Quiz Examples

intangible assets

A famous musician sells the copyright of one of his songs to a record company for $2 million. In this scenario, the sale of the copyright of the song exemplifies the sale of a(n) _____.

short-term bank loans

ATR Co., a marketing agency, borrows $3 million from Platinum Bank. While negotiating with the bank, the firm signs a promissory note, which specifies that the firm must pay the borrowed amount in 90 days with interest. However, the bank also requires the firm's inventories and receivables to be pledged as collateral to back the loan. Which of the following short-term financing options is being offered by Platinum Bank in the given scenario?

balance sheet

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

current assets

Abiel, a granola bar manufacturing company, sells approximately 500 batches of its soft drinks worth $90,000 every week. In this context, the 500 batches of soft drinks that Abiel produces weekly represent the company's _____.

Vision

Anthony always tries to put his ideas into action regardless of the outcome. He perfects his craft by trying out different possibilities. If he is dissatisfied with the result, he tries out a different method and does not give up. Which entrepreneurial characteristic is highlighted in the given scenario?

revolving credit agreement

Ballard wants to start a new business. To get start-up capital, he takes a short-term loan from a bank. The bank agrees to provide him the agreed-upon funds as per a legally binding commitment. However, the bank requires Ballard to pay interest on any fund he borrows and a commitment fee based on the unused amount of funds. Which of the following short-term financing sources does Ballard utilize to fund his business in the given scenario?

false

Benny-Duke Inc. reports a net income of $7 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

horizontal merger

ChocBean Corp. and Cocoa Inc. are leading producers and distributors of cocoa beans. They join together to become the world's largest distributor of cocoa beans. This association allows the merged company to increase its size and market power within the cocoa industry. This is an example of a(n) _____.

Limited Liability Company (LLC)

CoffeeCo, a coffee brewing company, is owned by foreign investors and local businessmen. Its earnings are equally divided among its members. It does not face the problem of double taxation as taxes are only levied on the personal income of the members. The owners of CoffeeCo do not have personal liability for any debts incurred by the company. In the given scenario, CoffeeCo is an example of a _____.

current liability

Dalila, a clothing company, purchases 70 sewing machines from a company called Easy Fabric on credit. Dalila is supposed to pay an amount of $89,000 to Easy Fabric. This amount is due within a year of the date on the balance sheet. In this scenario, the amount of credit that Dalila owes Easy Fabric is referred to as Dalila's _____.

retained earnings

Daniel, the owner of a bookstore, decides to reinvest his personal profits from the current fiscal year toward renovating the store and expanding its inventory. In the context of owners' equity, the profits that Daniel reinvests in the bookstore are called__________.

true

David needs to acquire financial capital to purchase a printing press for his business. David can either acquire the financial capital for the press by borrowing money from a bank, or by purchasing the press on credit from his supplier.

treated as Faithan's personal income

Faithan is the owner of a candy store and manages the store by himself. Any profit that Faithan's store earns is__________.

profit and loss statement

Faraday Co. has applied for a business loan at United Bank. To best assess the loan case, the loan officer at the bank, Cadak, decides to look at the company's net income. Cadak will find this information in Faraday's _____.

limited partnership

Gaines and Otis own a clothing design business. They are in a form of partnership where Otis is only a dormant partner who contributes financially to the business, whereas Gaines actively manages the business and takes care of imports and exports. Gaines and Otis are bound by an agreement where, unlike Otis, Gaines is personally responsible for all the debts incurred by the business. In the given scenario, Gaines and Otis have a _____.

personal resources

Galahad owns an outer space-themed coffee shop. The entire coffee shop resembles a rocket ship. He has also installed a projector that transforms the ceiling into a starry night sky. Galahad used most of his savings to fund this venture and also borrowed funds from family members. In the given scenario, Galahad used _____ to fund his business.

trade credit

Halia Corp., a lamp manufacturing company, buys its raw materials from Soi Lights, a lighting raw material supplier. Soi Lights allows Halia Corp. to make the payment at a later date, as opposed to immediate payment. Which of the following short-term financing options is being used by Halia in the given scenario?

board of directors

Harry is one of the top managers in RPLD Corporation. He, along with seven other members, makes the major decisions of the company and oversees its operation. Although Harry is not the owner of the corporation, he holds stocks in the company and has the power to appoint a chief executive officer (CEO) for the company. In this scenario, Harry is part of the _____ of RPLD Corporation.

