FIN300 CH 1

The Sarbanes-Oxley Act requires corporate officers to do which of the following?

- Accept responsibility for material errors in the annual report - Confirm the validity of the annual financial report - List any deficiencies in internal controls

A general partnership has which of the following characteristics?

- It is difficult to transfer ownership - Each owner has limited liability for all firm debts

Which of the following is true of a sole proprietorship?

- a proprietorship has a limited life - it is the simplest type of business to form.

Which of the following is included in working capital?

- accounts payable - accounts receivable - current (short-term) assets

Inventory is a:

- current asset - part of working capital

Which of the following are included in a firms capital structure?

- equity - long term debt

A good financial decision will do which of the following?

- increase market value of shareholders' equity - increase the value of the firms existing stock

Corporations in other countries are often called:

- joint stock companies - public limited companies

Which of the following can be used to encourage managers to act in the best interests of shareholders?

- stock options and bonuses - better prospects of promotion - managerial compensation tied to performance

Which of the following are considered stakeholders in a company?

- suppliers - government - employees

If you hire a real estate company to sell your house, you are most apt to encounter which one of the following?

Agency problem

Businesses are motivated to organize as corporations because stockholders in a corporation have ____ liability for corporate debts.

Limited

The liability of a shareholder in a corporation is limited to which of these?

The amount the shareholder invested in the corporation.

What is the main goal of financial management?

To maximize current value per share of existing stock

Since ___________ and ownership are separated, a corporation's life is unlimited.

management

A ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm.

stakeholder