FIN 301 Test 1 Ch. 1

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as:

working capital management.

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

working capital.

An employee has a claim on the cash flows of Martin's Machines. This claim is defined as a claim by one of the firm's:

stakeholders.

Which one of the following situations is most apt to create an agency conflict?

Basing management bonuses on the length of employment

Which one of the following functions is generally a responsibility assigned to the corporate treasurer?

Capital expenditures

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller?

Cash management

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Corporate accounting and financial fraud

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

Corporation

Working capital management includes which one of the following?

Determining which customers will be granted credit

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debt II. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

I, III, and IV only

If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?

Investments

What is the primary goal of financial management for a sole proprietorship?

Maximize the market value of the equity

Which one of the following correctly defines a common chain of command within a corporation?

The controller reports directly to the chief financial officer.

Which one of the following statements is correct?

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

Which one of the following statements about a limited partnership is correct?

There must be at least one general partner.

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):

stakeholder.

A private placement is most apt to involve:

a life-insurance company.

Security dealers:

buy and sell from their own inventory.

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:

capital structure management.

The goal of financial management is to increase the:

current market value per share.

An auction market:

has a physical trading floor.

Corporate shareholders:

have the ability to change the corporation's bylaws.

A limited liability company (LLC):

prefers its profits be taxed as personal income to its owners.

One example of a primary market transaction would be the:

sale of 1,000 shares of newly issued stock by Alt Company to Miquel.

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE. This sale will occur in the:

secondary market.