Chapter 1 – The Financial Manager and the Firm – Homework – Flashcards
Unlock all answers in this set
Unlock answersquestion
the IRS ****all of these a shareholder a lender
answer
Which of the following are stakeholders?
question
residual cash.
answer
The cash remaining after the firm has met its operating expenses, payments to creditors, and taxes is called
question
must be paid within a year
answer
Current liabilities are liabilities that
question
which productive assets the firm should employ
answer
Capital budgeting involves
question
how a firm's day-to-day financial matters should be managed
answer
Working capital management decisions involve
question
capital markets
answer
Financial markets in which equity and debt instruments with maturities greater than one year are traded are called
question
sole proprietorships
answer
About 75 percent of all businesses in the United States are
question
a) sole proprietorship b) partnership c) corporation *****d) a and b
answer
Which of the following business organizational forms creates a tax liability on income at the personal income tax rate?
question
corporation
answer
Which of the following business organizational forms is easiest to raise capital?
question
partnership
answer
Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm?
question
limited liability partnership
answer
Which of the following is considered a hybrid organizational form?
question
there is a separation of ownership and control of the firm
answer
One reason for the existence of agency problems between managers and share holders is that
question
a manager expensing a large dinner on the company expense report
answer
An example of a direct agency cost is
question
managerial labor markets ****all of these management compensation an independent board of directors
answer
Which of the following can help align the behavior of managers with the goals of shareholders?
question
the managerial labor market disciplining managers.
answer
Executives that repeatedly put their own interests before that of the firm may find that they have difficulty finding another job after their current one. This is an example of
question
the cost of compliance
answer
What is the major complaint concerning the Sarbanes-Oxley Act of 2002 by firms?
question
Information asymmetry
answer
_____________occur(s) when one party in a business transaction has information that is unavailable to the other parties in the transaction.
question
Risk
answer
If a firm establishes maximizing profits at the most important goal of the firm, which of the following would not be given proper consideration?
question
Capital budgeting
answer
Which of the following factors or activities can be controlled by the management of the firm?
question
Agency conflicts.
answer
The legal system and market forces impose substantial costs on individuals and institutions that engage in unethical behavior. Which of the following would not be an example of the above?
