Bus 120 6-10
Which approaches for investing in securities requires intensive research to identify discrepancies between a company's true worth and its current market price?
value investing
In context of managerial accounting, ______ are costs that change directly with the level of production.
variable costs
_____ are companies that invest in start-up businesses with high growth potential in exchange for a share of ownership
venture capital firms
In the context of corporate restructuring, a ______ refers to a combination of firms that are at different stages in production of goods and services
vertical merger
In accordance with corporate bylaws, stockholders elect a _____ and rely on it to oversee the operations of their company and protect their interests.
Board of directors
_____ is the mix of equity and debt financing a firm uses to meet its permanent financing needs.
Capital structure
The____ established the Federal Deposit Insurance Corporation, which insured depositors against financial losses shen a bank failed.
Glass-Steagall Act of 1933
Which is true of mutual funds?
It is easy to withdraw funds from a mutual fund
which is a drawback of buying an established business?
It may entail inheriting the previous owner's mistakes
In the context of limited partnership, which of the following statements is true of general partners? (general partners have the right to_____)
They have the right to participate fully in managing their partnership
which is a reason why many members of the Europen Union have low entrepreneurship rates?
They provide strong unemployment insurance to their citizens
Which is true of the Dodd-Frank Act of 2010?
This law created the Financial Stability Oversight Council to identify emerging risks in the financial sector.
____is one of the most important sources of short term financing for many firms and arises when suppliers ship materials, parts, or goods to a firm without requiring payment at the time of delivery.
Trade credit
___ are short-term IOUs issued by the US government that typically mature in 4, 13, or 26 weeks.
Treasury bills
A ______ is a projection showing how a firm's budgeted sales and costs will affect expect net earnings.
budgeted income statement
An advantage of a general partnership is that the:
business is taxed as the personal income of its owners
The _____ on a bond expresses the annual interest payment as a percentage of the bond's per value.
coupon rate
A(n) ____ is a restriction lenders impose on borrowers as condition of providing long-term debt financing
covenant
The purpose of ____ is to protect creditors by preventing the borrower from pursuing policies that might undermine its ability to repay the loan
covenants
In the context if financial statements, ______ are debts that come due within a year of the date on the balance sheet.
current liabilities
In context of interpreting financial statements, using comparative statements to identify changes in key account value over time is called ______.
horizontal analysis
Entrepreneurs must understand the no conventional lending source (private or governmet) will_____.
lend all of a start-ups funding
A _____ is a financial arrangement in which a bank agrees to provide a firm with funds up to some specified limit, as long as the borrower's financial situation does not deteriorate, and the bank has sufficient funds.
line of credit
____ are small segments of a market with fewer competitors than the market as a whole.
market niches
In the context of basic financial planning tools, the budgeted income statement and budgeted balance sheet are referred to as ____.
pro forma financial statements
When a firm negotiates a loan with a bank, it signs a(n) _____, which specifies the length of the loan, the rate of interest the firm must pay, and other terms and conditions of the loan.
promissory note
which is an advantage of starting a business from scratch?
the entrepreneur gets to build their own business concept and structure
when starting a business from scratch:
the logistics can be challenging
Which of the following is true of people with an external locus of control?
they believe that the actions of others can control their fate
which of the following is true of a small business?
they have more scope to provide personal customer service that larger businesses
In the context of external audits of financial statements, which is true of CPA firms?
they must be independent of the companies they are auditing
The SEC of 1934 required that all publicly traded firms with at least____ file quarterly and annual financial reports with the SEC.
500 shareholders and $10 million in assets
In context of the balance sheet, which serves to be the rationale behind the accounting equation?
A firm must finance the purchase of their assets, and the owners and non- owners should contribute towards it
In context of corporations, ______ is a corporate restructuring in which one firm buys another
An acquisition
In context of an independent auditor's report , ______ indicates that the auditor believes the financial statements are seriously flawed and that they may be misleading and unreliable.
An adverse opinion
______ are individuals who finance start-up companies with high growth potential in exchange for a share of ownership.
Angel Investors
___ are not-for-profit organizations owned by their depositors, which strive to pay higher interest rates on loans.
Credit unions
_____ refers to funds provided by the owners of a company.
Equity financing
_____ are shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or other securities.
Exchange-Traded Funds (ETFs)
_____ is the functional area of business that is responsible for finding the best sources of funds and the best ways to use them.
Finance
In the US the Securities Exchange Commission has delegated the responsibility for developing accounting standards to a price organization called the _______.
Financial Accounting Standards Board
_____are costs that are the result of a firm's general operations and are not tied to any specific cost object.
Indirect costs
______ are organizations that pool contributions from investors, clients, or depositors and use these funds to buy stocks and other securities.
Institutional investors
The ______ considers a C corporation to be a separate legal entity and taxes its earnings accordingly.
Internal Revenue Service
_____ work within their organization to detect problems such as waste , mismanagement, embezzlement, and employee theft.
Internal auditors
In the context of various launching options when starting a business, which is a drawback associated with buying a franchise?
It has less opportunity for creativity
In the context of funding options for a small business, which of the following is true of crowdfunding?
Its sites are used to fund nonprofits
Which of the following is one of the largest crowdfunding sites in terms of traffic?
