Business Test 6-10

When people use the term "corporation" without specifying which type, they are generally referring to a(n) _____.

C corporation

The _____ of 2010 expanded the Fed's regulatory authority over nondepository financial institutions, such as hedge funds and mortgage brokers that had previously operated with little regulatory oversight or accountability.

Dodd frank act

Which of the following statements is true of a socially responsible firm?

It has an obligation to respect the needs of all stakeholders.

In the context of financial statements, which of the following statements is true of large corporations?

Large corporations with publicly traded stock must provide an annual report containing financial statements to all stockholders.

_____ provide analysis and prepare reports and financial statements for their organization.

Management accountant

Which of the following categories of people is most likely to step into entrepreneurship?

People who have trouble being subordinates because of their personalities

Which of the following is an advantage of a C corporation?

Shareholders have limited liability in the firm.

Which of the following statements is true of entrepreneurswho possess tolerance of failure?

They tend to view nonsuccess as a chance to learn

Institution Investors

amass huge pools of financial capital from various sources.

Richard is a wealthy and successful businessman who is well known for financing many successful start-ups. He has earned a sizable amount of profit by providing capital to start-ups in return for a share of their profits. In the given scenario, which of the following statements is true of Richard?

angel investor

In the event that a large company has to downsize, the middle-aged workers who are laid off find it difficult to find new jobs. When such workers decide to start their own businesses, they:

are called necessity entrepreneurs.

In the context of opportunities and threats, overhead costs for small businesses:

are often lower than big companies

_____ measure how effectively an organization uses its resources to generate net income.

asset management ratios

In the context of balance sheets, resources owned by a firm are known as _____.

assets

Marcus is a venture capitalist who invests in start-ups and small businesses. He is interested in investing in an online start-up company that has been in business for a year. Before making a decision, Marcus does some research on the value of the company's assets and liabilities. In this scenario, Marcus is most likely analyzing the company's:

balance sheet

The three kinds of basic financial statements that are prepared in financial accounting are:

balance sheet, income statement, and statement of cash flows.

A textile corporation has two hundred odd stockholders. As it is inconvenient for so many stockholders to manage the company, the stockholders elect a group of individuals to oversee the company's operation and to represent their interests. In this scenario, the stockholders elect a _____.

board of directors

Scoopjoe, an ice cream brand in Wisconsin, has ten other outlets in Illinois, Michigan, and Ohio. As part of the agreement between Scoopjoe's main outlet and the other outlets, the former not only supplies raw materials to the latter but also provides help with site selection, training of staff, and finance. The given scenario exemplifies a:

business format franchise

Damien buys stocks worth $2800 in a cosmetic products manufacturing company. His investment turns out to be a sound decision as the prices of his stocks go up by $900. In this scenario, Damien earns a _____.

capital gain

The extent to which a firm relies on various forms of debt and equity to satisfy its financing needs is called that firm's _____.

capital structure

A _____ is the most common depository institution.

commercial bank

A(n) _____ is a combination of two firms that are in unrelated industries.

conglomerate merger

In a sole proprietorship, any debts the company incurs are:

considered to be the owner's personal liabilities

The basic rules governing how a corporation is organized and how it conducts its business are known as

corporate bylaws

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

corporation

Lina, along with ten of her colleagues, starts a financial cooperative to financially assist each other. The members pool their savings in the cooperative, and they can also take loans from it on a low interest rate. Members of the cooperative benefit from higher returns on savings and lower rates on loans. In this scenario, the cooperative started by Lina and her colleagues exemplifies a(n) _____.

credit union

____ is the process of funding ventures by raising money from a large number of investors via the Internet.

crowdfunding

The government of Brunasia issues bonds with a guarantee to make periodic interest payments on the par value. The government offers a 6.5% interest on its bonds. In this case, the percentage of interest offered by the government of Brunasia is called the _____.

cupon rate

In the context of liquidity ratios, a firm's _____ are the debts that must be repaid in the following year.

current liabilities

When a company takes out a bank loan, or issues and sells corporate bonds, it is relying on _____.

