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FIN 3250 Exam 1 (Chapters 1-4) Questions and Answers
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FIN 3250 Exam 1 (Chapters 1-4) Questions and Answers
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FIN 3250 Exam 1 (Chapters 1-4)Questions and Answers
A conflict of interest between the stockholders and management of a firm is called: -
Answer-the agency problem
The person generally directly responsible for overseeing the tax management, cost
accounting, financial accounting, and information system functions is the: - Answer-
controller
The financial statement summarizing a firm's accounting performance over a period of
time is the: - Answer-income statement
When one shareholder sells stock directly to another the transaction is said to occur in
the: - Answer-secondary market
A current asset is: - Answer-an item currently owned by the firm that will convert to cash
within the next 12 months.
_____ refers to the difference between a firm's current assets and its current liabilities. -
Answer-net working capital
A business owned by a single individual is called a: - Answer-sole proprietorship
Your _____ tax rate measures the total taxes you pay divided by your taxable income. -
Answer-average
Managers are encouraged to act in shareholders' interests by: - Answer-all of the
above, which are:
- shareholder election of a board of directors who select management
- the threat of a takeover by another firm
- compensation contracts that tie compensation to corporate success
The primary goal of financial management is to: - Answer-maximize the current value
per share of the existing stock.
What are the four primary disadvantages of the sole proprietorship and partnership
forms of business organization? What benefits are there to these types of business
organizations as opposed to the corporate form? - Answer-The four disadvantages are:
1. unlimited liability for debts
2. limited business life
3. difficulty transferring ownership
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