quiz assigment 1


A business created as a distinct legal entity composed of one or more individuals or entities is called a:

corporation.
limited partnership.
general partnership.
unlimited liability company.
sole proprietorship.

The process of planning and managing a firm's long-term investments is called:
capital structure.
agency cost analysis.
capital budgeting.
working capital management.
financial depreciation.

Which of the following are key requirements of the Sarbanes-Oxley Act?
I. Officers of the corporation must review and sign annual reports.
II. Officers of the corporation must now own more than 5% of the firm's stock.
III. Annual reports must list deficiencies in internal controls
IV. Annual reports must be filed with the SEC within 30 days of year end.
II only
I and III only
II and III only
II and IV only
I only

A conflict of interest between the stockholders and management of a firm is called:
corporate activism.
corporate breakdown.
stockholders' liability.
legal liability.
the agency problem.

The division of profits and losses among the members of a partnership is formalized in the:
indemnity clause.
indenture contract.
group charter.
partnership agreement.
statement of purpose

Which one of the following statements is correct?
Both partnerships and corporations incur double taxation.
Both sole proprietorships and partnerships are taxed in a similar fashion.
Partnerships are the most complicated type of business to form.
Both partnerships and corporations have limited liability for general partners and shareholders.
All types of business formations have limited lives.

Which one of the following statements concerning a sole proprietorship is correct?
The ownership of the firm is easy to transfer to another individual.
The company must pay separate taxes from those paid by the owner.
The legal costs to form a sole proprietorship are quite substantial.
The owner can generally raise large sums of capital quite easily.
The life of the firm is limited to the life span of the owner.

Which one of the following parties is considered a stakeholder of a firm?
employee
long-term creditor
short-term creditor
preferred stockholder
common stockholder

The treasurer and the controller of a corporation generally report to the:
chief financial officer.
chairman of the board.
chief executive officer.
president.
board of directors.

A stakeholder is:
any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of the firm.
 
a creditor to whom the firm currently owes money and who consequently has a claim on the cash flows of the firm.
 
a person who initially started a firm and currently has management control over the cash flows of the firm due to his/her current ownership of company stock.
 
any person or entity that owns shares of stock of a corporation.
any person or entity that has voting rights based on stock ownership of a corporation.

The decisions made by financial managers should all be ones which increase the:
financial distress of the firm.
marketability of the managers.
market value of the existing owners' equity.
growth rate of the firm.
size of the firm.

Which form of business structure faces the greatest agency problems?
general partnership
limited liability company
corporation
sole proprietorship
limited partnership

Which one of the following statements is correct concerning corporations?
The stockholders are usually the managers of a corporation.
The ability of a corporation to raise capital is quite limited.
The income of a corporation is taxed as personal income of the stockholders.
The majority of firms are corporations.
The largest firms are usually corporations.

Which of the following are disadvantages of a partnership?
I. limited life of the firm
II. personal liability for firm debt
III. greater ability to raise capital than a sole proprietorship
IV. lack of ability to transfer partnership interest
I, III, and IV only
II and III only
I and II only
III and IV only
I, II, and IV only

Accounting profits and cash flows are:
generally the same since they reflect current laws and accounting standards.
generally the same since accounting profits reflect when the cash flows are received.
generally not the same since GAAP allows for revenue recognition separate from the receipt of cash flows.(true)
generally not the same because cash inflows occur before revenue recognition.
Both c and d.

reference:connect finance,http://connect.mcgraw-hill.com/connectweb/branding/en_US/default/html/instructor/index.html

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