BA 240 Chapter 1 (Week 1)

______ budgeting is the process of making and managing expenditures on long-term assets.

Capital

In large firms, financial activity is usually associated with which top officer?

Chief financial officer

Which of the following positions generally report to the chief financial officer (CFO)? Multiple select question.

Controller Treasurer

Which of the following are considered stakeholders in a company?

Employees Government Suppliers

It is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control. True false question.

False

What are the two factors that impact whether managers will act in the best interest of stockholders?

How closely management goals align with stockholder goals and the way managers are compensated

Which of the following are true of a sole proprietorship?

It is the simplest type of business to form. A proprietorship has a limited life.

Which of the following can be used to encourage managers to act in the best interests of shareholders?

Managerial compensation tied to performance Better prospects of promotion

The aim of the act known as Blank______ is to protect investors from corporate abuse.

SOX

When a corporation is formed, it is granted which of the following rights?

State citizenship for jurisdictional purposes The ability to issue stock Legal powers to sue

Which of the following, according to the textbook, are possible financial goals for a company?

Survival Maximize profits Minimize costs

What is the main goal of financial management? Multiple choice question.

To maximize current value per share of existing stock

A partnership must have at least _______ owners.

Two

Which of the following companies were involved in corporate scandals that led to Sarbanes-Oxley?

Tyco Enron WorldCom

Which of the following are among the most important questions to be asked when a business is started?

Where will long-term financing be obtained to pay for investments? What long-term investments should be made? How will everyday financial activities be handled?

Which of the following is not an important question that must be asked when starting a firm?

Which type of operating system should you use for your computers?

The relationship between stockholders and management can best be described as a(n) ______ relationship.

agency

A ___ corporation is for profit, and has the legal attributes of accountability, transparency, and purpose.

benefit

Some of the cash flow generated by a firm goes back to the financial markets in the form of ______.

dividends and debt payments

In financial markets, debt and ___ securities are bought and sold.

equity

A corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.

legal

Capital budgeting is concerned with planning and managing a firm's _____.

long-term investments

Because ownership in a corporate is spread over a huge number of shareholders, it can be argued that ___ effectively controls the firm.

managers

In a shareholder-manager relationship, who is the agent? Multiple choice question.

managers

Since ownership in a corporation can be dispersed over a huge number of stockholders, it can be argued that ______ effectively controls the firm. Multiple choice question.

mangement

Most equity shares of large firms in the U.S. trade on:

organized auction markets

The goal of the for-profit business is to maximize ___ equity

owner's

A business without separate legal authority formed by two or more people is known as a _____.

partnership

Corporations in other countries are often called:

public limited companies. joint stock companies.

A ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm. Multiple choice question.

stakeholder

Organized auction markets include:

the New York Stock Exchange

The financial manager acts in the shareholders' best interests by making decisions that increase the value of _____.

the stock

A benefit corporation is for profit, and has the legal attributes of accountability, _____, and purpose.

transparency

A sole proprietor has ______ personal liability for all business debts and obligations.

unlimited

The possible goal of profit maximization:

can be achieved by cost-cutting. would probably be the most commonly cited goal for a business.

It is argued that, left to themselves, managers would tend to maximize the amount of resources over which they have control or, more generally, ___ power or wealth.

corporate

A joint stock company is another name for what is referred to as a ___ in the United States

corporation