cash budget

Idris, a financial manager at Big Bang technologies, wants to know when his firm will need to arrange for short-term financing and when the firm is likely to have surplus cash available to pay off loans or to invest in short-term liquid assets. These concerns suggest that Idris would want to develop a _____.

false

Institutional investors amass large pools of financial capital by accepting savings account deposits.

management accountant

Jacquez is an employee at Power Co. His duties include preparing reports and analyzing company data. He also appraises financial performances and verifies the accuracy and validity of the company's internal records. In this scenario, what role does Jacquez hold in the organization?

public accountant

Jael works for an accounting firm that performs external audits, provides consulting services, and does the tax preparation for other businesses and individuals. Given this information, Jael is most likely a _____.

Flexibility

Kaamil, a single parent, quits his job and starts a small independent company because he is unable to give adequate attention to his children. Being an entrepreneur gives him the freedom to give undivided attention to his children without jeopardizing his work. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

institutional investors

Laadan Insurance is an insurance company in Mexico. Laadan uses its large pool of financial capital, which it accumulates by collecting premiums from its policyholders, to purchase corporate stocks of different multinational companies. In this scenario, Laadan Insurance is a(n) _____.

investing activities

Laird Chicken Hut, a popular chain restaurant, spends $84,000 on redesigning its interiors and modifying its ambience. In this scenario, the expenses that the restaurant incurs from refurbishing its appearance exemplify cash flows from__________.

Lakeisha can exchange each convertible security that she owns for 35 shares of common stock

Lakeisha owns convertible securities in OctoCorp. If the conversion ratio for the convertible securities is 35, it means that__________.

True

Mr. Lewis bought 650 shares of stocks in Garrett Corp. the previous year at a price of $19 per share. The market price has now risen to $25 per share. This result indicates that Mr. Lewis could receive a capital gain if he sells his stock.

securities broker

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

false

Mrs. Jamieson, a retiree, likes to invest in preferred stocks and bonds as it involves very little risk. She knows that the value of many of these stocks will not increase drastically, but the small returns help supplement her pension. Mrs. Jamieson's approach is an example of the market timing strategy.

He is an angel investor

Nahuatl 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 Nahuatl?

file quarterly and annual financial reports with the SEC

Naiser Inc., a publicly traded firm, has approximately 1,500 shareholders and $43 million in assets. Given the specifications of the company, the Securities and Exchange Commission (SEC) mandates Naiser Inc. to__________.

venture capital firm

Quintero wants to open a new influencer marketing company. Intero, a multinational firm, agrees to fund his business on the condition that Intero be given 48% ownership in the company. In the given scenario, Intero is most likely a(n) _____.

preferred stockholder

Rachel and Cori both have stocks in the Greenwell Group. However, if in the future the company goes out of business, Cori will have a claim on the assets of the company before Rachel. Also, she is given higher priority when the company pays the dividends to all its stockholders. Unlike Rachel, Cori is a _____.

asset management ratios

Sadako Nu, a laptop manufacturing company, produces 20,000 units of laptops. These units are sold within 4 months and replenished with another 30,000 units. In one year, Sadako Nu replaces its inventory of laptops five times over. Sadako Nu most likely analyzes _____ to measure how many times its inventory is sold and replaced each year.

capital gain

Tai Yang buys stocks worth $3,000 in a haircare products manufacturing company. His investment turns out to be a sound decision as the price of his stocks goes up by $960. In this scenario, Tai Yang earns a _____.

limited liability partnership

Three brothers of a family own a furniture showroom. Each of them is actively involved in handling the day-to-day business activities. However, when the business suffered huge losses at the end of the last fiscal year, the personal wealth and assets of the brothers did not get affected. This is most likely because the brothers have a___________.

having lower overhead costs

Ulvi starts his company in his parents' basement because he cannot afford to rent an office space. Most of his finances are spent on procuring the essential items to set up his company. As a result, Ulvi is able to save funds for the future. The opportunity of _____ is highlighted in the given scenario.

owns a corporation

Vail owns a consulting business along with six other people. Like the other owners, Vail is not personally responsible for the debts of the company. Her personal assets are thus protected in case the company incurs losses. Given this information, it can be assumed that Vail _____.

liquidity ratios

Waldo Sports, a sports equipment company, needs to pay off its loans to banks the following year. The company plans to sell its factories in the country of Naiser in order to pay its debts. In this scenario, Waldo Sports' ability to sell its factories in Naiser to pay its debts is measured by calculating _____.

