Survey of business exam 2

_____ measure how effectively an organization uses its resources to generate net income. a. Asset management ratios b. Capital budgeting ratios c. Leverage ratios d. Profitability ratios

a. Asset management ratios

Which of the following statements is true of a limited liability partnership (LLP)? a. It does not need to distinguish between limited and general partners. b. The amount of liability protection offered by LLPs varies among states. c. All partners of an LLP cannot take an active role in management. d. It is completely different from a limited partnership.

a. It does not need to distinguish between limited and general partners.

In the context of balance sheets, resources owned by a firm are known as _____. a. holdings b. assets c. capitals d. liabilities

b. assets

The _____ summarizes the financial results of a firm's operations over a given period of time. a. balance sheet b. income statement c. statement of cash flows d. statement of stockholders equity

b. income statement

In the context of budget preparation, which of the following is an advantage of using bottom-up budgeting? a. It is less time consuming than the top-down approach. b. It eliminates the possibility of budgetary slack. c. Middle managers are likely to be highly motivated to achieve budgetary goals. d. Supervisory managers are likely to know the long-term strategic needs of a company.

c. Middle managers are likely to be highly motivated to achieve budgetary goals.

In financial management, risk is referred to as the: a. environmental factors that may affect a business adversely. b. internal factors that may disrupt the smooth functioning of a company. c. degree of uncertainty about the actual outcome of a decision. d. various strategies implemented by managers to increase returns.

c. degree of uncertainty about the actual outcome of a decision.

In finance, a _____ is one that can be quickly converted into cash with little risk of loss. a. capital asset b. fixed asset c. tangible asset d. liquid asset

d. liquid asset

Which of the following is true of balance sheets? a. The balance sheets of different firms vary in specifics. b. They identify the sources and uses of cash for firms in a given accounting period. c. All balance sheets are organized to reflect the profitability index of firms d. They do not include the value of the intangible assets of firms.

a. The balance sheets of different firms vary in specifics.

In the accounting equation, assets are equal to: a. liabilities plus owners' equity. b. liabilities divided by gross profit. c. stockholders' equity subtracted from liabilities. d. owners' equity multiplied by net income.

a. liabilities plus owners' equity.

Which of the following is a similarity between angel investors and venture capitalists? a. Both require firms to pledge collateral, such as inventories or accounts receivable. b. Both invest in risky opportunities that offer the possibility of high rates of return. c. Both typically provide funds without requiring a share of ownership. d. Both are key sources of long-term funds, which are backed by commercial paper.

b. Both invest in risky opportunities that offer the possibility of high rates of return.

_____ perform a variety of accounting functions for local, state, or federal agencies, such as the Internal Revenue Service (IRS) and the Federal Deposit Insurance Corporation (FDIC). a. Public prosecutors b. Government accountants c. Public accountants d. Social accountants

b. Government accountants

Sidney 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, Sidney: a. is to serve a seven-year term and cannot be reappointed to serve another term. b. must sever all ties with any firms or institutions that she served prior to joining the board. c. is responsible for directing the Securities and Exchange Commission to enforce the accounting standards d. must pass a rigorous two-day, four-part examination to be promoted as a certified fraud examiner.

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

Which of the following statements is true of a socially responsible firm? a. It increases the bargaining power of buyers. b. It has high employee turnover. c. It has an obligation to respect the needs of all stakeholders. d. It emphasizes maximizing shareholder value.

c. It has an obligation to respect the needs of all stakeholders.

A(n) _____ cannot contribute funds to a political campaign. a. S corporation b. C corporation c. not-for-profit corporation d. statutory close corporation

c. not-for-profit corporation

In which of the following ways do public accountants differ from management accountants? a. Public accountants rely on data provided by top managers, whereas management accounts rely on data provided by middle and supervisory managers. b. Management accountants are answerable to the Securities and Exchange Commission, whereas public accountants are answerable to their own organization. c. Management accountants are associated with CPA firms, whereas public accountants can only be internal auditors. d. Public accountants conduct external audits, whereas management accountants analyze the financial statements of their own organization.

d. Public accountants conduct external audits, whereas management accountants analyze the financial statements of their own organization.

In the context of accounting, which of the following best defines cost? a. The value of equities a firm has at its disposal b. The income from which public expenses are met c. The income lost due to unaccountable decision-making d. The value of what is given up in exchange for something else

d. The value of what is given up in exchange for something else

The _____ of a company is a simple statement that shows how the accumulated revenues that have been reinvested in the company have changed from one accounting period to the next. a. profit and loss statement b. pro forma statement c. statement of operations d. statement of retained earnings

d. statement of retained earnings