Unit 3 quiz

question

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?
answer

International finance
question

Which one of the following is a working capital decision?
answer

How much cash should the firm keep in reserve?
question

Which one of the following correctly defines a common chain of command within a corporation?
answer

The controller reports directly to the chief financial officer.
question

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller?
answer

Cash management
question

Which one of the following is an advantage of being a limited partner?
answer

Losses limited to capital invested
question

Margie opened a used bookstore and is both the 100 percent owner and the store’s manager. Which type of business entity does Margie own if she is personally liable for all the store’s debts?
answer

Sole proprietorship
question

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debt II. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria’s personal account at the bank to pay the store’s debt IV. Sell any assets Maria personally owns and apply the proceeds to the store’s debt
answer

I, III, and IV only
question

A limited liability company (LLC):
answer

prefers its profits be taxed as personal income to its owners.
question

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?
answer

Corporate accounting and financial fraud
question

The goal of financial management is to increase the:
answer

current market value per share.
question

The potential conflict of interest between a firm’s owners and its managers is referred to as which type of conflict?
answer

Agency
question

Probably the least effective means of aligning management goals with shareholder interests is:
answer

automatically increasing management salaries on an annual basis.
question

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):
answer

stakeholder.

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