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LSUS MHA 706 FINANCIAL MANAGEMENT
MIDTERM EXAM | FREQUENTLY TESTED
QUESTIONS WITH CORRECT ANSWERS |
BRAND NEW!
The Sarbanes-Oxley Act of 2002 has:
a.) reduced the annual compliance costs of all publicly traded
firms in the U.S.
b.) decreased senior management's involvement in the corporate
annual report.
c.) greatly increased the number of U.S. firms that are going
public for the first time.
d.) decreased the number of U.S. firms going public on foreign
exchanges.
e.) essentially made officers of publicly traded firms personally
responsible for the firm's financial statements. - ✔✔✔ Correct Answer
> essentially made officers of publicly traded firms personally
responsible for the firm's financial statements.
The primary goal of financial management is most associated
with increasing the:
a.) dollar amount of each sale
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b.) traffic flow within the firm's stores
c.) fixed costs while lowering the variable costs
d.) firm's liquidity
e.) market value of the firm - ✔✔✔ Correct Answer > market value of
the firm
Which one of the following best describes the primary intent of
the Sarbanes-Oxley Act of 2002?
a.) Decrease the number of corporations that can be publicly
traded
b.) Increase the protections against corporate fraud
c.) Limit secondary issues of corporate securities
d.) Increase the dividends paid to shareholders
e.) Increase the number of firms that "go dark" - ✔✔✔ Correct Answer
> Increase the protections against corporate fraud
Which one of the following situations is most apt to create an
agency conflict?
a.) Compensating a manager based on his or her division's net
income
b.) Giving all employees a bonus if a certain level of efficiency is
maintained
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c.) Hiring an independent consultant to study the operating
efficiency of the firm
d.) Basing management bonuses on the length of employment
e.) Laying off employees during a slack period - ✔✔✔ Correct Answer >
Basing management bonuses on the length of employment
One example of a primary market transaction would be the:
a.) sale of 100 shares of stock by Maria to her best friend.
b.) purchase by Theo of 5,000 shares of stock from his father.
c.) sale of 1,000 shares of newly issued stock by Alt Company to
Miquel.
d.) sale by Terry of 50,000 shares of stock to his brother.
e.) sale of 5,000 shares of stock owned by a corporate CEO to his
son. - ✔✔✔ Correct Answer > sale of 1,000 shares of newly issued
stock by Alt Company to Miquel.
Uptown Markets is financed with 45 percent debt and 55 percent
equity. This mixture of debt and equity is referred to as the firm's:
a.) capital structure.
b.) capital budget.
c.) asset allocation.
d.) working capital.
e.) risk structure. - ✔✔✔ Correct Answer > capital structure.
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Raleigh BBQ has $48,000 in current assets and $39,000 in
current liabilities. Decisions related to these accounts are
referred to as:
a.) capital structure decisions.
b.) capital budgeting decisions.
c.) working capital management.
d.) operating management.
e.) fixed account structure. - ✔✔✔ Correct Answer > working capital
management
Vera opened a used bookstore and is both the 100 percent owner
and the store's manager. Which type of business entity does Vera
own if she is personally liable for all the store's debts?
a.) Sole proprietorship
b.) Limited partnership
c.) Corporation
d.) Joint stock company
e.) General partnership - ✔✔✔ Correct Answer > Sole proprietorship
Deandre and Mason both enjoy sunshine, water, and surfboards.
Thus, the two friends decided to create a business together
renting surfboards, paddle boats, and inflatable devices in
LSUS MHA 706 FINANCIAL MANAGEMENT
MIDTERM EXAM | FREQUENTLY TESTED
QUESTIONS WITH CORRECT ANSWERS |
BRAND NEW!
The Sarbanes-Oxley Act of 2002 has:
a.) reduced the annual compliance costs of all publicly traded
firms in the U.S.
b.) decreased senior management's involvement in the corporate
annual report.
c.) greatly increased the number of U.S. firms that are going
public for the first time.
d.) decreased the number of U.S. firms going public on foreign
exchanges.
e.) essentially made officers of publicly traded firms personally
responsible for the firm's financial statements. - ✔✔✔ Correct Answer
> essentially made officers of publicly traded firms personally
responsible for the firm's financial statements.
The primary goal of financial management is most associated
with increasing the:
a.) dollar amount of each sale
,Page 2 of 42
b.) traffic flow within the firm's stores
c.) fixed costs while lowering the variable costs
d.) firm's liquidity
e.) market value of the firm - ✔✔✔ Correct Answer > market value of
the firm
Which one of the following best describes the primary intent of
the Sarbanes-Oxley Act of 2002?
a.) Decrease the number of corporations that can be publicly
traded
b.) Increase the protections against corporate fraud
c.) Limit secondary issues of corporate securities
d.) Increase the dividends paid to shareholders
e.) Increase the number of firms that "go dark" - ✔✔✔ Correct Answer
> Increase the protections against corporate fraud
Which one of the following situations is most apt to create an
agency conflict?
a.) Compensating a manager based on his or her division's net
income
b.) Giving all employees a bonus if a certain level of efficiency is
maintained
,Page 3 of 42
c.) Hiring an independent consultant to study the operating
efficiency of the firm
d.) Basing management bonuses on the length of employment
e.) Laying off employees during a slack period - ✔✔✔ Correct Answer >
Basing management bonuses on the length of employment
One example of a primary market transaction would be the:
a.) sale of 100 shares of stock by Maria to her best friend.
b.) purchase by Theo of 5,000 shares of stock from his father.
c.) sale of 1,000 shares of newly issued stock by Alt Company to
Miquel.
d.) sale by Terry of 50,000 shares of stock to his brother.
e.) sale of 5,000 shares of stock owned by a corporate CEO to his
son. - ✔✔✔ Correct Answer > sale of 1,000 shares of newly issued
stock by Alt Company to Miquel.
Uptown Markets is financed with 45 percent debt and 55 percent
equity. This mixture of debt and equity is referred to as the firm's:
a.) capital structure.
b.) capital budget.
c.) asset allocation.
d.) working capital.
e.) risk structure. - ✔✔✔ Correct Answer > capital structure.
, Page 4 of 42
Raleigh BBQ has $48,000 in current assets and $39,000 in
current liabilities. Decisions related to these accounts are
referred to as:
a.) capital structure decisions.
b.) capital budgeting decisions.
c.) working capital management.
d.) operating management.
e.) fixed account structure. - ✔✔✔ Correct Answer > working capital
management
Vera opened a used bookstore and is both the 100 percent owner
and the store's manager. Which type of business entity does Vera
own if she is personally liable for all the store's debts?
a.) Sole proprietorship
b.) Limited partnership
c.) Corporation
d.) Joint stock company
e.) General partnership - ✔✔✔ Correct Answer > Sole proprietorship
Deandre and Mason both enjoy sunshine, water, and surfboards.
Thus, the two friends decided to create a business together
renting surfboards, paddle boats, and inflatable devices in