Kickstarter.com
______ are securities dealers that commit to continuously offering to buy and sell specific NASDAQ listed stocks
Market makers
_____ provide a framework for analyzing the impact of a firm's plans on the financing needs of the company.
Pro forma financial statements
____ are the part of a firm's net income in reinvestments.
Retained earnings
_____ is calculated by dividing net income by owner's equity.
Return on equity
The ______ increased the SEC's authority to regulate financial markets and investigate charges of fraud and unethical behavior.
Sarbanes-Oxley Act
In the US, the ultimate legal authority to set accounting standards lies with the _____.
Securities Exchange Commission
Which is a major issue that confronts financial managers as they seek to maximize the market price of stock?
Social responsibility
which of the following is true of franchises set up across borders?
The limit of a franchise's right over a territory is decided through a franchise agreement
which of the following it true of LLCs? (how are they taxed?)
There is no separate tax in the earnings of the companies if they chose to be treated as a partnership
____ is an arrangement under which an investment banker agrees to purchase all shares of a public offering at an agreed upon price
Underwriting
Which is true of bonds?
When a bond's market price is above its per value, it is selling at a premium
which is a threat to a small business?
a bigger regulatory burden compared to large businesses
A ____ is a form of a business ownership in which the business in considered a legal entity that is separate and distinct from its owners.
a corporation
In context of small businesses and the economy of a country, which factors can bring down entrepreneurship rates?
a high level of employment protection
Entrepreneurs who mortgage their homes for the business and stake their reputation on the success of an unproven product demonstrate _______.
a high tolerance if uncertainty
The _______ is a financial budget and shows how a firm's operations, investing. and financing activities are expected to affect all of the assets, liability, and owners' equity accounts.
budgeted balance sheet
In the context of business ownership,the document filed with a state government to establish the existence of a new corporation is referred to as the______.
articles of incorporation
The major responsibilities involved in financial are the preparation of the______.
balance sheet, income statement, and statement of cash flows
_____ is the process a firm uses to evaluate long-term investment proposals.
capital budgeting
The SEC requires publicly traded corporations to provide______.
comparative financial statements
What is a disadvantage of an LLC?
complexity of formation
which if the following is a characteristic of successful entrepreneur?
confidence
The _____ is computed by dividing a firm's total liabilities by its total assests.
debt ratio
____ are financial intermediaries that obtain funds by accepting checking and savings deposits from individuals, businesses, and other institutions, and then lending those funds to borrowers.
depositary institutions
A _______ occurs when a firm transfers total or partial ownership of some of its operations to investors or to another company.
divestiture
Earnings Per Share (EPS) is calculated by:
dividing net income of firm minus preferred dividends by the average number of shares of common stock outstanding
from a franchisee perspective, which of the following is an advantage offered by franchising?
easy access to funding
_____ is a characteristic that most successful entrepreneurs posses.
energy
People who risk their time, money, and other resources to start and manage a business are known as _____.
entrepreneurs
an individual who decides to establish a sole proprietorship must realize that they would be facing: (what kind of liability?)
facing unlimited personal liability for company's debt.
A(n) _____ is a company that provides short-term financing to firms by purchasing their accounts receivables at a discount
factor
The legal and ethical obligations of financial managers to make decisions consistent with the financial interests of their firm's owner is called their _____.
fiduciary duty
Which of the following is an appealing benefit that entrepreneurs enjoy?
flexible schedule
A _____ is a licensing arrangement under which one party allows another party to use its name, trademark, patents, copyrights, business methods, and other property in exchange for monetary payments and other considerations.
franchise
which is true of ETFs?
has lower costs and fees than mutual funds
In the context of corporate restructuring, a _______ is defined as a combination of firms in the same industry
horizontal merger
The opportunity cost that arises when a firm uses owner-supplied resources is known as a(n) ________.
implicit cost
The _____ is computed by dividing a firm's cost of goods sold by average inventory levels
inventory turnover ratio
Stockholder typically went to view a firm's accounting information to:
know if management has generated a strong enough return on investment
one draw black of sole proprietorship is that the owners:
may find it difficult to attract and maintain talented employees
A ______ refers to a corporate restructuring that occurs when 2 formerly independent business entities combine to form a new organization
merger
The ____ is a situation where the behavior of an incompetent or irresponsible franchisee adversely affects not only the franchise as a whole, but also the success of other franchisees.
negative halo effect
According to the US Small Business Administration, to officially count as a small business the:
number of employees should range between 100 to 1,500
______ are budgets that identify projected sales and production goals and the various costs the firm will incur to meet these goals .
operating budgets
the vast majority of LLCs elect to be taxed as______.
partnerships
GAAP are a set of accounting standards that is used in the:
preparation of financial statements
Increases in a firm's assets that result from the sale of goods, provision of services, or other activities intended to earn income are referred to as ______.
revenue
____ are financial intermediaries that participate directly in securities markets, buying and selling stocks and bonds for their own account.
securities dealers
A(n) _____ is an organized venue for stockbrokers and securities dealers to trade listed stocks and other securities for their clients.
securities exchange
In the context of budget preparation, the cash budget is a financial budget document that identifies_________.
short-term fluctuations in cash flows
In the context of statement of cash flows, cash flows from investing activities.
show the amount of cash received from the scale of fixed assets
_____ refers to the claims owners have against their firm's assets.
stockholder's equity