FINA 3332: FINAL (UH) Test Questions
and All Correct Answers 2026-2027
Updated.
partnership - Answer An unincorporated business owned by two or more persons.
corporation - Answer A legal entity created by a state, separate and distinct from its owners
and managers, having unlimited life, easy transferability of ownership, and limited liability.
bylaws - Answer A set of rules drawn up by the founders of the corporation that indicates
how the company is to be governed; includes procedures for electing directors, rights of
stockholders, and how to change the bylaws when necessary.
corporate charter - Answer A document filed with the appropriate department of the state in
which a business is incorporated that provides information about the company, including its
name, address, directors, and amount of capital stock.
limited liability company (LLC) - Answer Offers the limited personal liability associated with a
corporation; however, the company's income is taxed like that of a partnership.
limited liability partnership (LLP) - Answer A partnership wherein at least one partner is
designated as a general partner with unlimited personal financial liability, and the other
partners are limited partners whose liability is limited to amounts they invest in the firm.
S corporation - Answer A corporation with no more than 100 stockholders that elects to be
taxed in the same manner as proprietorships and partnerships, so that business income is only
taxed once.
stockholder wealth maximization - Answer The appropriate goal for management decisions;
considers the risk and timing associated with expected cash flows to maximize the price of the
firm's common stock.
value - Answer The present, or current, value of the cash flows that an asset is expected to
generate in the future.
agency problem - Answer A potential conflict of interest between outside shareholders
(owners) and managers who make decisions about how to operate the firm.
,Business ethics - Answer A company's attitude and conduct toward its stakeholders
(employees, customers, stockholders, and community). Ethical behavior requires fair and honest
treatment of all parties.
Hostile takeovers - Answer The acquisition of a company over the opposition of its
management.
Corporate governance - Answer Deals with the set of rules a firm follows when conducting
business; these rules identify who is accountable for major financial decisions.
stakeholders - Answer Those who are associated with a business, including managers,
employees, customers, suppliers, creditors, stockholders, and other parties with an interest in
the firm's well-being.
proxy votes - Answer Voting power that is assigned to another party, such as another
stockholder or institution.
exchange rates - Answer The prices at which the currency of one country can be converted
into the currencies of other countries.
multinational companies - Answer Firms that operate in two or more countries.
industrial groups - Answer Organizations of companies in different industries with common
ownership interests, which include firms necessary to manufacture and sell products; networks
of manufacturers, suppliers, marketing organizations, distributors, retailers, and creditors.
hostile takeover - Answer The acquisition of a company over the opposition of its
management.
To be successful, a financial institution is required to - Answer understand the cause of rise
and fall of interest rates.
Coordination of the finance function and the marketing function is critical to the success of a
company, especially a small, newly formed firm because it - Answer is necessary to ensure
that sufficient cash is generated to survive.
If any partner is unable to meet his or her pro rata claim in the event the partnership goes
bankrupt, the remaining partners - Answer must make good on the unsatisfied claims.
,Which of the following must be filed by a limited liability company (LLC) with the state in which
the business is set up? - Answer Articles of organization
Which of the following is a reason for profit-motivated, free-enterprise economies to be more
successful than socialistic and communistic economic systems? - Answer Actions that help a
firm in a profit-motivated economy to increase the price of its stock are also beneficial to the
society at large.
equals net income divided by the number of outstanding shares of common stock. - Answer
Earnings per share
The Sarbanes-Oxley Act of 2002 requires a publicly traded corporation to have a committee that
consists of _____to oversee the firm's audits. - Answer outside directors
A company's attitude and conduct toward its employees, customers, community, and
stockholders is referred to as - Answer business ethics.
Which of the following statements about corporations that are considered open is true? -
Answer Their stocks are widely dispersed among a large number of different investors.
Which of the following statements about political risk is true? - Answer d. A nation is free to
place constraints on the transfer of corporate resources.
Corporation - Answer This entity, which is legally separate from its managers and owners, is
authorized by a state to conduct business.
Finance - Answer It addresses how money is raised and used by individuals, businesses, and
governments.
Stakeholder - Answer This term describes individuals and groups, both internal and external
to the company, whose support is critical to the success of the organization.
