question

The _____ shows the assets, liabilities, and owners' equity of a firm, at a specific point in time.

answer

balance sheet

question

A bookkeeper's first task is to record the firm's transactions in a journal.

answer

FALSE

question

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

answer

TRUE

question

Skilled professionals who are responsible for the development of strategies to minimize taxes are called:

answer

tax accountants.

question

Many business decisions are made in hopes of improving a firm's "bottom line." Which of the following financial statements will reveal a firm's "bottom line"?

answer

income statement

question

Accountants do the work involved in recording financial events and transactions, but the actual classifying and interpreting of this data is left to financial managers.

answer

True

question

Assets are reported on the firm's balance sheet.

answer

TRUE

question

A firm's ________ reports the profit or loss for the firm over a specified time period.

answer

income statement

question

The area of accounting that provides managers inside the organization with information they need to make decisions is called:

answer

Managerial accounting

question

The most liquid asset is:

answer

Cash.

question

Double-entry bookkeeping requires that every transaction be recorded in two places.

answer

TRUE

question

It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements.

answer

TRUE

question

An accountant who works for a single business or government agency is referred to as a:

answer

Private accountant.

question

Liquidity refers to how fast an asset can be converted to cash.

answer

True

question

Accountants do the work involved in recording financial events and transactions, but the actual classifying and interpreting of this data is left to financial managers.

answer

True

question

Companies raising funds must choose either debt or equity sources, but not both.

answer

False

question

A(n) _____________ job includes forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management.

answer

financial manager's

question

Inability to attract and retain qualified employees is one of the most common ways for a firm to fail financially.

answer

FALSE

question

If a company secures a one-year bank loan it is considered ______.

answer

short-term financing

question

The first step in the financial planning process is:

answer

forecasting financial needs.

question

Which of the following would normally involve long-term financing?

answer

Purchase of modern equipment

question

A comptroller is the chief accounting officer of an organization.

answer

TRUE

question

Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.

answer

TRUE

question

Undercapitalization refers to the problem of insufficient start-up funds.

answer

TRUE

question

The concept, "time value of money" indicates:

answer

dollar received today is worth more than a dollar received a year from today.

question

Which of the following represents a capital expenditure?

answer

purchasing a building to be used for office space

question

A major concern for firms selling on credit is:

answer

the large amount of assets tied up in accounts receivable

question

Short-term financing refers to borrowed funds that must be repaid in a year or less.

answer

TRUE

question

A just-in-time inventory system allows a firm to:

answer

reduce their investment in inventory.

question

To be effective, budgets are prepared independently of organizational forecasts.

answer

False

question

The trading of previously issued securities from one investor to another takes place in the:

answer

secondary market.

question

The Federal Trade Commission (FTC) regulates the security markets in the United States.

answer

False

question

_________ represent a powerful force in the buying and selling of corporate securities.

answer

Institutional investors

question

Dividends are paid out of a corporation's

answer

Profit, after taxes

question

The secondary market is where investors (both individuals and companies) go to find someone who is interested in selling their investments to them.

answer

TRUE

question

A stock exchange provides a marketplace where the public can directly buy and sell securities without the help of intermediaries.

answer

False

question

Stocks that are not listed as trading on one of the national or international stock exchanges can be traded on the OTC, Over-The-Counter exchange

answer

TRUE

question

An initial public offering (IPO) represents the first time a corporation's stock is offered and sold to persons outside of the company.

answer

TRUE

question

Only government employees represent institutional investors.

answer

FALSE

question

Corporations that issue preferred stock incur a legal obligation to pay dividends to those stockholders.

answer

False

question

The corporate certificate issued to an investor that has loaned money to the corporation or government is called a:

answer

bond.

question

Creating a portfolio by buying several different types of investments to spread the risk of investing is called ______________.

answer

diversification

question

When investors purchase ________ stock, they receive a priority claim in the payment of dividends, as well as assets, if the business is liquidated. However, these investors do not have voting rights. common

answer

preferred

question

___________ are the firm's after tax profits that are distributed to stockholders.

answer

Dividends

question

Which of the following situations would be considered insider trading?

answer

Your stockbroker calls and recommends that you diversify your portfolio with a few shares of SLB [Schlaumberger] because SLB's request through the FTC and several international trade commissions to finalize the purchase of two oil companies was successful. You act on this information.

question

The currencies of some countries, although durable and portable are relatively unstable, which makes international exchanges difficult.

answer

True

question

The FDIC traditionally protects depositors up to $250,000 per account.

answer

TRUE

question

Which of the following represent an independent agency of the U.S. government that insures bank deposits?

answer

Federal Deposit Insurance Corporation

question

To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.

answer

The FED's open-market operations involve the buying and selling of securities on the open market. If the FED wants to tighten the money supply it will sell securities. If the FED wants to loosen the money supply (create more money to flow through the economy), it will buy securities

question

The Fed requires that banks hold a percentage of their deposits in a vault. This percentage is the _________.

answer

reserve requirement

question

The ______ definition of money supply includes money that is quickly and easily accessed.

answer

M-1

question

The organization responsible for conducting monetary policy in the United States is the:

answer

Federal Reserve System

question

The Fed uses ________ to regulate the money supply.

answer

the deposit requirement

question

When the value of the U.S. dollar increases relative to other currencies:

answer

the size of the national debt decreases

question

The Federal Reserve System consists of ________ Federal Reserve banks.

answer

12

question

time deposit that earns interest is a ______________.

answer

certificate of deposit

question

A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans

answer

commercial bank

question

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

answer

True

question

Which of the following represents the technical name for a checking account?

answer

Demand deposit

question

The Fed commonly buys or sells U.S. government securities to regulate the money supply.

answer

True

Introduction to Business Chapters 17-20 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards