Introduction to Business Chapters 17-20 – Flashcards

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question
The _____ shows the assets, liabilities, and owners' equity of a firm, at a specific point in time.
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balance sheet
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A bookkeeper's first task is to record the firm's transactions in a journal.
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FALSE
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The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.
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TRUE
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Skilled professionals who are responsible for the development of strategies to minimize taxes are called:
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tax accountants.
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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"?
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income statement
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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.
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True
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Assets are reported on the firm's balance sheet.
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TRUE
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A firm's ________ reports the profit or loss for the firm over a specified time period.
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income statement
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The area of accounting that provides managers inside the organization with information they need to make decisions is called:
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Managerial accounting
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The most liquid asset is:
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Cash.
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Double-entry bookkeeping requires that every transaction be recorded in two places.
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TRUE
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It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements.
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TRUE
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An accountant who works for a single business or government agency is referred to as a:
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Private accountant.
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Liquidity refers to how fast an asset can be converted to cash.
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True
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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.
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True
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Companies raising funds must choose either debt or equity sources, but not both.
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False
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A(n) _____________ job includes forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management.
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financial manager's
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Inability to attract and retain qualified employees is one of the most common ways for a firm to fail financially.
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FALSE
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If a company secures a one-year bank loan it is considered ______.
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short-term financing
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The first step in the financial planning process is:
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forecasting financial needs.
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Which of the following would normally involve long-term financing?
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Purchase of modern equipment
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A comptroller is the chief accounting officer of an organization.
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TRUE
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Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.
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TRUE
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Undercapitalization refers to the problem of insufficient start-up funds.
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TRUE
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The concept, "time value of money" indicates:
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dollar received today is worth more than a dollar received a year from today.
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Which of the following represents a capital expenditure?
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purchasing a building to be used for office space
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A major concern for firms selling on credit is:
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the large amount of assets tied up in accounts receivable
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Short-term financing refers to borrowed funds that must be repaid in a year or less.
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TRUE
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A just-in-time inventory system allows a firm to:
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reduce their investment in inventory.
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To be effective, budgets are prepared independently of organizational forecasts.
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False
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The trading of previously issued securities from one investor to another takes place in the:
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secondary market.
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The Federal Trade Commission (FTC) regulates the security markets in the United States.
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False
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_________ represent a powerful force in the buying and selling of corporate securities.
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Institutional investors
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Dividends are paid out of a corporation's
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Profit, after taxes
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The secondary market is where investors (both individuals and companies) go to find someone who is interested in selling their investments to them.
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TRUE
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A stock exchange provides a marketplace where the public can directly buy and sell securities without the help of intermediaries.
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False
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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
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TRUE
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An initial public offering (IPO) represents the first time a corporation's stock is offered and sold to persons outside of the company.
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TRUE
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Only government employees represent institutional investors.
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FALSE
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Corporations that issue preferred stock incur a legal obligation to pay dividends to those stockholders.
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False
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The corporate certificate issued to an investor that has loaned money to the corporation or government is called a:
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bond.
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Creating a portfolio by buying several different types of investments to spread the risk of investing is called ______________.
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diversification
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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
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preferred
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___________ are the firm's after tax profits that are distributed to stockholders.
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Dividends
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Which of the following situations would be considered insider trading?
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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.
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The currencies of some countries, although durable and portable are relatively unstable, which makes international exchanges difficult.
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True
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The FDIC traditionally protects depositors up to $250,000 per account.
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TRUE
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Which of the following represent an independent agency of the U.S. government that insures bank deposits?
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Federal Deposit Insurance Corporation
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To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.
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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
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The Fed requires that banks hold a percentage of their deposits in a vault. This percentage is the _________.
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reserve requirement
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The ______ definition of money supply includes money that is quickly and easily accessed.
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M-1
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The organization responsible for conducting monetary policy in the United States is the:
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Federal Reserve System
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The Fed uses ________ to regulate the money supply.
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the deposit requirement
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When the value of the U.S. dollar increases relative to other currencies:
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the size of the national debt decreases
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The Federal Reserve System consists of ________ Federal Reserve banks.
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12
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time deposit that earns interest is a ______________.
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certificate of deposit
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A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans
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commercial bank
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Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.
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True
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Which of the following represents the technical name for a checking account?
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Demand deposit
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The Fed commonly buys or sells U.S. government securities to regulate the money supply.
answer
True
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