fin300 exam 1 EXAM LATEST (2025) COMPLETE
QUESTIONS With 100% Verified Solutions,
How is finance related to the disciplines of accounting and economics? -
(ANSWER)essentially a combination of accounting and economics. In other words,
finance is an applied area of economics that relies on accounting for input.
List and describe the three career opportunities in the field of finance. -
(ANSWER)Financial management involves managing the finances of a business.
Bankers, stockbrokers, and others who work in financial markets and institutions
focus on the flow of money through financial institutions and the markets in
which financial assets are exchanged. They track the impact of interest rates on
the flow of that money.
People who work in the field of investments locate, select, and manage income-
producing assets. For instance, security analysts and mutual fund managers both
operate in the investment field.
Describe the duties of the financial manager in a business firm -
(ANSWER)measure the firm's performance, determine what the financial
consequences will be if the firm maintains its present course or changes it, and
recommend how the firm should use its assets. Financial managers also locate
external financing sources and recommend the most beneficial mix of financing
sources, and they determine the financial expectations of the firm's owners.
explain why accounting profits and cash flows are not the same thing. -
(ANSWER)Stock value depends on future cash flows, their timing, and their
,riskiness. Profit calculations do not consider these three factors. Profit, as defined
in accounting, is simply the difference between sales revenue and expenses. It is
true that more profits are generally better than less profits, but when the pursuit
of short-term profits adversely affects the size of future cash flows, their timing,
or their riskiness, then these profit maximization efforts are detrimental to the
firm.
What is an agent? What are the responsibilities of an agent? - (ANSWER)An agent
is a person who has the implied or actual authority to act on behalf of another.
The owners whom the agents represent are the principals. Agents have a legal
and ethical responsibility to make decisions that further the interests of the
principals.
Compare and contrast the potential liability of owners of proprietorships -
(ANSWER)unlimited liability for matters relating to the business. This means that
the sole proprietor is responsible for all the obligations of the business, even if
those obligations exceed the amount the proprietor has invested in the business.
Compare and contrast the potential liability of owners of partnerships (general
partners) - (ANSWER)Each partner in a partnership is usually liable for the
activities of the partnership as a whole. Even if there are a hundred partners, each
one is technically responsible for all the debts of the partnership. If ninety-nine
partners declare personal bankruptcy, the hundredth partner still is responsible
for all the partnership's debts.
Compare and contrast the potential liability of owners of corporations -
(ANSWER)A corporation is a legal entity that is liable for its own activities.
Stockholders, the corporation's owners, have limited liability for the corporation's
, activities. They cannot lose more than the amount they paid to buy the
corporation's stock.
Explain the difference between what an accountant does and what a financial
analyst does. - (ANSWER)An accountant prepares financial statements while a
financial analyst interprets them
The treasurer of a large corporation is responsible for - (ANSWER)cash
management, credit management, and financial planning.
Describe the basic role of a financial manager in a firm that sells stock publicly. -
(ANSWER)A financial manager's role in a publicly traded company is to make
financial decisions so as to best serve the principal stockholders.
How would the value of a firm be affected by
a. The introduction of a new product designed to increase the firm's cash inflows
is delayed by one year. The size of the expected cash flows is not affected. -
(ANSWER)The value of the firm would go down due to the increase in the amount
of time it takes to receive the cash inflows.
How would the value of a firm be affected by
b. A firm announces to the press that its cash earnings for the coming year will be
10 percent higher than previously forecast. - (ANSWER)The value of the firm
would go up due to the increase in expected cash inflows.
QUESTIONS With 100% Verified Solutions,
How is finance related to the disciplines of accounting and economics? -
(ANSWER)essentially a combination of accounting and economics. In other words,
finance is an applied area of economics that relies on accounting for input.
List and describe the three career opportunities in the field of finance. -
(ANSWER)Financial management involves managing the finances of a business.
Bankers, stockbrokers, and others who work in financial markets and institutions
focus on the flow of money through financial institutions and the markets in
which financial assets are exchanged. They track the impact of interest rates on
the flow of that money.
People who work in the field of investments locate, select, and manage income-
producing assets. For instance, security analysts and mutual fund managers both
operate in the investment field.
Describe the duties of the financial manager in a business firm -
(ANSWER)measure the firm's performance, determine what the financial
consequences will be if the firm maintains its present course or changes it, and
recommend how the firm should use its assets. Financial managers also locate
external financing sources and recommend the most beneficial mix of financing
sources, and they determine the financial expectations of the firm's owners.
explain why accounting profits and cash flows are not the same thing. -
(ANSWER)Stock value depends on future cash flows, their timing, and their
,riskiness. Profit calculations do not consider these three factors. Profit, as defined
in accounting, is simply the difference between sales revenue and expenses. It is
true that more profits are generally better than less profits, but when the pursuit
of short-term profits adversely affects the size of future cash flows, their timing,
or their riskiness, then these profit maximization efforts are detrimental to the
firm.
What is an agent? What are the responsibilities of an agent? - (ANSWER)An agent
is a person who has the implied or actual authority to act on behalf of another.
The owners whom the agents represent are the principals. Agents have a legal
and ethical responsibility to make decisions that further the interests of the
principals.
Compare and contrast the potential liability of owners of proprietorships -
(ANSWER)unlimited liability for matters relating to the business. This means that
the sole proprietor is responsible for all the obligations of the business, even if
those obligations exceed the amount the proprietor has invested in the business.
Compare and contrast the potential liability of owners of partnerships (general
partners) - (ANSWER)Each partner in a partnership is usually liable for the
activities of the partnership as a whole. Even if there are a hundred partners, each
one is technically responsible for all the debts of the partnership. If ninety-nine
partners declare personal bankruptcy, the hundredth partner still is responsible
for all the partnership's debts.
Compare and contrast the potential liability of owners of corporations -
(ANSWER)A corporation is a legal entity that is liable for its own activities.
Stockholders, the corporation's owners, have limited liability for the corporation's
, activities. They cannot lose more than the amount they paid to buy the
corporation's stock.
Explain the difference between what an accountant does and what a financial
analyst does. - (ANSWER)An accountant prepares financial statements while a
financial analyst interprets them
The treasurer of a large corporation is responsible for - (ANSWER)cash
management, credit management, and financial planning.
Describe the basic role of a financial manager in a firm that sells stock publicly. -
(ANSWER)A financial manager's role in a publicly traded company is to make
financial decisions so as to best serve the principal stockholders.
How would the value of a firm be affected by
a. The introduction of a new product designed to increase the firm's cash inflows
is delayed by one year. The size of the expected cash flows is not affected. -
(ANSWER)The value of the firm would go down due to the increase in the amount
of time it takes to receive the cash inflows.
How would the value of a firm be affected by
b. A firm announces to the press that its cash earnings for the coming year will be
10 percent higher than previously forecast. - (ANSWER)The value of the firm
would go up due to the increase in expected cash inflows.