Value - Answer This is the present worth of the future cash flows generated by an asset or
firm, discounted at a rate appropriate for the riskiness of the cash flows.
Limited liability - Answer An investor's personal responsibility for the business's liabilities can
never be less than zero or more than the amount invested in the firm's common shares.
Alex, Susan, and Jose own an accounting firm in San Francisco. All share in the profits of the firm
proportionately and file taxes only at an individual level. According to their agreement, none of
, the owners will be held personally liable for the firm's debts. This is an example of: - Answer
An LLP/LLC
Which of the following statements regarding a corporation's annual report is true? - Answer
The verbal statements in the report attempt to explain how management expects the firm to
perform in the future.
Larger publicly traded firms must file a ___report with the Securities and Exchange Commission
(SEC). - Answer 10-K
Inventory is an example of a(n) - Answer current asset.
The value of assets, liabilities, and equities outside of the firm in the marketplace is the -
Answer market value.
Which of the following statements about a firm's income statement is true? - Answer It
summarizes the revenue generated and the expenses incurred by a firm during the accounting
period.
On March 3 of the current year, a firm had a quick ratio of 2.0. Two days later, the firm
purchased equipment for cash. Assuming all other things are equal, how will this transaction
affect the firm's quick ratio? - Answer The quick ratio will decrease.
How does financial leverage affect the expected rate of return realized by stockholders of a
firm? - Answer Interest on debt is tax deductible.
Which of the following groups of ratios show the combined effects of liquidity management,
asset management, and debt management on the operating results? - Answer Profitability
ratios
When calculating ratios, a company can minimize the problems arising from seasonal factors by
- Answer using monthly averages for inventories.
Sapphire Industries Ltd. and Garnet Enterprises Ltd. are textile businesses. The quick ratio of
Sapphire is 0.5, and the quick ratio of Garnet is 1.0. As part of the window-dressing strategy,
both firms will purchase inventory on credit. Which of the following is true about the actual
results of this transaction? - Answer The quick ratios of both Sapphire and Garnet will
decrease.
and All Correct Answers 2026-2027
Updated.
partnership - Answer An unincorporated business owned by two or more persons.
corporation - Answer A legal entity created by a state, separate and distinct from its owners
and managers, having unlimited life, easy transferability of ownership, and limited liability.
bylaws - Answer A set of rules drawn up by the founders of the corporation that indicates
how the company is to be governed; includes procedures for electing directors, rights of
stockholders, and how to change the bylaws when necessary.
corporate charter - Answer A document filed with the appropriate department of the state in
which a business is incorporated that provides information about the company, including its
name, address, directors, and amount of capital stock.
limited liability company (LLC) - Answer Offers the limited personal liability associated with a
corporation; however, the company's income is taxed like that of a partnership.
limited liability partnership (LLP) - Answer A partnership wherein at least one partner is
designated as a general partner with unlimited personal financial liability, and the other
partners are limited partners whose liability is limited to amounts they invest in the firm.
S corporation - Answer A corporation with no more than 100 stockholders that elects to be
taxed in the same manner as proprietorships and partnerships, so that business income is only
taxed once.
stockholder wealth maximization - Answer The appropriate goal for management decisions;
considers the risk and timing associated with expected cash flows to maximize the price of the
firm's common stock.
value - Answer The present, or current, value of the cash flows that an asset is expected to
generate in the future.
agency problem - Answer A potential conflict of interest between outside shareholders
(owners) and managers who make decisions about how to operate the firm.
,Business ethics - Answer A company's attitude and conduct toward its stakeholders
(employees, customers, stockholders, and community). Ethical behavior requires fair and honest
treatment of all parties.
Hostile takeovers - Answer The acquisition of a company over the opposition of its
management.
