Financial Management Quiz Questions
and Answers Graded A+
A bond is similar to a loan T or F - Correct answer-True
A bond is a debt instrument issued by corporations or governments. - Correct
answer-True
A syndicate is a group of investors that is temporarily formed to handle the
issuance of new bonds. - Correct answer-True
If the price of a particular stock begins to heavily fluctuate, then the specialist will
__________ the spread. - Correct answer-Increase the spread
A stock is a share of ______________ in a particular company. - Correct answer-
Ownership
he New York Stock Exchange is an auction market. - Correct answer-True
Some high frequency traders provide liquidity to the rest of the market. - Correct
answer-True
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,If providing liquidity becomes more risky, then dealers will __________ the spread
- Correct answer-Increase the spread
An IPO is where a company goes public or sells shares to the public for the first
time. - Correct answer-True
Without financial markets, exchange would become more costly. - Correct answer-
True
NYSE daily trading volume has increased over the last 50 years. - Correct answer-
True
Which type of bond placement - competitive sale or negotiated sale - requires a
more thorough interview process? - Correct answer-Negotiated Sale
Accounts payable represents money a firm owes to: - Correct answer-Suppliers due
to purchases made on credit
The basic balance sheet equation states that Assets are equal to Liabilities plus
Owner's equity. This is because all assets are - Correct answer-Financed either by
other people's money or by the firm's owners' money.
The matching principle in accrual accounting requires that: - Correct answer-
Revenues are matched to the expenses incurred to generate the revenues
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, Which of the following would not be considered an operating expense? - Correct
answer-Interest expense
The evolution of retained earnings is best described by: - Correct answer-Change
in retained earnings = net income - dividends
Net Fixed Assets represents: - Correct answer-The original cost of the firm's assets
held for use less accumulated depreciation
Tax expense as shown on the income statement is the amount of cash the firm paid
to the taxing authority during the period. - Correct answer-True
Accrual accounting recognizes: - Correct answer-Revenues when the earnings
process is complete and matches expenses to revenues recognized.
Retained earnings represents: - Correct answer-The cumulative amount of the
firm's earnings not distributed to shareholders
Notes Payable carry an explicit interest cost - Correct answer-True
Current assets are listed in order of: - Correct answer-The most liquid to the least
liquid.
A firm reported retained earnings of $305 in 20x2. For 20x3, the firm reports
retained earnings of $400 and pays dividends of $25. What was net income in
20x3? - Correct answer-$120
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
and Answers Graded A+
A bond is similar to a loan T or F - Correct answer-True
A bond is a debt instrument issued by corporations or governments. - Correct
answer-True
A syndicate is a group of investors that is temporarily formed to handle the
issuance of new bonds. - Correct answer-True
If the price of a particular stock begins to heavily fluctuate, then the specialist will
__________ the spread. - Correct answer-Increase the spread
A stock is a share of ______________ in a particular company. - Correct answer-
Ownership
he New York Stock Exchange is an auction market. - Correct answer-True
Some high frequency traders provide liquidity to the rest of the market. - Correct
answer-True
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,If providing liquidity becomes more risky, then dealers will __________ the spread
- Correct answer-Increase the spread
An IPO is where a company goes public or sells shares to the public for the first
time. - Correct answer-True
Without financial markets, exchange would become more costly. - Correct answer-
True
NYSE daily trading volume has increased over the last 50 years. - Correct answer-
True
Which type of bond placement - competitive sale or negotiated sale - requires a
more thorough interview process? - Correct answer-Negotiated Sale
Accounts payable represents money a firm owes to: - Correct answer-Suppliers due
to purchases made on credit
The basic balance sheet equation states that Assets are equal to Liabilities plus
Owner's equity. This is because all assets are - Correct answer-Financed either by
other people's money or by the firm's owners' money.
The matching principle in accrual accounting requires that: - Correct answer-
Revenues are matched to the expenses incurred to generate the revenues
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Which of the following would not be considered an operating expense? - Correct
answer-Interest expense
The evolution of retained earnings is best described by: - Correct answer-Change
in retained earnings = net income - dividends
Net Fixed Assets represents: - Correct answer-The original cost of the firm's assets
held for use less accumulated depreciation
Tax expense as shown on the income statement is the amount of cash the firm paid
to the taxing authority during the period. - Correct answer-True
Accrual accounting recognizes: - Correct answer-Revenues when the earnings
process is complete and matches expenses to revenues recognized.
Retained earnings represents: - Correct answer-The cumulative amount of the
firm's earnings not distributed to shareholders
Notes Payable carry an explicit interest cost - Correct answer-True
Current assets are listed in order of: - Correct answer-The most liquid to the least
liquid.
A firm reported retained earnings of $305 in 20x2. For 20x3, the firm reports
retained earnings of $400 and pays dividends of $25. What was net income in
20x3? - Correct answer-$120
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
