Finance 3010 Exam 1 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
a. working capital
b. debt
c. capital structure
d. investment capital
e. net capital - CORRECT ANSWER a. working capital
Which one of the following is a working capital management decision?
a. determining the number of shares of stock to issue to fund an acquisition
b. determining the amount of long-term debt required to complete a project
c. determining the amount of equipment needed to complete a job
d. determining whether or not a project should be accepted
e. determining whether to pay cash for a purchase or use the credit offered by the supplier -
CORRECT ANSWER e. determining whether to pay cash for a purchase or use the credit
offered by the supplier
Which one of the following best describes the primary advantage of being a limited partner instead of
a general partner?
a. greater control over the business affairs of the partnership
b. tax-free income
c. active participation in the firm's activities
d. no potential financial loss
e. maximum loss limited to the capital invested - CORRECT ANSWER e. maximum loss
limited to the capital invested
Which one of the following statements concerning a sole proprietorship is correct?
Select one:
a. transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation
, b. a sole proprietorship is taxed the same as a C corporation
c. the life of a sole proprietorship is potentially unlimited
d. a sole proprietor can generally raise large sums of capital quite easily
e. it is easy to create a sole proprietorship - CORRECT ANSWER e. it is easy to create a sole
proprietorship
Which one of the following terms is defined as the management of a firm's long-term investments?
Select one:
a. agency cost analysis
b. capital budgeting
c. working capital management
d. capital structure
e. financial allocation - CORRECT ANSWER b. capital budgeting
Which one of the following statements is correct?
Select one:
a. Corporate shareholders elect the corporate president
b. The majority of firms in the U.S. are structured as corporations
c. Corporations can raise large amounts of capital generally easier than partnerships can
d. Corporate profits are taxable income to the shareholders when earned
e. Stockholders face no potential losses related to their corporate investment - CORRECT
ANSWER c. Corporations can raise large amounts of capital generally easier than partnerships
can
Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
Select one:
a. capital budgeting
b. capital structure
c. cost analysis
QUESTIONS AND CORRECT ANSWERS
Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
a. working capital
b. debt
c. capital structure
d. investment capital
e. net capital - CORRECT ANSWER a. working capital
Which one of the following is a working capital management decision?
a. determining the number of shares of stock to issue to fund an acquisition
b. determining the amount of long-term debt required to complete a project
c. determining the amount of equipment needed to complete a job
d. determining whether or not a project should be accepted
e. determining whether to pay cash for a purchase or use the credit offered by the supplier -
CORRECT ANSWER e. determining whether to pay cash for a purchase or use the credit
offered by the supplier
Which one of the following best describes the primary advantage of being a limited partner instead of
a general partner?
a. greater control over the business affairs of the partnership
b. tax-free income
c. active participation in the firm's activities
d. no potential financial loss
e. maximum loss limited to the capital invested - CORRECT ANSWER e. maximum loss
limited to the capital invested
Which one of the following statements concerning a sole proprietorship is correct?
Select one:
a. transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation
, b. a sole proprietorship is taxed the same as a C corporation
c. the life of a sole proprietorship is potentially unlimited
d. a sole proprietor can generally raise large sums of capital quite easily
e. it is easy to create a sole proprietorship - CORRECT ANSWER e. it is easy to create a sole
proprietorship
Which one of the following terms is defined as the management of a firm's long-term investments?
Select one:
a. agency cost analysis
b. capital budgeting
c. working capital management
d. capital structure
e. financial allocation - CORRECT ANSWER b. capital budgeting
Which one of the following statements is correct?
Select one:
a. Corporate shareholders elect the corporate president
b. The majority of firms in the U.S. are structured as corporations
c. Corporations can raise large amounts of capital generally easier than partnerships can
d. Corporate profits are taxable income to the shareholders when earned
e. Stockholders face no potential losses related to their corporate investment - CORRECT
ANSWER c. Corporations can raise large amounts of capital generally easier than partnerships
can
Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
Select one:
a. capital budgeting
b. capital structure
c. cost analysis
