Chapter 1 Learnsmart 1

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A corporation received cash from fonancial markets by selling ___ and ___.

*Bonds *Stocks

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

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

Which of the following is included in working capital?

*Current (short-term) assets *Accounts Payable *Accounts Receivable

Inventory is:

*Current assets *Park of working capital

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

*Enron *WorldCom *Tyco

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

*Financial aspects of operations, such as collections of accounts receivables *Financial decisions *Long-ter investment decisions

A good financial decision will do which of the following?

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

A general partnership has which of the following characteristics?

*It is dificult to transfer ownership *Each owner has unlimted liability for all form debts

Which of the following are true of a sole proprietorship?

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

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

*Long-term debt *Equity

A treasurer's responsiblities typically include:

*Making financial plans *Handling cash flows *Managing capital expenditure decisions

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

*Minimize costs *Maximizes profits *Survival

The controller is responsible for which of the following tasks?

*Tax reporting *Financial accounting

Which of the following are important when considering a partnership?

*Taxation of partnership income *Person liability for firm debts *Fund raising limitations

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

Agency problem

The conflict of interest between an agent and a principal is called a(n) ___.

Agency problem

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

Articles of incorporation

The rules used by a corporation to regulate its existance are known as ____.

Bylaws

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

Capital Structure

The officer responsible for corporate tax reporting is the ___?

Controller

A bad sinancial decision is defind as a decision that ___owners' equity.

Decreases

Some of the cash flow generated by a firm goes back to the financial markets in the form of ____?

Dividends and debt payments

The life of a corporation _____.

Is unlimited

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

Legal

In a limted partnership, a limited partner's liability for business debts is ___?

Limited to their cash contribution to the partnership

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

Maximize

A sole proprietorship is a business owned by ___Person(s)?

One

How is ownership transferred in a corporation?

Ownership is transferred by gifting or selling shares of stock

A business without seperate legal authority formed by two or more people is known as a ____?

Partnership

Because shareholders get paid last after all other obligations are satisfied, they are often called:

Residual owners

When one owner or creditor sells to another, the transaction takes place in the ___ market.

Secondary

The owners of a corporation are called ____?

Shareholders

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

Stakeholder

What is the main goal of financial management?

To maximize shareholder wealth

The officer responsible for the firm's cash flows is the ___?

Treasurer

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

Unlimited


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