Financial Management Quiz, Quizzes of Financial Management

Download Financial Management Quiz and more Quizzes Financial Management in PDF only on Docsity! [Feretco][TAN410] Quiz 1. Review Chapter 1 + Chapter 2 1 A. B. A. B. A. B. A. B. A. B. A. B. A. B. First and last name Question /1 40 The total sales for a month equal the cash inflows for that month. True False Question /2 40 One function of a company audit is to monitor the agency problem. True False Question /3 40 Spending money to lower the noise level of a business will automatically lessen the value of that business, even though the action is a good ethical decision. True False Question /4 40 Tom, Dick and Harry invest $25,000 each and form a partnership. Tom, Dick and Harry must each own one-third of the business. True False Question /5 40 Shareholders of a corporation gain limited liability in exchange for double taxation. True False Question /6 40 The primary financial goal of a business is to maximize profits. True False Question /7 40 Profits are equal to sales revenue minus expenses. True False [Feretco][TAN410] Quiz 1. Review Chapter 1 + Chapter 2 2 A. B. A. B. A. B. A. B. A. B. C. D. A. B. C. D. Question /8 40 Partners who actively participate in the management of the partnership are called limited partners. True False Question /9 40 If the government spends more money than it receives, it is surplus economic unit. True False Question /10 40 Preferred shareholders vote to elect a board of directors to oversee the corporation. True False Question /11 40 Corporations never have to repay the funds received from selling stocks. True False Question /12 40 Which one of the following is correct concerning an underwriting conducted on a best efforts basis? The investment bankers do not guarantee the sale of all of the securities but do guarantee the price at which the securities will be sold. The issuing firm receives a written guarantee for a predetermined amount for the sale of its securities. The investment bankers accept the market risk on the sale of the securities. The investment bankers do not guarantee the sale of all of the securities nor guarantee the price at which the securities will be sold. Question /13 40 The price at which a dealer buys a security is called the ask price. spread. bid price. offer price. [Feretco][TAN410] Quiz 1. Review Chapter 1 + Chapter 2 5 A. B. C. D. A. B. C. D. A. B. C. D. Question /21 40 Which one of the following represents the best effort to reduce the agency problem? paying senior managers a cash bonus each year based on the number of people employed by the company giving senior managers bonuses consisting of shares of company share whenever the company improves its production efficiency increasing the salary of the company president every time the company opens a new store providing company cars to all managers employed by the firm for more than one year Question /22 40 Which one of the following business organizations does NOT pass its income directly to the owners for tax purposes? limited liability partnerships partnerships corporations sole proprietorships Question /23 40 Which of the following characteristics does NOT apply to a sole proprietorship? ease of formation full degree of control business losses can be applied against employment income unlimited life [Feretco][TAN410] Quiz 1. Review Chapter 1 + Chapter 2 6 A. B. C. D. A. B. C. D. A. B. A. B. A. B. Question /24 40 Which of the following would NOT be considered a stakeholder of the company? political lobbyists Consumer groups rival businesses environmentalists Question /25 40 Martha, Chris and Amanda, have started their own business. Which form of business would be impossible for them to operate within? partnership sole proprietorship corporation LLC Question /26 40 A financial manager oversees the cash inflows and outflows of a business. True False Question /27 40 Maximizing current profits always provides the greatest value for a firm. True False Question /28 40 Creditors, customers, and the local community, are all stakeholders of a company. True False [Feretco][TAN410] Quiz 1. Review Chapter 1 + Chapter 2 7 A. B. A. B. A. B. C. D. A. B. C. D. Question /29 40 A general partner is individually liable for all of the debts of the partnership. True False Question /30 40 Partnership profits are passed through to the individual partners for tax purposes. True False Question /31 40 Parties that underwrite securities are called investment bankers. dealers. brokers. stockbrokers. Question /32 40 Which one of the following securities trades in the capital markets? shares certificate of deposit commercial paper Treasury bill