Corporate governance - Answer Deals with the set of rules a firm follows when conducting
business; these rules identify who is accountable for major financial decisions.
stakeholders - Answer Those who are associated with a business, including managers,
employees, customers, suppliers, creditors, stockholders, and other parties with an interest in
the firm's well-being.
proxy votes - Answer Voting power that is assigned to another party, such as another
stockholder or institution.
exchange rates - Answer The prices at which the currency of one country can be converted
into the currencies of other countries.
multinational companies - Answer Firms that operate in two or more countries.
industrial groups - Answer Organizations of companies in different industries with common
ownership interests, which include firms necessary to manufacture and sell products; networks
of manufacturers, suppliers, marketing organizations, distributors, retailers, and creditors.
hostile takeover - Answer The acquisition of a company over the opposition of its
management.
To be successful, a financial institution is required to - Answer understand the cause of rise
and fall of interest rates.
Coordination of the finance function and the marketing function is critical to the success of a
company, especially a small, newly formed firm because it - Answer is necessary to ensure
that sufficient cash is generated to survive.
If any partner is unable to meet his or her pro rata claim in the event the partnership goes
bankrupt, the remaining partners - Answer must make good on the unsatisfied claims.
,Which of the following must be filed by a limited liability company (LLC) with the state in which
the business is set up? - Answer Articles of organization
Which of the following is a reason for profit-motivated, free-enterprise economies to be more
successful than socialistic and communistic economic systems? - Answer Actions that help a
firm in a profit-motivated economy to increase the price of its stock are also beneficial to the
society at large.
equals net income divided by the number of outstanding shares of common stock. - Answer
Earnings per share
The Sarbanes-Oxley Act of 2002 requires a publicly traded corporation to have a committee that
consists of _____to oversee the firm's audits. - Answer outside directors
A company's attitude and conduct toward its employees, customers, community, and
stockholders is referred to as - Answer business ethics.
Which of the following statements about corporations that are considered open is true? -
Answer Their stocks are widely dispersed among a large number of different investors.
Which of the following statements about political risk is true? - Answer d. A nation is free to
place constraints on the transfer of corporate resources.
Corporation - Answer This entity, which is legally separate from its managers and owners, is
authorized by a state to conduct business.
Finance - Answer It addresses how money is raised and used by individuals, businesses, and
governments.
Stakeholder - Answer This term describes individuals and groups, both internal and external
to the company, whose support is critical to the success of the organization.
Value - Answer This is the present worth of the future cash flows generated by an asset or
firm, discounted at a rate appropriate for the riskiness of the cash flows.
Limited liability - Answer An investor's personal responsibility for the business's liabilities can
never be less than zero or more than the amount invested in the firm's common shares.
Alex, Susan, and Jose own an accounting firm in San Francisco. All share in the profits of the firm
proportionately and file taxes only at an individual level. According to their agreement, none of
, the owners will be held personally liable for the firm's debts. This is an example of: - Answer
An LLP/LLC
Which of the following statements regarding a corporation's annual report is true? - Answer
The verbal statements in the report attempt to explain how management expects the firm to
perform in the future.
Larger publicly traded firms must file a ___report with the Securities and Exchange Commission
(SEC). - Answer 10-K
Inventory is an example of a(n) - Answer current asset.
The value of assets, liabilities, and equities outside of the firm in the marketplace is the -
Answer market value.
Which of the following statements about a firm's income statement is true? - Answer It
summarizes the revenue generated and the expenses incurred by a firm during the accounting
period.
On March 3 of the current year, a firm had a quick ratio of 2.0. Two days later, the firm
purchased equipment for cash. Assuming all other things are equal, how will this transaction
affect the firm's quick ratio? - Answer The quick ratio will decrease.
How does financial leverage affect the expected rate of return realized by stockholders of a
firm? - Answer Interest on debt is tax deductible.
Which of the following groups of ratios show the combined effects of liquidity management,
asset management, and debt management on the operating results? - Answer Profitability
ratios
When calculating ratios, a company can minimize the problems arising from seasonal factors by
- Answer using monthly averages for inventories.
Sapphire Industries Ltd. and Garnet Enterprises Ltd. are textile businesses. The quick ratio of
Sapphire is 0.5, and the quick ratio of Garnet is 1.0. As part of the window-dressing strategy,
both firms will purchase inventory on credit. Which of the following is true about the actual
results of this transaction? - Answer The quick ratios of both Sapphire and Garnet will
decrease.
