FIN300- EXAM 1 || All Answers are Flawless.
What are the three main areas of career opportunities in finance? correct answers 1. Financial
management
2. Financial markets and institutions
3. Investments
What are the primary responsibilities of a person holding the title of treasurer at a large
corporation? correct answers responsible for cash management, credit management, and financial
planning
Who is a "principal" in an agent-principal relationship? correct answers the person who hires the
agent to act on their behalf. The principal is the person to who the agent owes a duty.
What legal and ethical decisions may influence a firm's financial decisions? correct answers
legal: environmental, safety, civil rights
ethical: fair treatment of workers, environmental sensitivity, and support for the community
Subchapter S corp correct answers a small corporation that is taxed as if it were a partnership.
Avoid double taxation if corporate income paid to stockholders
LLC correct answers limited liability companies are hybrids between partnerships and
corporations. pass their profits and losses through to their owners, as partnerships do, without
taxation of the LLC itself. They provide limited liability for their owners, as corporations do.
proprietorship correct answers A business owned by one person. very easy to form, unlimited
liability, life of firm dies with owner unless heirs continue operating or sell the business, not a
separate entity, complete control by owners
,partnership correct answers relatively easy to form, unlimited liability for general partners,
surviving partners must deal with the deceased partner's heirs, not a separate legal entity, control
is limited for individual partner
limited partners correct answers usually contribute capital and share the profits but don't take part
in running the business. only liable for the amount they invest in the partnership.
corporation correct answers more difficult to form, limited liability, firm can live beyond owner's
lifetimes, separate legal entity, control may be very limited for individual stockholder
Difference between an accountant and a financial analyst correct answers An accountant prepares
financial statements while a financial analyst interprets them.
basic role of financial manager in a firm that sells stock publicly correct answers A financial
manager's role in a publicly traded company is to make financial decisions so as to
best serve the principal stockholders.
why are LLC's said to be hybrids between partnerships and corporations? correct answers LLCs
have a small number of members like partnerships and each of these members is likely to
have an active voice in the company like a partnership. The LLC is taxed like a partnership.
Unlike a partnership, and more like a corporation, the owners generally enjoy limited liability.
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
d. profits received are tax-free correct answers ANSWER: b
In a very large corporation, the financial planner usually reports directly to the:
, a. treasurer
b. controller
c. chief financial officer
d. financial accountant correct answers ANSWER: a
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 correct answers ANSWER: d
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 correct answers ANSWER: a
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 correct answers ANSWER: c
A manager has responsibilities to stockholders:
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
What are the three main areas of career opportunities in finance? correct answers 1. Financial
management
2. Financial markets and institutions
3. Investments
What are the primary responsibilities of a person holding the title of treasurer at a large
corporation? correct answers responsible for cash management, credit management, and financial
planning
Who is a "principal" in an agent-principal relationship? correct answers the person who hires the
agent to act on their behalf. The principal is the person to who the agent owes a duty.
What legal and ethical decisions may influence a firm's financial decisions? correct answers
legal: environmental, safety, civil rights
ethical: fair treatment of workers, environmental sensitivity, and support for the community
Subchapter S corp correct answers a small corporation that is taxed as if it were a partnership.
Avoid double taxation if corporate income paid to stockholders
LLC correct answers limited liability companies are hybrids between partnerships and
corporations. pass their profits and losses through to their owners, as partnerships do, without
taxation of the LLC itself. They provide limited liability for their owners, as corporations do.
proprietorship correct answers A business owned by one person. very easy to form, unlimited
liability, life of firm dies with owner unless heirs continue operating or sell the business, not a
separate entity, complete control by owners
,partnership correct answers relatively easy to form, unlimited liability for general partners,
surviving partners must deal with the deceased partner's heirs, not a separate legal entity, control
is limited for individual partner
limited partners correct answers usually contribute capital and share the profits but don't take part
in running the business. only liable for the amount they invest in the partnership.
corporation correct answers more difficult to form, limited liability, firm can live beyond owner's
lifetimes, separate legal entity, control may be very limited for individual stockholder
Difference between an accountant and a financial analyst correct answers An accountant prepares
financial statements while a financial analyst interprets them.
basic role of financial manager in a firm that sells stock publicly correct answers A financial
manager's role in a publicly traded company is to make financial decisions so as to
best serve the principal stockholders.
why are LLC's said to be hybrids between partnerships and corporations? correct answers LLCs
have a small number of members like partnerships and each of these members is likely to
have an active voice in the company like a partnership. The LLC is taxed like a partnership.
Unlike a partnership, and more like a corporation, the owners generally enjoy limited liability.
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
d. profits received are tax-free correct answers ANSWER: b
In a very large corporation, the financial planner usually reports directly to the:
, a. treasurer
b. controller
c. chief financial officer
d. financial accountant correct answers ANSWER: a
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 correct answers ANSWER: d
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 correct answers ANSWER: a
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 correct answers ANSWER: c
A manager has responsibilities to stockholders:
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
