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ASU FIN 300 Exam 1 (Ch 1-4) EXAM ELABORATIONS
QUESTIONS AND VERIFIED ANSWERS 2026 UPDATE
| 100% SOLVED!!
Profit maximization as a goal of the firm:
a. is an economic principle and not an accounting one
b. is superior to other goals that could be pursued
c. maximizes the wealth of the owners
d. does not consider cash flow or risk - ANSWER -d. does not consider
cash flow or risk
Wealth maximization as a goal of the firm:
a. is usually discounted by bondholders
b. takes a long-run perspective and focuses on the owners of the firm
c. is a long-run perspective used by financial managers for internal use
only
d. is an accounting number - ANSWER -b. take a long-run perspective
and focuses on the owners of the firm
An important advantage a general partner usually has is:
a. limited liability
b. usually a larger share of profit distribution when the firm is successful
c. unlimited liability
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d. profits received are tax-free - ANSWER -b. usually a larger share of
profit distribution when the firm is successful
A Subchapter S corporation:
a. is a large corporation
b. has limited liability for its owners
c. is double taxed
d. has unlimited liability for its owners - ANSWER -b. has limited liability
for for its owners
One of the most important disadvantages of the corporate form of
business is:
a. shares that can be sold
b. professional managers
c. double taxation
d. unlimited owner liability - ANSWER -c. double taxation
A manager has responsibilities to stockholders:
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
d. only where legal issues apply - ANSWER -a. for legal and ethical
issues
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Problems with seeking profit as a goal of the firm would include each of
the following except:
a. profit is completely unrelated to cash flow
b. profit goals involve timing issues
c. accountants have different ways of measuring profit
d. profit is only a proxy for cash flow - ANSWER -b. accountants have
different ways of measuring profit
Which statement is correct about limited partners?
a. they have management control equal to their percent of investment
b. they have no tax liability
c. they can lose only one half of their initial investment
d. there is no limit to the number of limited partners that may
participate - ANSWER -d. there is no limit to the number of limited
partners that may participate
Which of the following would least affect the value of a firm's stock?
a. cashflows
b. market share
c. timing on cash flows
d. risk associated with receiving cash flows - ANSWER -b. market share
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Which of the following areas of finance is concerned with internal
decision-making of a business?
a. Financial markets and institutions
b. Financial Management
c. Investments
d. Agency Issues - ANSWER -b. financial managment
The term "financial management" refers to:
a. The variety of job titles often given to financial managers.
b. The duties of the one person who makes most of the financial
decisions.
c. The process of decision-making that produces value.
d. The chief financial officer (CFO). - ANSWER -c. the process of
decision-making that produces value
"The primary financial goal of the business firm is to maximize the
wealth of the firm's owners." For a corporation, this statement means
that managers should focus on maximizing the wealth of its
shareholders or its:
a. market value
b. sales revenue
c. net income
d. minimize the risk - ANSWER -a. market value
ASU FIN 300 Exam 1 (Ch 1-4) EXAM ELABORATIONS
QUESTIONS AND VERIFIED ANSWERS 2026 UPDATE
| 100% SOLVED!!
Profit maximization as a goal of the firm:
a. is an economic principle and not an accounting one
b. is superior to other goals that could be pursued
c. maximizes the wealth of the owners
d. does not consider cash flow or risk - ANSWER -d. does not consider
cash flow or risk
Wealth maximization as a goal of the firm:
a. is usually discounted by bondholders
b. takes a long-run perspective and focuses on the owners of the firm
c. is a long-run perspective used by financial managers for internal use
only
d. is an accounting number - ANSWER -b. take a long-run perspective
and focuses on the owners of the firm
An important advantage a general partner usually has is:
a. limited liability
b. usually a larger share of profit distribution when the firm is successful
c. unlimited liability
,2|Page
d. profits received are tax-free - ANSWER -b. usually a larger share of
profit distribution when the firm is successful
A Subchapter S corporation:
a. is a large corporation
b. has limited liability for its owners
c. is double taxed
d. has unlimited liability for its owners - ANSWER -b. has limited liability
for for its owners
One of the most important disadvantages of the corporate form of
business is:
a. shares that can be sold
b. professional managers
c. double taxation
d. unlimited owner liability - ANSWER -c. double taxation
A manager has responsibilities to stockholders:
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
d. only where legal issues apply - ANSWER -a. for legal and ethical
issues
,3|Page
Problems with seeking profit as a goal of the firm would include each of
the following except:
a. profit is completely unrelated to cash flow
b. profit goals involve timing issues
c. accountants have different ways of measuring profit
d. profit is only a proxy for cash flow - ANSWER -b. accountants have
different ways of measuring profit
Which statement is correct about limited partners?
a. they have management control equal to their percent of investment
b. they have no tax liability
c. they can lose only one half of their initial investment
d. there is no limit to the number of limited partners that may
participate - ANSWER -d. there is no limit to the number of limited
partners that may participate
Which of the following would least affect the value of a firm's stock?
a. cashflows
b. market share
c. timing on cash flows
d. risk associated with receiving cash flows - ANSWER -b. market share
, 4|Page
Which of the following areas of finance is concerned with internal
decision-making of a business?
a. Financial markets and institutions
b. Financial Management
c. Investments
d. Agency Issues - ANSWER -b. financial managment
The term "financial management" refers to:
a. The variety of job titles often given to financial managers.
b. The duties of the one person who makes most of the financial
decisions.
c. The process of decision-making that produces value.
d. The chief financial officer (CFO). - ANSWER -c. the process of
decision-making that produces value
"The primary financial goal of the business firm is to maximize the
wealth of the firm's owners." For a corporation, this statement means
that managers should focus on maximizing the wealth of its
shareholders or its:
a. market value
b. sales revenue
c. net income
d. minimize the risk - ANSWER -a. market value
