FIN 3200 quiz one ch 1 and 2

Corporations in other countries are often called:

-joint stock companies -public limited companies -limited liability companies

a shareholders liability is limited to which of these?

the amount the shareholder invested in the corporation

which one of the following statements is incorrect? 1. OTC markets have a physical trading floor generally located in either New York City or Chicago 2. The Chicago Stock Exchange 3. The primary purpose of the NYSE is to match buyers with sellers 4. all of the major stock exchanges are U.S based

the primary purpose of the NYSE is to match buyers with sellers

When evaluating financial planning steps, we must consider all of the following, except

the project horizon for the next 30 to 90 days

in a general partnership, each partner is personally liable for:

the total debts of the partnership, even if he or she was unaware of those debts

in a for-profit business, owners equity is equivalent to:

the total value of stock in a corporation

which of the following are key questions for investments? 1. What are the stocks? 2. What determines the price of a financial asset? 3. what are the risks and rewards associated with investing? 4. What is the best mixture of financial assets to hold? 5. How much money should you have to open a portfolio?

2. What determines the price of a financial asset? 3. what are the risks and rewards associated with investing? 4. What is the best mixture of financial assets to hold?

true or false: a corporation borrows money in its own name

true

true or false: in a large corporation, stockholders and managers are usually separate groups.

true

true or false: to generate a coherent plan, goals and objectives will have to be modified and priorities will have to be established.

true

a partnership must have at least______________ owners

two

Ensuring that the firm has sufficient funds to continue operations on a day-to-day basis comes under the heading of __________ management.

working capital

the daily financial operations of a firm are primarily controlled by managing the:

working capital

A general partnership has which of the following circumstances? 1. each owner has unlimited for all firm debts 2. it is always regulated by a formal partnership agreement 3. large amounts of cash can be raised easily 4. all partners share in gains or losses of the partnership

4. all partners share in gains or losses of the partnership 1. each owner has unlimited for all firm debts

One of the important questions in the area of investments includes the potential risks and reward associated with investing in ____________ assets.

Financial

Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?

General partnership

According to the textbook, which of the following is not one of the three main questions to be addressed if you wanted to start your own business?

How many employees will I need?

When are corporate profits taxed?

Individuals pay taxes on corporate dividends. Corporations pay taxes on corporate profits.

what is the main goal of financial management?

To maximize current share value

an organization must prepare____________- and bylaws when forming a corporation.

articles of incorporation

Probably the least effective means of aligning management goals with shareholder interests is:

automatically increasing management salaries on an annual basis

_____________ budgeting is the process of planning and managing a firm's long term assets.

capital

Uptown markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:

capital structure

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

capital structure

public limited companies and joint stock companies are other names for __________

companies

Which one of the following is most apt to align managements priorities with shareholders' interests?

compensating managers with shares of stock that must be held for a minimum of 3 years

The ____________ office is responsible for corporate tax reporting.

controller's

The _____________ office is responsible for corporate tax reporting.

controllers

the federal government taxes which of the following?

corporate earnings and shareholder dividends

which of the following is a disadvantage of sole proprietorships and partnerships?

difficulty of transferring ownership

The controller is responsible for which of the following tasks? 1. financial accounting 2. Tax reporting and payments 3. capital expenditures 4. raising capital

financial accounting tac reporting and payments

A partnership in which partners share in gains or losses, and carry unlimited liability for all partnerships debts, is called a:

general partnership

A sole proprietorship is a business that______________

is owned by one person

Why don't large businesses organize as sole proprietorships or partnerships?

it can be difficult to raise cash for investment in these forms, and that limits the ability of the business to grow.

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

limited

What type of partnership involves both general and limited partners to run the business?

limited partnership

In a limited partnership, a limited partner's liability for business debt is_______________.

limited to their cash contribution to the partnership

capital budgeting is concerned with making and managing expenditures on _____________.

long-term assets

Which of the following are included in a firms capital structure? 1. net sales 2. current assets 3. long-term debt 4. equity

long-term debt equity

in a shareholder-manager relationship, who is the agent?

managers

A treasure's responsibilities typically include a. financial accounting b. making financial plans c. managing capital expenditure decisions d. handling cash flows

managing capital expenditure decisions making financial plans handling cash flows

the primary goal of financial management is most associated with increasing the:

market value of the firm

Is profit maximization the primary objective of a business?

no ; profit maximization may not take into account other strategic objectives necessary to maximize shareholder value.

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

partnership

a limited liability company is taxes like a ____________-, but retains__________________ _____________ for owners

partnership ; limited liability

Which of these topics is not of especial interest to a financial manager?

product development

How is ownership of a corporation represented?

shares of stock

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

the ability to issue stock legal powers to sue

Working capital structure includes which of the following? 1. cash 2. short term assets 3. equipment 4. inventory

1. cash 2. short-term assets 3. inventory

business finance if broadly concerned with which of the following? 1. how to manage day to day finances of the firm 2. how to finance long-term investments 3. how to set up the audit committee 4. which long-term investment to make

1. how to manage day to day finances of the firm 2. how to finance long-term investments 3. which long-term investment to make

Business finance is broadly concerned with which of the following 1. how to manage day-to-day finances of the firm 2. which long-term investment to make 3. How to finance long-term investment 4. how to set up the audit committee

1. how to manage day-to-day finances of the firm 2. which long-term investment to make 3. How to finance long-term investment

Which of the following positions generally report to the chief financial officer? 1. Director of marketing 2. treasure 3. Chris executive officer 4. controller

1. treasure 2. controller

What three subjects is the financial manager concerned with?

Capital structure, working capital management and capital budgeting

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

Chief financial officer

How is ownership transferred in a corporation?

Ownership is transferred by gifting or selling shares of stock

Which of the following is NOT one of the basic areas of finance?

Personal Finance

One advantage of the corporate form of organization is the:

ability to raise larger sums of equity of capital than other organizational forms