FOB Final Exam Ch. 16,17,18

________ can be exchanged at the investor's option for a certain number of shares of the corporation's common stock.

Convertible bonds

________ is the average rate of interest a firm pays on its combination of debt and equity.

Cost of capital

Hedging refers to forming contracts that allow a company to ________.

buy supplies in the future at designated prices

The Sarbanes-Oxley Act outlaws ________.

loans by corporations to their own executives

Before a company can sell shares to the public in the United States, it must ________.

register with the SEC

Which of the following is an internal source for obtaining funds for business?

selling assets to obtain revenue

Private equity refers to ________.

shares that are owned by institutions rather than individuals

Burn rate is a major concern when preparing a(n) ________ budget.

start-up

________ refers to short-term promissory notes, or contractual agreements, to repay a borrowed amount by a specified time with a specified interest rate.

Commercial paper

________ is an SEC-required document that discloses required information about the company, its finances, and its plans for using the money it hopes to raise.

Prospectus

________ budget identifies the money a new company will need to spend to launch operations.

Start-up

Which of the following sources of short-term debt is characterized by revolving credit terms?

credit card

Which of the following refers to evaluating a company's performance and the economic implications of strategic decisions such as product pricing, employee benefits, and business acquisitions?

financial analysis

Which of the following is generated through management accounting rather than financial accounting?

profitability reports

Managers use a(n) ________ to identify the costs needed to accomplish a particular project.

project budget

A specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors is known as a(n) ________.

underwriter

________ is an accounting method in which revenue is recorded when a sale is made, and expense is recorded when it is incurred.

Accrual basis

________ is an accounting method in which revenue is recorded when payment is received and expense is recorded when money is paid.

Cash basis

________ is an agreement to use an asset in exchange for regular payment.

Lease

Duromart is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores. Which of the following actions of Duromart is an example of availing short-term credit?

The company opens a trade credit account with a major bank.

Public accountants are professionals who provide ________.

accounting services to businesses and individuals for a fee

Which of the following is an example of a current asset?

accounts receivable

Robert Consultants was incorporated in the year 2010. The company is now performing a formal evaluation to ensure and certify the integrity and reliability of the company's financial statements. This formal evaluation is referred to as ________.

audit

Generating a(n) ________ is a function of financial accounting.

balance sheet

AccBiz is a tool used commonly by small businesses. It is a simple application that records financial transactions. It records such transactions as sales, purchases, income, receipts, and payments. However, the software cannot be used for financial analyses or higher-level applications. The functions that AccBiz performs can be referred to as ________.

bookkeeping

The ________ outlines expenditures for real estate, new facilities, major equipment, and other such investments.

capital budget

A(n) ________ is the highest-ranking accountant in a company, responsible for overseeing all accounting functions.

controller

Which of the following is a source of long-term debt financing?

corporate bond

Which of the following is an example of a company's asset?

inventory in the warehouse

Short-term financing is financing that will typically be repaid within ________.

one year

Albert is the financial manager of a manufacturing firm. Albert has been an integral part of the firm ever since it started business in 2006. Albert's job has transformed over the years and every year he is responsible for creating a budget to identify all sources of raising funds and coordinates the spending of those funds throughout the company. This budget is an example of a(n) ________ budget.

operating

Which of the following is an example of a fixed asset?

transportation equipment