Ch. 1

Benefit

A ______________ corporation is for profit, and has the legal attributes of accountability, transparency, and purpose.

decreases

A bad financial decision is defined as a decision that ______ owners' equity.

residual owners

Because shareholders get paid last after all other obligations are satisfied, they are often called _____. Multiple choice question.

long-term investments

Capital budgeting is concerned with planning and managing a firm's _____. Multiple choice question.

Personal

Corporate profits are taxed twice, first at the corporate level when they are earned and again at the ______________ level when they are paid out.

dark

Due to the extreme costs of SOX, hundreds of public firms have chosen to "go _______________ ," meaning their shares are no longer traded on the major stock exchanges.

Bylaws

Forming a corporation involves preparing articles of incorporation and a set of .

Agency Problem

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

financial manager

In a large corporation, the _____ would be responsible for answering the three main questions that must be asked when starting a firm.

STEM

In addition to the importance of finance for marketing, accounting, and management careers, finance is also now considered a _____ discipline, especially at the graduate level.

Chief financial officer

In large firms, financial activity is usually associated with which top officer?

- part of working capital. - current asset.

Inventory is a:

Corporation

Joint stock company is another name for what is referred to as a ______________ in the United States.

corporation

Joint stock company is another name for what is referred to as a ______________ in the United States.

Management

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

the existing shares of stock

The primary responsibility of financial managers is to increase the value of _____.

Bylaws

The rules used by a corporation to regulate its existence are known as _________.

False

True or false: Finance is mainly important to study if you are planning a career in finance.

False

True or false: Ownership in the corporate form is difficult to transfer.

- Long-term debt - Equity

Which of the following are included in a firm's capital structure?

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

Which of the following are true of a sole proprietorship?

- WorldCom - Enron - Tyco

Which of the following companies were involved in corporate scandals that led to Sarbanes-Oxley?

- Current (short-term) assets - Accounts receivable - Accounts payable

Which of the following is included in working capital?

- Controller - Treasurer

Which of the following positions generally report to the chief financial officer (CFO)?

Capital

______ budgeting is the process of making and managing expenditures on long-term assets.

Maximize

The goal of a for-profit business is to ______ existing owners' equity.

the board of directors

In a corporation, the stockholders elect _____, who then select the managers.

management

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

limited

Stockholders in a corporation have _____ liability for corporate debts.

- Minimize costs - Survival - Maximize profits

Which of the following, according to the textbook, are possible financial goals for a company?

Ownership is transferred by gifting or selling shares of stock.

How is ownership transferred in a corporation?

Is unlimited

The life of a corporation ______.

Controller

Which corporate officer is responsible for accurate financial reporting of the firm's activities?

- What long-term investments should be made? - Where will long-term financing be obtained to pay for investments? - How will everyday financial activities be handled?

Which of the following are among the most important questions to be asked when a business is started?

- Taxation of partnership income - Fund raising limitations - Personal liability for firm debts

Which of the following are important when considering a partnership?

- Taxation of partnership income - Personal liability for firm debts - Fund raising limitations

Which of the following are important when considering a partnership?

Which type of operating system should you use for your computers?

Which of the following is not an important question that must be asked when starting a firm?

- Corporations can enter into contracts. - Corporations can sue and be sued. - A corporation is a separate legal entity with the ability to acquire and exchange property.

Which of the following show why a corporation is the most important form of business?

Capital structure

Which term applies to the mixture of debt and equity maintained by a firm?

SOX

The aim of the act known as _____ is to protect investors form corporate abuse.

General

In a ______________ partnership, all the partners share in gains or losses, and all have unlimited liability for all partnership debts, not just some particular share.

is unlimited

The life of a corporation ______.

To maximize current value per share of existing stock

What is the main goal of financial management?

Residual

Stockholders are entitled to only what is left after employees, suppliers, and creditors are paid, which makes them _____ owners.

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

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

Bylaws

The _____________ are rules describing how the corporation regulates its existence.

Corporation

The ______________ is the most important form, in terms of size, of business organization in the United States.

proprietorship

The advantages and disadvantages of a partnership are basically the same as those of a _____.

- Tax payments - Financial accounting

The controller is responsible for which of the following tasks?

risk

The corporate goal involving bankruptcy avoidance, stability, and safety relate to controlling ______________.

Corporate earnings and shareholder dividends

The federal government taxes which of the following?

The stock

The financial manager acts in the shareholders' best interests by making decisions that increase the value of _____.

the stock

The financial manager acts in the shareholders' best interests by making decisions that increase the value of _____.

1. Corporate Finance 2. Investments 3. Financial Institutions 4. International Finance 5. Fintech

The five main areas of finance are:

Owner's

The goal of the for-profit business is to maximize ______________ equity.

The amount the shareholder invested in the corporation

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

treasurer

The officer responsible for managing the firm's cash flows is the ______.

stockholders

The owners of a corporation are called ______.

- can be achieved by cost-cutting - would probably be the most commonly sighted goal for a business

The possible goal of profit maximization _____.

Raising cash

The relative ease of transferring ownership, the limited liability for business debts, and the unlimited life of the business are why the corporate form is superior to sole proprietorships or partnerships for _____.

raising cash

The relative ease of transferring ownership, the limited liability for business debts, and the unlimited life of the business are why the corporate form is superior to sole proprietorships or partnerships for _____.

agency

The term ______________ costs refers to the costs of the conflict of interest between stockholders and management.

False

True or false: Under SOX, corporate officers must declare annual reports contain zero omissions.

- Earning or increasing profits - Controlling risk

What are the two basic classifications under which most potential financial goals fall?

- State citizenship for jurisdictional purposes - The ability to issue stock - Legal powers to sue

When a corporation is formed, it is granted which of the following rights?

- The ability to issue stock - State citizenship for jurisdictional purposes - Legal powers to sue

When a corporation is formed, it is granted which of the following rights?

Shareholders

Which one 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 firm's assets.

- Financial accounting - Tax payments

he controller is responsible for which of the following tasks?

transparency

A benefit corporation is for profit, and has the legal attributes of accountability, _____, and purpose.

Two

A partnership must have at least _______ owners.

- financial aspects of operations, such as collections of accounts receivables. - financing decisions. - long-term investment decisions.

In a large corporation, the financial manager is primarily responsible for:

limited to his/her cash contribution to the partnership

In a limited partnership, a limited partner's liability for business debts is ______.

Partnership

A business without separate legal authority formed by two or more people is known as a _____.

Legal

A corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.

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

A general partnership has which of the following characteristics?

- Increase the value of the firm's existing stock - Increase the market value of shareholders' equity

A good financial decision aims at which of the following?

partnership; limited

A limited liability company is taxed like a ______ and its owners have ____ liability.

Unlimited

A sole proprietor has ______ personal liability for all business debts and obligations.

One

A sole proprietorship is a business owned by ______ person(s).

is owned by one person.

A sole proprietorship is a business that _______.

- making financial plans. - managing capital expenditure decisions. - handling cash flows.

A treasurer's responsibilities typically include:

partnership

An LLC is essentially a hybrid of ______________ and corporation.

articles of incorporation

An organization must prepare ______ and bylaws when forming a corporation.

Management

Because ownership in a corporate is spread over a huge number of shareholders, it can be argued that ______________ effectively controls the firm.

Limited

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

- public limited companies. - joint stock companies.

Corporations in other countries are often called:

-Limited -Limited

In a ______________ partnership, one or more general partners will run the business and have unlimited liability, but there will be one or more ______________partners who will not actively participate in the business.