buisness exam

Felix lost his job at an investment firm because of downsizing during a period of recession. To keep himself financially stable, he opened a food truck that became a huge success. Which of the following advantages of entrepreneurship initially motivated Felix to start the food truck?

Survival

Par value is the value of a bond at its maturity; what the issuer promises to pay the bondholder when the bond matures.

True

Which of the following statements is true of a franchisor-franchisee relationship?

a. A franchisor limits the franchisee's territory from expanding into other areas.

A Franchise Disclosure Document (FDD) is:

a. a document provided by a franchisor to the franchisee.

Heinrich Chemical Corporation holds an annual meeting in which it invites all individuals who hold shares in the company. The occasion is also set aside for the election of a new member to the company's board of directors. However, the company ensures that only individuals who have the right to vote participate in the election. In this scenario, the _____ of the company take part in the voting process.

a. common stockholders

One drawback of offering liberal credit to customers is that it can:

a. delay the receipt of cash that the firm needs to meet its financial obligations.

As the recession of 2007-2008 loomed over both large and small businesses, many firms looked for ways to deleverage. The term deleveraging implies that:

a. the firms replaced much of the debt in their capital structure with equity.

Which of the following is a difference between managerial accounting and financial accounting?

b. Financial accounting is governed by a set of generally accepted accounting principles, whereas managerial accounting uses procedures developed internally that are not required to follow generally accepted accounting principles.

Which of the following is true of the Securities Act of 1933?

b. It prohibited misrepresentation in the sale of newly issued stocks and bonds.

In the context of budgeting, a flexible budget:

b. is designed to show the appropriate budgeted level of costs for each different level of sales.

Hevron Hrist, a multinational company, finances itself each year by procuring 25 percent of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.

b. leverage ratios

Julian wants to open a bakery. He uses his savings and borrows some funds from his family to start his business. In the given scenario, Julian uses _____ to fund his business.

b. personal resources

Jenny, an external auditor from a public accounting firm, verified the financial statements of a real estate company. At the end of her review, Jenny did not find any discrepancies in the figures presented by the company and the accounting methods of the company. In this scenario, the independent auditor's report most likely offered a(n) _____.

b. unqualified opinion

Which of the following is true of stock exchanges?

c. Each exchange establishes its own requirements for the securities it lists.

Mort Zuba, an automobile company, needs to pay off its loans to banks the following year. The company plans to sell its factories in Astonsia in order to pay its debts. In this scenario, Mort Zuba's ability to sell its factories in Astonsia to pay its debts is measured by calculating _____.

c. liquidity ratios

A(n)__________, a type of divestiture, occurs when a company issues stock in one of its own divisions or operating units and sets it up as a separate company—complete with its own board of directors and corporate officers.

c. spin-off

Suresh quits his nine-to-five job at a multinational company and starts his own event management company. In his new company, he does not practice a nine-to-five work regime. Instead, he organizes meetings with clients by making appointments that favor his schedule. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

d. Flexibility

Prenora Inc., a newly established company, is set to prepare its first budget. The top management of the company decides to use a budgeting approach that will seek active participation from the middle and supervisory managers of the company. In the given scenario, Prenora Inc. will most likely use the _____ to budgeting.

d. bottom-up approach

According to small business experts, while raising start-up funds from friends and relatives, it is:

d. essential to keep the relationship as professional as possible.

According to critics, the Glass-Steagall Act:

d. impeded financial innovation.