BCOR 340 EXAM 1

(a) the creation of value for shareholders.

7. Problem The focal point of financial management in a firm is: (a) the creation of value for shareholders. (b) the minimization of the amount of taxes paid by the firm. (c) the dollars profits earned by the firm. (d) the number and types of products or services provided by the firm.

(b) limited owner liability.

A major advantage of the corporate form of organization is: (a) reduction of double taxation. (b) limited owner liability. (c) legal restrictions. (d) ease of organization.

(b) cash outflow to shareholders as dividends.

According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity? (a) cash outflow to lenders as interest. (b) cash outflow to shareholders as dividends. (c) cash outflow to purchase bonds issued by another company. (d) cash outflow to the government for taxes.

A

According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity? (a) cash outflow to shareholders as dividends. (b) cash outflow to the government for taxes. (c) cash outflow to purchase bonds issued by another company. (d) cash outflow to lenders as interest.

(c) To periodically pay off interest and outstanding principal through maturity.

Amortizing a loan means: (a) To combine school loan and car loan into a single mortgage. (b) To pay only the interest of a loan through maturity. (c) To periodically pay off interest and outstanding principal through maturity. (d) To pay someone else's debt, or act as a guarantor.

C

Amortizing a loan means: (a) To combine school loan and car loan into a single mortgage. (b) To pay someone else's debt, or act as a guarantor. (c) To periodically pay off interest and outstanding principal through maturity. (d) To pay only the interest of a loan through maturity.

(d) Assets and Liabilities

Calculating net worth of a person requires: (a) Tax bracket (b) Salary of a person determines their net worth (c) Fixed and Variables Expenses (d) Assets and Liabilities

(d) All of above

Paying accounts payable with cash will result in: (a) Decrease in current asset (b) Decrease in current liability (c) Increase in equity-to-assets ratio (d) All of above

(a) Increase

Problem When interest rates increase, the future value of $100 would: ? (a) Increase (b) Decrease (c) Stay the same (d) First increase and then decrease

A

The focal point of financial management in a firm is: (a) the creation of value for shareholders. (b) the number and types of products or services provided by the firm. (c) the dollars profits earned by the firm. (d) the minimization of the amount of taxes paid by the firm.

(c) the creation of value for shareholders.

The focal point of financial management in a firm is: (a) the minimization of the amount of taxes paid by the firm. (b) the dollars profits earned by the firm. (c) the creation of value for shareholders. (d) the number and types of products or services provided by the firm

(d) maximize the value of the firm's common stock in the short-run. "Make money for the owners, now and into the future." - Frank DeGeorge

The long-run objective of financial management is to: (a) maximize return on investment. (b) maximize the value of the firm's common stock in the long-run. (c) maximize earnings per share. (d) maximize the value of the firm's common stock in the short-run.

(c) Increase

When interest rates increase, the future value of $100 would: ________? (a) First increase and then decrease (b) Decrease (c) Increase (d) Stay the same

C

When interest rates increase, the future value of $100 would: ________? (a) First increase and then decrease (b) Stay the same (c) Increase (d) Decrease

(a) Increase

When interest rates increase, the future value of $100 would: ________? (a) Increase (b) Stay the same (c) Decrease (d) First increase and then decrease

(d) Borrow short term to finance additional fixed assets

Which of the following would NOT improve the current ratio? (a) Sell fixed assets to reduce accounts payable. (b) Issue long-term debt to buy inventory. (c) Sell common stock to reduce current liabilities. (d) Borrow short term to finance additional fixed assets