debt financing

When a company issues and sells new stock or uses retained earnings to meet its financial needs, it is using _____.

equity financing

_____ indicate the cash a firm spends, or other assets it uses up, to carry out the business activities necessary to generate its revenue.

expenses

To give the company's stockholders, creditors, and other external stakeholders an accurate idea of the company's overall performance, Rowensport Corporation, a multinational company, releases statements that contain details of the company's profits and losses over the past five years. In this scenario, the company is most likely involved in _____.

financial accounting

Dora works for PowTran Corp. Her primary responsibilities include managing the firm's working capital and analyzing long-term investment opportunities for the firm. Dora is most likely a part of the firm's _____ team.

financial management

Markets that transfer funds from savers to borrowers are referred to as _____.

financial markets

A _____ refers to a partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm.

general partnership

Firms that rely on a lot of debt in their capital structure are said to be _____.

highly leveraged

A firm considers _____ to increase size and market power within the industry.

horizontal mergers

The _____ summarizes the financial results of a firm's operations over a given period of time.

income statement

A(n) _____ is the first time a company issues stock that may be bought by the general public.

initial public offering

In the context of balance sheets, patents, trademarks, and copyrights are examples of _____.

intangible assets

The _____ measures how many times a firm's stock is sold and replaced each year.

inventory turnover ratio

A(n) _____ is a financial intermediary that specializes in helping firms raise financial capital by issuing securities in primary markets.

investment bank

In addition to contributions from owners, firms can also raise long-term funds by:

issuing bonds

Which of the following features of a sole proprietorship proves that it is a risky endeavor?

its unlimited liability

_____ are ratios that measure the extent to which a firm relies on debt financing in its capital structure.

leverage ratios

In the accounting equation, assets are equal to:

liabilities plus owners' equity.

Garret wants to buy shares of an iron manufacturing company, but he does not want to pay a high price for them. He asks his securities broker to only buy shares that come within the price of $300 and $400. In this scenario, Garret places a _____ with his broker.

limit order

A(n) _____ is a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatment.

limited liability company

In finance, a _____ is one that can be quickly converted into cash with little risk of loss.

liquid asset

_____ measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the following year.

liquid ratio

_____ is found by multiplying the price per share times the number of shares of common stock outstanding.

market cap

_____ is the profit or loss a firm earns in the time period covered by the financial statement that reports the revenues and expenses.

net income

In the context of balance sheets, retained earnings are a major component of the _____ section.

owners equity

A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.

partnership

Julian wants to open a bakery. He uses his savings and borrows some funds from his family to start his business. In the given scenario, Julian uses _____ to fund his business.

personal resources

A(n) _____ is a type of stock that gives its holder priority over common stockholders in terms of dividends and claims on assets.

preferred stock

_____ are ratios that measure the rate of return a firm is earning on various measures of investment.

probability ratios

Which of the following is an advantage associated with a sole proprietorship?

retention of control

Mr. Troy wants to buy stocks of a local retail company. He needs help with market research and requires some investing advice, as well as someone to do the trading for him. Mr. Troy should contact a(n) _____.

securities broker

A _____ tracks the prices of a large group of stocks that meet certain defined criteria.

stock index

An owner of a C corporation is called a _____.

stockholder

Which of the following is an appealing benefit that entrepreneurs enjoy?

the ability to set their own hours

As the recession of 2007-2008 loomed over both large and small businesses, many firms looked for ways to deleverage. The term deleveraging implies that:

the firms replaced much of the debt in their capital structure with equity.

Reese buys securities in a pharmaceutical company for $3300. After a period of eight months, when the prices of the securities go up in the market, she sells her securities for $3700. In this case, the difference of $400 in the prices of the securities is called:

the spread

The Securities and Exchange Commission (SEC) has the authority to go after individuals who engage in illegal insider trading, which is the practice of:

using inside information to profit unfairly from trading in a company's securities.

Which of the following funding options provides advice and guidance to start-up businesses along with the funds?

venture capital