$40

Wilson Oracles Co., a luxury resort in Arizona, has 800 shares of outstanding common stock and has not issued any preferred stock. Its net income is $32,000. Wilson Oracles Co.'s earnings per share (EPS) are _____.

providing personal customer service

Xiang owns a film studio with high-quality equipment. He allows videographers to schedule sessions based on their flexibility. He also allows clients to bring their own production assistants and works with them to achieve the desired result. As a result, his customers frequent his studio and recommend it to their friends and colleagues. The opportunity of _____ is highlighted in the given scenario.

financial management

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

Independence

Yannis, an employee at a consulting firm, is dissatisfied with the way his superiors handle business dealings. For this reason, he quits his job and starts his own business, so that he is able to make all business decisions without interference from anyone. Which advantage of entrepreneurship is highlighted in the given scenario?

internal auditor

Betty's job entails detecting problems such as embezzlement, waste, mismanagement, and employee theft at her organization. In this case, Betty is a(n) _____.

Gramm Billey Leach Act

Bloomington City Bank, a commercial bank in Indiana, was suffering from financial losses. Once the U.S. government passed the _____ in 1999, the bank started recovering from its losses as it was allowed to sell its securities.

not-for-profit corporation

Blue Mist is an organization whose earnings are exempt from federal and state income taxes. Individuals who contribute money to the organization can use the benefit of tax deduction. However, the organization is unable to distribute dividends to its members. Given this information, Blue Mist is most likely a(n) ________.

Factoring

Dagon Financing offers short-term financing plans to other companies. It buys the accounts of other companies at a discount and collects the full amount from the customers of those companies. Which of the following short-term financing options is being provided by Dagon Financing in this scenario?

Accounting Equation

Daley Incorporation, a social media company, is deciding whether to acquire Choice Inc., a start-up company that operates within the same industry. To better assess its decision, the management of Daley Incorporation needs to find out the value of Choice Inc.'s total assets. The management has information regarding Choice Inc.'s liabilities and stockholders' equity. In this scenario, the management should most likely use the _____ to get the required information.

must sever all ties with any firms or institutions that she served prior to joining the board

Edalene is a member of the Financial Accounting Standards Board (FASB) and is entrusted with the responsibility of establishing accounting principles in the United States. As a member of the board, Edalene__________.

stockholders

Edina and Galam both have shares in BC&Y Corporation, a C corporation that offers limited liability to all its owners. In this context, Edina and Galam are the _____ of BC&Y Corporation.

have a general partnership

Ethan and Dally start an analytics company together. Both of them have an equal right to participate in the company's management and share in the company's profits. In this scenario, Ethan and Dally most likely _____.

confidence

Evan left her job as a marketing manager in a reputed company to start her own social media marketing company at a time when social media marketing was not in vogue. She was bold enough to take this step despite knowing the amount of risk involved. Which entrepreneurial characteristic is highlighted in the given scenario?

Greater financial success

Haide starts a wedding planning company and earns a large profit in her first year. Her total earnings are more than what she used to earn as a salaried employee. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

Energy

Hakim has an innovative idea for a better bathroom sink design. Hence, he starts a business to implement this idea that he believes will succeed. He is also aware of the risks involved in starting the business. However, Hakim puts in only four hours a day into building his business. Some days, he finds it difficult to put in any time at all. Which of the following entrepreneurial characteristics does Hakim lack?

takes precedence over common stockholders

If Aldo is a preferred stockholder at Cam Inc., and Cam goes out of business, Aldo's claim on the firm's assets__________.

false

If an invoice lists the terms of trade credit as 2/10 net 30, it means that the supplier is offering a 10% cash discount off the invoice price if the buyer pays within 2 days.

it provides commercial loans

Ifor Bank is well known for providing funds to start-ups. The bank lends money to an entrepreneur at an interest rate of 6%, which is to be repaid only after the business earns a sizable profit. If the business fails, then only the primary amount needs to be returned. In the given scenario, which of the following statements is true of Ifor Bank?

Credit Union

Kadin, along with eight of his 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 Kadin and his colleagues exemplifies a(n) _____.

Crowdfunding

Kahili wants to make a short film on the unequal distribution of money in the world and its effect on different social classes. Instead of approaching a production house, he creates a website for the project where he pitches his idea through a short video and requests viewers to donate any amount of money to cover the production cost. In the given scenario, which of the following is Kahili using to get the capital for his film?

