Fin 3716 ch. 1

an example of financing decisions are?

- How to raise money to pay for a firms investments

Which of the following represent cash outflows from a corporation? I. issuance of securities II. payment of dividends III. new loan proceeds IV. payment of government taxes

2 4

A business owned by a solitary individual who has unlimited liability for its debt is called a: A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. limited liability company

B

Which one of the following is a working capital management decision? A. determining the amount of equipment needed to complete a job B. determining whether to pay cash for a purchase or use the credit offered by the supplier C. determining the amount of long-term debt required to complete a project D. determining the number of shares of stock to issue to fund an acquisition E. determining whether or not a project should be accepted

B

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. limited liability company.

C

Which form of business structure is most associated with agency problems? A. sole proprietorship B. general partnership C. limited partnership D. corporation E.limited liability company

D

The decision to issue additional shares of stock is an example of which one of the following? A. working capital management B. net working capital decision C. capital budgeting D. controller's duties E. capital structure decision

E

A business created as a distinct legal entity and treated as a legal "person" is called a: a. corporation. b. sole proprietorship. c. general partnership. d.limited partnership. e.unlimited liability company.

a

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

partnership

Which one of the following is a primary market transaction? a. sale of currently outstanding stock by a dealer to an individual investor b. sale of a new share of stock to an individual investor c. stock ownership transfer from one shareholder to another shareholder d. gift of stock from one shareholder to another shareholder e. gift of stock by a shareholder to a family member

b

The primary responsibility of financial managers is to increase the value of ...

the existing shares of stock

Treasurer ...

this financial officer oversees cash management , credit management, financial planning and capital expenditures

Controller....

this financial officer oversees costs and financial accounting, taxes and information systems

Corporate finance deals with?

investment decisions and financing decisions

Which corporate officer is responsible for managing the firms cash? a. controller b. sales manager c. treasurer d. corporate secretary

c

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

chief financial officer

Which one of the following terms is defined as the management of a firms long term investments? a. working capital management b. financial allocation c. agency cost analysis d. capital budgeting e. capital structure

d

some of the cash flow generated by a firm goes back to the financial markets in the form of

dividends and debt payments

The controller of a corporation generally reports directly to the -- a. board of directors b. chairman of the board c. chief executive officer d. president e. vice president of finance

e

businesses are motivated to organize as corporations because stockholders in a corporation have===== liability for corporate debts

limited

What questions do capital structure financial managers ask ?

- How to raise money -What -When -Where -Debt or equity , what is the optimal mix

The controller is responsible for which of the following tasks? a)financial accounting b)raising capital c)tax reporting d)capital expenditure

a and c

corporations in other countries are often called a. public limited companies b. joint stock companies c. recalibrated partnerships d. autonomous entities

a b

Which of the following are considered stakeholders in a company ? a. employees b. suppliers c. government d. stockholder

a b c

Which of the following are important when considering a partnership? a. taxation of partnership income b. fund raising limitations c. future dividend policy d. personal liability for firm debts

a b d

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? a.working capital management b. cash management c. cost analysis d. capital budgeting e. capital structure

e

Which of the following individuals have unlimited liability based on their ownership interest? I. general partner II. sole proprietor III. stockholder IV. limited partner

1 2

Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life

1 3 4

Which of the following are cash flows from a corporation into the financial markets? I. repayment of long-term debt II. payment of government taxes III. payment of loan interest IV. payment of quarterly dividend

1 3 4

Which of the following questions are addressed by financial managers ? I. How should a product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases? III. Should the firm borrow more money? IV. Should the firm acquire new equipment?

2 3 4

Which one of the following is defined as a firm's short-term assets and its short-term liabilities? A. working capital B. debt C. investment capital D. net capital E. capital structure

A

Which one of the following best states the primary goal of financial management? A. maximize current dividends per share B. maximize the current value per share C. increase cash flow and avoid financial distress D. minimize operational costs while maximizing firm efficiency E. maintain steady growth while increasing current profits

B

Which one of the following functions should be the responsibility of the controller rather than the treasurer? A.daily cash deposit B. income tax returns C. equipment purchase analysis D. customer credit approval E. payment to a vendor

B

Which one of the following statements is correct? A. A general partnership is legally the same as a corporation. B. Both sole proprietorship and partnership income is taxed as individual income. C. Partnerships are the most complicated type of business to form. D. All business organizations have bylaws. E. Only firms organized as sole proprietorships have limited lives.

B

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a: A. generally partner. B. sole proprietor. C. limited partner. D. corporate shareholder. E. zero partner.

C

Which one of the following statements concerning a sole proprietorship is correct? a.A sole proprietorship is designed to protect the personal assets of the owner. b.The profits of a sole proprietorship are subject to double taxation. c.The owner of a sole proprietorship is personally responsible for all of the company's debts. d.There are very few sole proprietorships remaining in the U.S. today. e.A sole proprietorship is structured the same as a limited liability company.

c

which one of the following business types is best situated to raising large amounts of capital? a. sole proprietorship b. limited liability company c. corporation d. general partnership e. limited partnership

c

an example of investment decisions are?

- What long term investments should the firm take on - What lines of business to obtain -Which real assets to acquire

What is the main role of working capital management?

-to deal with the day to day finances of the firm -managing short term assets and liabilities

the relationship between stockholders and management can best be described as a ====== relationship

agency

an organization must prepare ===== and bylaws when forming a corporation

articles of incorporation

The officer responsible for corporate tax reporting is the a. chief operating officer b. controller c. ombudsman d. treasurer

b

Which one of the following is a capital budgeting decision? a. determining how many shares of stock to issue b. deciding whether or not to purchase a new machine for the production line c. deciding how to refinance debt issue that is maturing d. determining how much inventory to keep on hand e. determining how much money should be kept in the checking account

b

What items are included in a firms capital structure? a)current assets b)long term debt c)equity d)net sales

b and c

A treasure's responsibilities typically include a. financial accounting b. making financial plans c. managing capital expenditure decisions d. handling cash flows

b c d

When a corporation is formed, it is granted which of the following rights ? a. corporate life of up to 100 year b. the ability to issue stock c. legal powers to sue d. state citizenship for jurisdictional purposes

b c d

Which one of the following is a capital structure decision? A.determining which one of two projects to accept B. determining how to allocate investment funds to multiple projects C. determining the amount of funds needed to finance customer purchases of a new product D. determining how much debt should be assumed to fund a project E. determining how much inventory will be needed to support a project

D

Which type of business organization has all the respective rights and privileges of a legal person? A.sole proprietorship B. general partnership C.limited partnership D.corporation E.Limited liability company

D

which term applies to the mixture of debt and equity maintained by a firm? a. capital structure b. net working capital c. capital budget d. cash management

capital structure

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management? a. increase in the amount of the quarterly dividend b. decrease in the per unit production costs c. increase in the number of shares outstanding d. decrease in the net working capital e. increase in the market value per share

e

Chief Financial Officer ...

this financial officer coordinates the activities of the treasurer and the controller

Decisions made by financial managers should primarily focus on increasing which one of the following? A. size of the firm B. growth rate of the firm C. gross profit per unit produced D. market value per share of outstanding stock E. total sales

D

Shareholder A sold 500 shares of ABC stock on the New York Stock exchange. This transaction - a. took pace in the primary market b. occurred in a dealer market c. was facilitated in the secondary market d. involved a proxy e. was a private placement

c

____ budgeting is the process of making and managing expenditures on long term assets

capital