Fin Ch 1

In a general partnership, each partner is personally liable for:

the total debts of the partnership, even if he or she was unaware of those debts

What is the primary goal of financial management for a sole proprietorship?

Maximize the market value of the equity

Which one of the following statements about a limited partnership is correct?

There must be at least one general partner

Corporate shareholders:

have the ability to change the corporation's bylaws.

A corporation:

is a legal entity separate from its owners

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

limited partnership

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

market value of the firm

Which of the following statements correctly applies to a sole proprietorship?

obtaining additional equity is dependent on the owner's personal finances

A limited liability company (LLC)

prefers its profits be taxed as personal income to its owners.

The Sarbanes-Oxley Act:

require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

corporation

The goal of financial management is to increase the:

current market value per share

The Sarbanes-Oxley Act of 2002 has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

A sole proprietorship:

has its profits taxed as personal income

Capital budgeting includes the evaluation of which of the following?

size,timing, and risk of future cash flows

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

the controller reports directly to the CFO

The primary goal of financial management is to maximize:

the market value of existing stock

The daily financial operations of a firm are primarily controlled by managing the:

working capital

Which one of the following applies to a general partnership?

Any one of the partners can be held solely liable for all of the partnership's debt

Which one of the following situations is most apt to create an agency conflict

Basing management bonuses

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Corporate accounting and financial fraud

Which of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Increase the protections against corporate fraud

Maria is the sole proprietor of an antique store that she has operated at the same location for the past 16 years. The store rents the space in which it is located but does own all of the inventory and fixtures. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific loan covenants or assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and use the cash raised to apply to the debt II. Sell the store fixtures and use the cash raised to apply to the debt III. Take funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

Sell the inventory and apply the proceeds to the debt Withdraw funds from Maria's personal account at the bank to pay the store's debt Sell any assets Maria personally owns and apply the proceeds to the store's debt

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

agency

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods. However, Weil's board of directors rejects the acquisition offer. This is an example of:

an agency conflict