S corporation

Kahoni Incorporated does not face the problem of double taxation as the Internal Revenue Service (IRS) does not tax the earnings of the company separately. Instead, taxes are only levied on the personal income of the stockholders. A limitation, however, is that the company is only allowed to have a maximum number of 100 stockholders at a time. Given this information, Kahoni Incorporated is a(n) _____.

selling expenses

Kainda wants to find out the net income of her business for the last quarter. She deducts the cost of goods sold from the revenue earned during that period and then deducts the operating expenses from the gross profit. If Kainda decides to subtract the salary of her employees from the operating expenses before deducting the operating expenses from the gross profit, which of the following expenses would she be deducting?

franchise

Macario, a high-end sneaker brand in California, signs a licensing agreement with a firm in Honolulu, Hawaii to allow the latter to use Macario's brand name, trademark, and business methods to operate the same sneaker business in Honolulu. In exchange, the Honolulu firm has to pay the owner of Macario an annual fee. This scenario is an example of a(n) _____.

securities broker

Macayle assists her clients in investing in the stock market. She not only acts as an agent by buying and selling corporate stocks and bonds on behalf of them, but also provides them with services like financial consultation and market research for a fee. In this scenario, Macayle plays the role of a(n) _____.

the glass-stegall act

Maceo holds a savings account in the Jersey City Bank in the United States. During an economic downturn, the bank suffers great losses. Maceo, however, is insured under the Federal Deposit Insurance Corporation, so her savings are protected as the insurance covers her deposit value. Which of the following laws ensured the protection of depositors from a bank's failure?

Sole Proprietorship

Macrae has always been inclined toward fashion and wants to open her own clothing boutique. She takes a loan of $30,000 from the bank and starts a boutique in her hometown. In the context of the four forms of business, Macrae most likely _____.

Profitability Ratios

Madigan Co., a clothing company, planned to sell its stock products in 4 month's time. The company was able to sell those products within 2 month's time. Therefore, it was able to sell double the estimated amount in a year. Given the scenario, which of the following ratio analyses is most likely to have been analyzed by Madigan Co. to achieve this success?

Challenge

Madra works as a glassblower at an interior design company where a group of artisans are required to produce a specific part of a product, and the product is later assembled. Madra quits her job and starts a small decoration business where she crafts unique products based on the demands of her customers. She feels that the constant need to adapt and outperform herself keeps her focused and motivated to improve her craft. Which advantage of entrepreneurship is highlighted in the given scenario?

limited partner

Nakendra starts a pastry shop with her friend. However, owing to other commitments, Nakendra is unable to help with the daily operations of the shop. Therefore, Nakendra proposes that she would not actively participate in managing the business but would provide financial support to the business. By doing this, she would be sharing the profits equally with her friend, without incurring any of the business debts personally. In this scenario, Nakendra is a(n) _____.

too little money

Ogaleesha wants to open a new computer lab with state-of-the-art equipment and qualified teachers. However, he can only afford one of the two. He decides to get the equipment first to start the lab. However, without qualified teachers to operate the equipment, Ogaleesha loses his customers and is forced to shut down the lab. Which of the following threats is highlighted in the given scenario?

investment bank

Pacifico Blu is a financial intermediary that helps firms raise their capital by facilitating the firms in issuing new securities and making sure that the securities are sold out in the market. In this scenario, Pacifico Blu is a(n) _____.

leverage ratio

Ragle Ridge, a multinational company, finances itself each year by procuring 30% of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.

conglomerate merger

Silver Springs Inc., a cell phone manufacturer, merges with Freedman Food Corp., a food manufacturing brand, to make the firms less vulnerable to adverse conditions in any single market. This scenario is an example of a _____.

asset management ratios

Tahigwa, a medical equipment company, gains most of its net income by outsourcing its manufacturing plants to foreign countries. For every product it manufactures, the demand for those products becomes more pronounced. Which of the following financial ratio analyses can be used to measure how effectively Tahigwa is using its resources to generate revenues?

government accountant

The Securities and Exchange Commission hires Gatton to procure and analyze data on the state's tax revenues and expenditures to ensure that they are recorded and reported in accordance with regulations and requirements. In this case, Gatton is most likely a(n) _____.

$330 million

The assets of Caelum Co., a glass and silver company, amount to $500 million, and its liabilities add up to $170 million. Based on the accounting equation, Caelum Co. owners' equity is equal to _____.