FINA 3332 - Top Hat Questions Latest
Exam with Correct Answers 2026
Updated.
The finance function is relatively independent of most other corporate functions. - Answer
False
In general, the role of the financial manager is to plan for the acquisition and use of funds so as
to maximize the value of the firm - Answer True
A proprietorship is a business owned by one individual and the owner benefits from the limited
liability for business, which limits his losses to what he has invested in the company - Answer
False
Two key limitations of the proprietorship form of business involve potential difficulty in raising
the necessary capital and the presence of unlimited personal liability for business debts -
Answer True
In the United States, the most common form of business is the ______________, and the form
of business that generates most of the sales and profits is the ______________. - Answer
proprietorship; corporation
The management's primary goal is stockholder wealth maximization, which, translates into -
Answer maximizing the value of the firm
Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the
primary difference between proprietorship and partnership business forms is that
______________ - Answer a partnership has more owners than a proprietorship
Which of the following financial statements includes information about a firm's assets, equity,
and liabilities? - Answer Balance sheet
Which of the following is an example of a current asset? - Answer Inventory
In which order will assets be listed in a balance sheet? - Answer In decreasing order of
liquidity
The information contained in the financial statements is used by investors to form an impression
as to the state of the company's financial health. - Answer True
, The balance sheet is a financial statement measuring the flow of funds into and out of various
accounts over time. - Answer False
Which of the following financial statements summarizes the revenue generated and the
expenses incurred by a firm during the accounting period? - Answer Income statement
What is the first item in an income statement used to determine the net income of a firm? -
Answer Net sales
How is net income calculated in an income statement? - Answer Net income = Earnings
before taxes - Taxes
Violet Solutions Ltd. has net sales of $850 million, variable operating costs of $475 million, and
fixed operating costs of $100 million. What is the net income of Violet Solutions? - Answer
$275 million
Which of the following financial statements shows a firm's financing activities (how funds were
generated) and investment activities (how funds were used) over a particular period of time? -
Answer Statement of cash flows
A firm's net income reported on its income statement must equal the operating cash flows on
the statement of cash flows. - Answer False
Which of the following accounts contains the actual money that can be spent by a firm? -
Answer Cash and equivalents
Which of the following actions can be considered a source of cash when constructing a
statement of cash flows? - Answer Increase in long-term bonds
Ratio analysis involves a comparison of the relationships between financial statement accounts
to analyze the financial position and strength of a firm. - Answer True
An analysis of a firm's financial ratios over time used to determine the improvement or
deterioration in its financial situation is called ______________. - Answer ratio analysis
A low inventory turnover ratio might indicate that: - Answer the firm is holding excess stocks
of inventory.
Exam with Correct Answers 2026
Updated.
The finance function is relatively independent of most other corporate functions. - Answer
False
In general, the role of the financial manager is to plan for the acquisition and use of funds so as
to maximize the value of the firm - Answer True
A proprietorship is a business owned by one individual and the owner benefits from the limited
liability for business, which limits his losses to what he has invested in the company - Answer
False
Two key limitations of the proprietorship form of business involve potential difficulty in raising
the necessary capital and the presence of unlimited personal liability for business debts -
Answer True
In the United States, the most common form of business is the ______________, and the form
of business that generates most of the sales and profits is the ______________. - Answer
proprietorship; corporation
The management's primary goal is stockholder wealth maximization, which, translates into -
Answer maximizing the value of the firm
Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the
primary difference between proprietorship and partnership business forms is that
______________ - Answer a partnership has more owners than a proprietorship
Which of the following financial statements includes information about a firm's assets, equity,
and liabilities? - Answer Balance sheet
Which of the following is an example of a current asset? - Answer Inventory
In which order will assets be listed in a balance sheet? - Answer In decreasing order of
liquidity
The information contained in the financial statements is used by investors to form an impression
as to the state of the company's financial health. - Answer True
, The balance sheet is a financial statement measuring the flow of funds into and out of various
accounts over time. - Answer False
Which of the following financial statements summarizes the revenue generated and the
expenses incurred by a firm during the accounting period? - Answer Income statement
What is the first item in an income statement used to determine the net income of a firm? -
Answer Net sales
How is net income calculated in an income statement? - Answer Net income = Earnings
before taxes - Taxes
Violet Solutions Ltd. has net sales of $850 million, variable operating costs of $475 million, and
fixed operating costs of $100 million. What is the net income of Violet Solutions? - Answer
$275 million
Which of the following financial statements shows a firm's financing activities (how funds were
generated) and investment activities (how funds were used) over a particular period of time? -
Answer Statement of cash flows
A firm's net income reported on its income statement must equal the operating cash flows on
the statement of cash flows. - Answer False
Which of the following accounts contains the actual money that can be spent by a firm? -
Answer Cash and equivalents
Which of the following actions can be considered a source of cash when constructing a
statement of cash flows? - Answer Increase in long-term bonds
Ratio analysis involves a comparison of the relationships between financial statement accounts
to analyze the financial position and strength of a firm. - Answer True
An analysis of a firm's financial ratios over time used to determine the improvement or
deterioration in its financial situation is called ______________. - Answer ratio analysis
A low inventory turnover ratio might indicate that: - Answer the firm is holding excess stocks
of inventory.
