Question 1

The biggest disadvantage of the sole proprietorship is

Accepted Answer

A)   unlimited liability.
B)   double taxation.
C)   limited access to capital.
D)   total control.E) A) and D)
F) B) and C)

Question 2

When determining a form of business organization,all of the following are considered EXCEPT

Accepted Answer

A)   who owns the firm.
B)   the owners' risks.
C)   the tax ramifications.
D)   the physical location of the business.E) A) and B)
F) A) and C)

Question 3

This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.

Accepted Answer

A)   minimizing layoffs
B)   maximizing market share
C)   minimizing costs
D)   maximizing shareholder valueE) C) and D)
F) B) and C)

Question 4

All of the following are advantages to organizing as a corporation EXCEPT

Accepted Answer

A)   limited liability.
B)   double taxation.
C)   easy access to capital.
D)   easy to transfer ownership.E) A) and B)
F) B) and C) B

Question 5

The most common type of business in the United States is the

Accepted Answer

A)   corporation.
B)   partnership.
C)   sole proprietorship.
D)   hybrid organization such as a limited liability company.E) B) and C)
F) A) and D) C

Question 6

Which of the following is legal duty between two parties where one party must act in the interest of the other party?

Accepted Answer

A)   agency theory
B)   angel investor
C)   fiduciary
D)   investment bankerE) A) and C)
F) B) and C)

Question 7

Agency problems exist in which forms of business ownership?

Accepted Answer

A)   sole proprietorship
B)   S corporation
C)   partnership
D)   corporationE) A) and B)
F) A) and C)

Question 8

From the perspective of access to capital,the best form of business organization is the

Accepted Answer

A)   sole proprietorship.
B)   corporation.
C)   partnership.
D)   S corporation.E) None of the above
F) All of the above

Question 9

What is the difference in perspective between finance and accounting?

Accepted Answer

A)   timing
B)   risk
C)   liability
D)   ownershipE) A) and D)
F) C) and D)

Question 10

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship,which of these must happen?

Accepted Answer

A)   The business must be re-formed as a partnership.
B)   The owner must give up some control.
C)   The owner must co sign on all loans.
D)   Both the business must be re formed as a partnership and the owner must give up some control.E) A) and B)
F) A) and C)

Question 11

As individual legal entities,corporations assume liability for their own debts,so the shareholders hold

Accepted Answer

A)   only limited liability.
B)   unlimited liability.
C)   shared liability.
D)   joint liability.E) A) and B)
F) C) and D)

Question 12

Which of the following is NOT considered a hybrid organization?

Accepted Answer

A)   S corporation
B)   limited liability partnership
C)   limited liability company
D)   limited partnership
E)   all of these choices are correct.F) All of the above
G) C) and D)

Question 13

Maximizing owners' equity value means carefully considering all of the following EXCEPT

Accepted Answer

A)   how to best bring additional funds into the firm.
B)   which projects to invest in.
C)   how best to increase the firm's risk.
D)   how best to return the profits from those projects to the owners over time.E) B) and C)
F) All of the above

Question 14

Restricted stock is

Accepted Answer

A)   a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied.
B)   a special type of stock that can be converted into corporate bonds after a specific amount of time has elapsed.
C)   a special type of stock that is a result of offering an employee stock ownership plan.D) A) and C)
E) A) and B) A

Question 15

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Accepted Answer

A)   accounting departments
B)   chief financial officers
C)   board of directors
D)   auditorsE) A) and B)
F) C) and D)

Question 16

The opportunity to buy stock at a fixed price over a specific period of time is referred to as

Accepted Answer

A)   stock opportunities.
B)   stock options.
C)   real assets.
D)   restricted stock.E) C) and D)
F) All of the above

Question 17

This subarea of finance helps facilitate the capital flows between investors and companies.

Accepted Answer

A)   investments
B)   financial management
C)   treasury management
D)   financial institutions and marketsE) All of the above
F) A) and D)

Question 18

A metaphor used to illustrate how an individual pursuing his own interests also tends to promote the good of the community.

Accepted Answer

A)   agency theory
B)   angel investor
C)   invisible hand
D)   perks or perquisitesE) B) and C)
F) All of the above

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Accountants are focused on what happened in the past.
B)   Financial managers are focused on what happened in the past.
C)   Both accountants and financial managers use total quality management systems to standardize data.
D)   Financial managers double-check the accountant's statements.E) B) and C)
F) A) and C)

Question 20

Which of the following managers would NOT use finance?

Accepted Answer

A)   operational managers
B)   marketing managers
C)   human resource managers
D)   all of these choices are correct.E) B) and D)
F) B) and C)

Exam 1: Introduction to Financial Management

The biggest disadvantage of the sole proprietorship is

Correct AnswerverifiedShow Answer

When determining a form of business organization,all of the following are considered EXCEPT

Correct AnswerverifiedShow Answer

This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.

Correct AnswerverifiedShow Answer

All of the following are advantages to organizing as a corporation EXCEPT

Correct AnswerverifiedB

The most common type of business in the United States is the

Correct AnswerverifiedC

Which of the following is legal duty between two parties where one party must act in the interest of the other party?

Correct AnswerverifiedShow Answer

Agency problems exist in which forms of business ownership?

Correct AnswerverifiedShow Answer

From the perspective of access to capital,the best form of business organization is the

Correct AnswerverifiedShow Answer

What is the difference in perspective between finance and accounting?

Correct AnswerverifiedShow Answer

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship,which of these must happen?

Correct AnswerverifiedShow Answer

As individual legal entities,corporations assume liability for their own debts,so the shareholders hold

Correct AnswerverifiedShow Answer

Which of the following is NOT considered a hybrid organization?

Correct AnswerverifiedShow Answer

Maximizing owners' equity value means carefully considering all of the following EXCEPT

Correct AnswerverifiedShow Answer

Restricted stock is

Correct AnswerverifiedA

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Correct AnswerverifiedShow Answer

The opportunity to buy stock at a fixed price over a specific period of time is referred to as

Correct AnswerverifiedShow Answer

This subarea of finance helps facilitate the capital flows between investors and companies.

Correct AnswerverifiedShow Answer

A metaphor used to illustrate how an individual pursuing his own interests also tends to promote the good of the community.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following managers would NOT use finance?

Correct AnswerverifiedShow Answer

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B

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C

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A

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