ASU FIN 300 EXAM 1 CHAPTERS 1 TO 4
FINAL PAPER 2026 QUESTIONS WITH
SOLUTIONS GRADED A+
⩥ Vice President of finance. Answer: coordinates the activities of the
treasurer and the controller
⩥ controller. Answer: handles cost and financial accounting, tax
payments, and management information systems
⩥ treasurer. Answer: is responsible for managing the firm's cash and
credit, its financial planning, and its capital expenditures
⩥ capital budgeting. Answer: the process of planning and managing a
firm's long-term investments
⩥ capital structure (financial structure). Answer: the specific mixture of
long-term debt and equity the firm uses to finance its operations
⩥ working capital. Answer: a firm's short-term assets and its short-term
liabilities
,⩥ working capital management. Answer: a day-to-day activity that
ensures that the firm has sufficient resources to continue its operations
and avoid costly interruptions
⩥ sole proprietorship. Answer: a business owned by one person
⩥ partnership. Answer: similar to a proprietorship except that there are
two or more owners (partners)
⩥ general partnership. Answer: all the partners share in gains or losses,
and all have unlimited liability for all partnership debts, not just some
particular share
⩥ limited partnership. Answer: one or more general partners will run the
business and have unlimited liability, but there will be one or more
limited partners who will not actively participate in the business
⩥ corporation. Answer: a legal "person," separate and stint from its
owners
⩥ articles of incorporation (a charter). Answer: must contain a number
of things, including the corporation's name, its intended life (which can
be forever), its business purpose, and the number of shares that can be
issued
,⩥ bylaws. Answer: are rules describing how the corporation regulates its
existence
⩥ double taxation. Answer: corporate profits are taxed twice: first at the
corporate level when they are earned and again at the personal level
when they are paid out
⩥ limited liability company (LLC). Answer: goal of this entity is to
operate and be taxed like a partnership but retain limited liability for
owners; is essentially a hybrid of partnership and corporation
⩥ the goal of financial management. Answer: is to maximize the current
value per share of the existing stock/maximize the market value of the
existing owners' equity
⩥ Sarbanes Oxley Act of 2002. Answer: enacted by Congress in
response to corporate scandals at companies; intended to protect
investors from corporate abuses
⩥ agency relationship. Answer: relationship between stockholders and
management
⩥ agency problem. Answer: conflict of interest between the principal
and the agent
, ⩥ agency costs. Answer: refers to the costs of the conflict of interest
between stockholders and management
⩥ indirect agency cost. Answer: a lost opportunity
⩥ direct agency costs. Answer: 1. a corporate expenditure that benefits
management but costs the stockholders
2. an expense that arises from the need to monitor management actions
⩥ proxy fight. Answer: unhappy stockholders can act to replace existing
managmenet
⩥ proxy. Answer: the authority to vote someone else's stock
⩥ stakholders. Answer: someone other than a stockholder or creditor
who potentially has a claim on the cash flows of the firm
⩥ primary market. Answer: refers to the original sale of securities by
governments and corporations
⩥ secondary markets. Answer: those in which these securities are bought
and sold after the original sale
FINAL PAPER 2026 QUESTIONS WITH
SOLUTIONS GRADED A+
⩥ Vice President of finance. Answer: coordinates the activities of the
treasurer and the controller
⩥ controller. Answer: handles cost and financial accounting, tax
payments, and management information systems
⩥ treasurer. Answer: is responsible for managing the firm's cash and
credit, its financial planning, and its capital expenditures
⩥ capital budgeting. Answer: the process of planning and managing a
firm's long-term investments
⩥ capital structure (financial structure). Answer: the specific mixture of
long-term debt and equity the firm uses to finance its operations
⩥ working capital. Answer: a firm's short-term assets and its short-term
liabilities
,⩥ working capital management. Answer: a day-to-day activity that
ensures that the firm has sufficient resources to continue its operations
and avoid costly interruptions
⩥ sole proprietorship. Answer: a business owned by one person
⩥ partnership. Answer: similar to a proprietorship except that there are
two or more owners (partners)
⩥ general partnership. Answer: all the partners share in gains or losses,
and all have unlimited liability for all partnership debts, not just some
particular share
⩥ limited partnership. Answer: one or more general partners will run the
business and have unlimited liability, but there will be one or more
limited partners who will not actively participate in the business
⩥ corporation. Answer: a legal "person," separate and stint from its
owners
⩥ articles of incorporation (a charter). Answer: must contain a number
of things, including the corporation's name, its intended life (which can
be forever), its business purpose, and the number of shares that can be
issued
,⩥ bylaws. Answer: are rules describing how the corporation regulates its
existence
⩥ double taxation. Answer: corporate profits are taxed twice: first at the
corporate level when they are earned and again at the personal level
when they are paid out
⩥ limited liability company (LLC). Answer: goal of this entity is to
operate and be taxed like a partnership but retain limited liability for
owners; is essentially a hybrid of partnership and corporation
⩥ the goal of financial management. Answer: is to maximize the current
value per share of the existing stock/maximize the market value of the
existing owners' equity
⩥ Sarbanes Oxley Act of 2002. Answer: enacted by Congress in
response to corporate scandals at companies; intended to protect
investors from corporate abuses
⩥ agency relationship. Answer: relationship between stockholders and
management
⩥ agency problem. Answer: conflict of interest between the principal
and the agent
, ⩥ agency costs. Answer: refers to the costs of the conflict of interest
between stockholders and management
⩥ indirect agency cost. Answer: a lost opportunity
⩥ direct agency costs. Answer: 1. a corporate expenditure that benefits
management but costs the stockholders
2. an expense that arises from the need to monitor management actions
⩥ proxy fight. Answer: unhappy stockholders can act to replace existing
managmenet
⩥ proxy. Answer: the authority to vote someone else's stock
⩥ stakholders. Answer: someone other than a stockholder or creditor
who potentially has a claim on the cash flows of the firm
⩥ primary market. Answer: refers to the original sale of securities by
governments and corporations
⩥ secondary markets. Answer: those in which these securities are bought
and sold after the original sale
