exam 3 intro to bus

_____ measure how effectively an organization uses its resources to generate net income.

Asset management ratios

This tool is used by companies to determine how they will accomplish goals in a stated time period

Budgeting

Cash inflows and outflows are project using a

Cash budget

Companies can obtain additional capital through either debt or

Equity

This is the process by which companies sell their accounts receivable at a discount

Factoring

This is always a good idea to fund a business with as much equity as possible. True or False?

False.

accounting that is used to provide information to those outside the company is called __________ accounting

Financial

Which of the following explains the preemptive right of common stockholders?

If a corporation issues new stock, existing stockholders can purchase new shares in proportion to their existing holdings before the stock is offered to the other investors.

Which of the following statements is true of a socially responsible firm?

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

Financial ratios that measure a company's ability to meet current obligations are called _______ ratios.

Liquidity

what types of people use accounting?

Managers Shareholders Suppliers All of the above****

_____ measures the income earned per dollar invested by the stockholders of a firm.

Return-on-equity

A public accounting firm takes up a contract to perform an external audit for an oil manufacturing company. The firm, however, is already in a consulting contract with the oil company. Because of its prior association with the oil company and the hefty fee the oil company pays the firm, the firm manipulates the audit report. Which of the following laws is violated in this scenario?

The Sarbanes-Oxley Act

Which of the following is an example of an intangible asset?

The goodwill showed by a food manufacturing company by helping its competitor at a time of crisis

Which of the following is a drawback of mutual funds?

The professional management touted by many funds does not come cheap.

Which of the following is true of securities brokers?

They act as agents for investors who want to buy or sell financial securities.

To buy today and pay later with inventory, a supplier may offer a

Trade credit

If a corporation issues new stock, existing stockholders sometimes have a preemptive right to purchase new shares in proportion to their existing holdings before the stock is offered to the other investors. True or False?

True

mutual funds are much more affordable way to diversify investments

True

the board has no legal obligation to declare a dividend. True or false?

True

Dividends of a company are:

a distribution of earnings that are paid to a corporation's stockholders.

Miller is the owner of a restaurant that has several franchises. One of the franchisees owes Miller a sum of $18,000 for the goods that he had bought from Miller on credit. In this scenario, the money owed to Miller is known as _____.

accounts receivables

using ________ accounting, revenues are recognized when they are earned

accrual- basis

Institutional investors:

amass huge pools of financial capital from various sources.

Securities brokers

are compensated by charging fees and commissions for the services they provide.

n the context of financial accounting, the external stakeholders of a firm:

are seldom interested in analyzing detailed accounting information about the individual departments within the firm.

Inventory turnover is an example of a ___________ ratio.

asset management

In the context of balance sheets, resources owned by a firm are known as _____.

assets

the basic account equation, assets= liabilities+ owners equity, is found in the

balance sheet

_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period.

budgeting

shareholder that have __________ stock have the right to vote on company issues

common

these are typically sold at a discount to the face value

corporate bonds

In the context of balance sheets, accounts receivable is an example of _____.

current assets

Balance sheets usually organize liabilities into two broad categories, which are:

current liabilities and long- term liabilities

Institutional investors don't accept ________ but amass huge pools of financial capital from other sources

deposits

When a company issues and sells new stock or uses retained earnings to meet its financial needs, it is using _____.

equity financing

Exchange-traded funds and mutual funds account for:

financial diversification.

Markets that transfer funds from savers to borrowers are referred to as _____.

financial markets

Financial managers use _____ to assess the financial strengths and weaknesses of their firm.

financial ratio analysis

Companies must adhere to this set of guidelines when making various reports

generally accepted accounting principles (GAAP)

The practice of holding many different securities in many different sectors is generally considered a desirable strategy because it

helps reduce (but not completely eliminate) risk.

Unlike the debt in a firm's capital structure, the equity in a firm's capital structure:

imposes no required payments.

This shows the financial result from business' operations over time

income statement

The _____ is an asset management ratio that measures how quickly a firm sells its stock to generate revenue.

inventory turnover ratio

A(n) _____ is a financial intermediary that specializes in helping firms raise financial capital by issuing securities in primary markets.

investment bank

When a company offers stock to the public initially, they get the help of a

investment bank

For a corporation, direct investment from owners occurs when:

it sells newly issued stock.

In finance, a _____ is one that can be quickly converted into cash with little risk of loss.

liquid asset

_____ provide analysis and prepare reports and financial statements for their organization.

management accountants

The price at which shares of an open-end mutual fund are issued and redeemed is based on the fund's _____.

net asset value per share

In the context of an independent auditor's report, if the auditor identifies some minor concerns but believes that on balance the firm's statements remain a fair and accurate representation of the company's financial position, the report will offer a(n) _____ opinion.

qualified

Which of the following is a source of long-term funds for a firm?

retained earning

This shows how much cash is going in and out of a business

statement of cash flows

NYSE and NASDAQ are examples of

stock exchange

Sometimes investment banks actually buy

the newly issued securities themselves; in other cases, they simply help arrange for their sale.

A health and fitness startup company goes for an initial public offering. For assistance, it enters into a firm commitment arrangement with an investment bank. As per the agreement, the investment bank itself will purchase all the shares at a specified price. This will guarantee that the company will receive a fixed amount of new funds. This scenario exemplifies a(n) _____.

underwriting