quiz 1

1A firm has $520 in inventory, $1,860 in fixed assets, $190 in accounts receivables, $210 in accounts payable, and $70 in cash. What is the amount of the current assets?

Current assets = $520 + $190 + $70 = $780

Who has ultimate control of a corporation?

the shareholders

Included in market value but excluded from book value

value of management skills, value of firm's reputation, and value of employee's experience

What account are included in working capital management?

Account payable, accounts receivable, and inventory. NOT fixed assets

Mixture of a firm's debt and equity financing

capital structure

What type of business organization has all the respective rights and privileges of a legal person?

corporation

Example of a capital budgeting decision

deciding whether or not to purchase a new machine for the production line

Example of an Agency Cost

hiring outside accountants to audit the company's financial statements

A financial statement that summarizes a firm's revenue and expenses over a period of time

income statement

What best illustrates that the management of a firm is adhering to the goal of financial management?

increase in the market value per share

Example of current assets

inventory and cash NOT patents or accounts payable

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a...

limited partner

The percentage of the next dollar you earn that must be paid in taxes is referred to as the....

marginal tax rate