ARE THE TWO BASIC CLASSIFICATIONS UNDER WHICH MOST POTENTIAL FINANCIAL GOALS FALL

1)EARNING OR INCREASING PROFITS 2)CONTROLLING RISK

THE CONTROLLER IS RESPONSIBLE FOR WHICH OF THE FOLLOWING TASKS

1)FINANCIAL ACCOUNTING 2)TAX REPORTING

THE RELATIONSHIP BETWEEN STOCKHOLDERS AND MANAGEMENT CAN BEST BE DESCRIBED AS ______RELATIONSHIP

AGENCY

THE COSTS INCURRED DUE TO A CONFLICT OF INTEREST BETWEEN STOCKHOLDERS AND MANAGEMENT ARE CALLED

AGENCY COSTS

SINCE OWNERSHIP IN A CORPORATION CAN BE DISPERSED OVER A HUGE NUMBER OF STOCKHOLDERS IT CAN BE ARGUED THAT_____ EFFECTIVELY CONTROLS THE FIRM

MANGEMENT

WHICH ONE OF THESE PROVIDES A MANAGER AN INCENTIVE TO PERFORM WELL

PROMOTIONS

WHICH OF THE FOLLOWING SHOW WHY A CORPORATION IS THE MOST IMPORTANT FORM OF BUSINESS

1) CORPORATIONS CAN ENTER INTO CONTRACTS 2)CORPORATIONS CAN SUE AND BE SUED 3)A CORPORATION IS A SEPARATE LEGAL ENTITY WITH THE ABILITY TO ACQUIRE AND EXCHANGE PROPERTY

A GOOD FINANCIAL DECISION WILL DO WHICH OF THE FOLLOWING

1) INCREASE MARKET VALUE OF SHAREHOLDERS EQUITY 2)INCREASE THE VALUE OF THE FIRMS EXISTING STOCK

A GENERAL PARTNERSHIP HAS WHICH OF THE FOLLOWING CHARACTERISTICS

1) IT IS DIFFICULT TO TRANSFER OWNERSHIP 2)EACH OWNERSHIP HAS UNLIMITED LIABILITY FOR ALL FIRM DEBTS

IN A LARGE CORPORATION, THE FINANCIAL MANAGER IS PRIMARILY RESPONSIBLE FOR

1)FINANCING DECISIONS 2)LONG TERM INVESTMENT DECISIONS 3)FINANCIAL ASPECTS OF OPERATIONS SUCH AS COLLECTIONS OF ACCOUNTS RECIVABLE

WHICH OF THE FOLLOWING ARE IMPORTANT WHEN CONSIDERING A PARTNERSHIP

1)FUND RAISING LIMITATIONS 2)PERSONAL LIABILITY FOR FIRM DEBTS 3)TAXATION OF PARTNERSHIP INCOME

WHICH OF THE FOLLOWING ARE INCLUDED IN A FIRMS CAPITAL STRUCTURE

1)LONG TERM DEBT 2) EQUITY

WHICH OF THE FOLLOWING CAN BE USED TO ENCOURAGE MANAGERS TO ACT IN THE BEST INTERESTS OF SHAREHOLDERS

1)MANAGERIAL COMPENSATION TIED TO PERFORMANCE 2)BETTER PROSPECTS OF PROMOTION 3)STOCK OPTIONS AND BONUSES