FIN300 Extra Review

Which one of the following terms is defined as the management of a firm's long-term investments? Working capital management Financial allocation Agency cost analysis Capital budgeting Capital structure

Capital budgeting

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? Working capital management Cash management Cost analysis Capital budgeting Capital structure

Capital structure

Which one of the following statements is correct? The majority of firms in the U.S. are structured as corporations. Corporate profits are taxable income to the shareholders when earned. Corporations can have an unlimited life. Shareholders are protected from all potential losses. Shareholders directly elect the corporate president.

Corporations can have an unlimited life.

Which one of the following statements is correct? Multiple Choice A general partnership is legally the same as a corporation. Income from both sole proprietorships and partnerships that is taxable is treated as individual income. Partnerships are the most complicated type of business to form. All business organizations have bylaws. Only firms organized as sole proprietorships have limited lives.

Income from both sole proprietorships and partnerships that is taxable is treated as individual income.

Which one of the following is an expense for accounting purposes but is not an operating cash flow for financial purposes? Multiple Choice Interest expense Taxes Cost of goods sold Labor costs Administrative expenses

Interest expense

Sally and Alicia are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with their unlimited liability. Which form of business entity should they consider as a replacement to their current arrangement assuming they wish to remain the only two owners of the business? Multiple Choice Sole proprietorship Joint stock company Limited partnership Limited liability company Corporation

Limited liability company

Which one of the following best states the primary goal of financial management? Maximize current dividends per share Maximize the current value per share Increase cash flow and avoid financial distress Minimize operational costs while maximizing firm efficiency Maintain steady growth while increasing current profits

Maximize the current value per share

Which one of the following functions should be the responsibility of the controller rather than the treasurer? Multiple Choice Depositing cash receipts Processing cost reports Analyzing equipment purchases Approving credit for a customer Paying a vendor

Processing cost reports

Which one of the following is a primary market transaction? Multiple Choice Sale of currently outstanding stock by a dealer to an individual investor Sale of a new share of stock to an individual investor Stock ownership transfer from one shareholder to another shareholder Gift of stock from one shareholder to another shareholder Gift of stock by a shareholder to a family member

Sale of a new share of stock to an individual investor

Public offerings of debt and equity must be registered with the: Multiple Choice New York Board of Governors. Federal Reserve. NYSE Registration Office. Securities and Exchange Commission. Market Dealers Exchange.

Securities and Exchange Commission.

Which one of the following parties has ultimate control of a corporation? Multiple Choice Chairman of the board Board of directors Chief executive officer Chief operating officer Shareholders

Shareholders

Which one of the following is a working capital management decision? Multiple Choice What type(s) of equipment is (are) needed to complete a current project? Should the firm pay cash for a purchase or use the credit offered by the supplier? What amount of long-term debt is required to complete a project? How many shares of stock should the firm issue to fund an acquisition? Should a project should be accepted?

Should the firm pay cash for a purchase or use the credit offered by the supplier?

Which one of the following statements is correct concerning the NYSE? Multiple Choice The publicly traded shares of a NYSE-listed firm must be worth at least $250 million. The NYSE is the largest dealer market for listed securities in the United States. The listing requirements for the NYSE are more stringent than those of NASDAQ. Any corporation desiring to be listed on the NYSE can do so for a fee. The NYSE is an OTC market functioning as both a primary and a secondary market.

The listing requirements for the NYSE are more stringent than those of NASDAQ.

The decision to issue additional shares of stock is an example of: working capital management. a net working capital decision. capital budgeting. a controller's duties. a capital structure decision.

a capital structure decision.

Financial managers should strive to maximize the current value per share of the existing stock to: Multiple Choice guarantee the company will grow in size at the maximum possible rate. increase employee salaries. best represent the interests of the current shareholders. increase the current dividends per share. provide managers with shares of stock as part of their compensation.

best represent the interests of the current shareholders.

Net working capital is defined as: Multiple Choice total liabilities minus shareholders' equity. current liabilities minus shareholders' equity. fixed assets minus long-term liabilities. total assets minus total liabilities. current assets minus current liabilities.

current assets minus current liabilities.

The articles of incorporation: describe the purpose of the firm and set forth the number of shares of stock that can be issued. are amended periodically especially prior to corporate elections. explain how corporate directors are to be elected and the length of their terms. sets forth the procedures by which a firm regulates itself. include only the corporation's name and intended life.

describe the purpose of the firm and set forth the number of shares of stock that can be issued.

Corporate bylaws: must be amended should a firm decide to increase the number of shares authorized. cannot be amended once adopted. define the name by which the firm will operate. describe the intended life and purpose of the organization. determine how a corporation regulates itself.

determine how a corporation regulates itself.

One disadvantage of the corporate form of business ownership is the: limited liability of its shareholders for the firm's debts. double taxation of distributed profits. firm's greater ability to raise capital than other forms of ownership. firm's potential for an unlimited life. firm's ability to issue additional shares of stock.

double taxation of distributed profits.

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

general partnership.

Depreciation for a tax-paying firm: Multiple Choice increases expenses and lowers taxes. increases the net fixed assets as shown on the balance sheet. reduces both the net fixed assets and the costs of a firm. is a noncash expense that increases the net income. decreases net fixed assets, net income, and operating cash flows.

increases expenses and lowers taxes

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a: corporation. sole proprietorship. general partnership. limited partnership. limited liability company.

sole proprietorship.

Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction: Multiple Choice took place in the primary market. occurred in a dealer market. was facilitated in the secondary market. involved a proxy. was a private placement.

was facilitated in the secondary market.