FI 320 Exam Complete Questions And
100% Correct Answers
\Q\.Which of the following statements is/are true?
I. The top financial manager within a firm is usually the Chief Financial Officer
II. Treasurer is also a financial manager, who oversees cash management, credit
management, capital expenditures, and financial planning
III. Controller is also a financial manager, who oversees taxes, cost accounting,
financial accounting, and data processing - ANSWERS✔-All of the above
\Q\.Which of the following statements is/are true?
I. Capital budgeting deals with long-term investments and/or projects.
II. Capital structure helps answer the type of financing to be used.
III. One drawback for sole proprietorship is unlimited liability.
IV. One advantage of corporation is the separation of ownership and
management. - ANSWERS✔-All of the Above
\Q\.Which of the following statements is/are true?
I. Agency problem deals with the conflict of interest between the principal
(stockholders) and agent (managers).
II. Capital structure helps answer how much debt should be assumed to fund a
project.
III. Capital budgeting concerns the management of a firm's long-term investments.
,IV. A business formed by two or more individuals who each have unlimited liability
for all of the firm's business debts is called a general partnership. - ANSWERS✔-All
of the Above
\Q\.Which of the following individuals have unlimited liability for a firm's debts
based on their ownership interest? - ANSWERS✔-Both general partners and sole
proprietors
\Q\.Which one of the following actions by a financial manager is most apt to
create an agency problem? - ANSWERS✔-Increasing current profits when doing so
will lower the value of the company's equity
\Q\.Which of the following statements is/are true?
I. Sole proprietorship has only one owner.
II. Both partnership and corporation can have unlimited term of existence.
III. Corporation suffers from double taxation - ANSWERS✔-Only I and III are correct
\Q\.An agency problem occurs when: - ANSWERS✔-Selina's agent went golfing
today instead of meeting with a film producer to sign a movie deal. When
questioned, the agent admitted that the decision is not in the best interests of the
principal, Selina
\Q\.The prospect for both sole proprietorships and partnerships is limited by: -
ANSWERS✔-Inability to access large amounts of funds or the potential death of
the owners
, \Q\.(t/f) Double taxation means that corporate dividends are taxed at both the
corporate level and the personal level - ANSWERS✔-True
\Q\.Financial managers should focus on the interests of _________ and the main
goal for financial management is ________ - ANSWERS✔-Shareholders; mazimize
equity (share price)
\Q\.Which of the following statements is/are true when making an income
statement for Year T?
I. Relevant information of the firm's operation in Year T is needed.
II. Various costs are deducted before distribution to various stakeholders.
III. The bottom of the income statement is net income, which belongs to
stockholder (the residual stakeholder). Net income is distributed to shareholders
in the form of dividends or returned to the company for future operations in the
form of retained earnings.
IV. Entries in the income statement are needed for both the firm's statement of
stockholders' equity and cash flows - ANSWERS✔-All of the above
\Q\.Which of the following statements is/are true about the statement of
stockholders' equity for Year T?
I. It expands the section of the common equity on the balance sheets, i.e., helps
explain the changes from Year T-1 and Year T.
II. The retained earnings portion in the income statement for Year T = entry of
retained earnings on the Year T balance sheet minus entry of retained earnings on
Year T-1 balance sheet.
100% Correct Answers
\Q\.Which of the following statements is/are true?
I. The top financial manager within a firm is usually the Chief Financial Officer
II. Treasurer is also a financial manager, who oversees cash management, credit
management, capital expenditures, and financial planning
III. Controller is also a financial manager, who oversees taxes, cost accounting,
financial accounting, and data processing - ANSWERS✔-All of the above
\Q\.Which of the following statements is/are true?
I. Capital budgeting deals with long-term investments and/or projects.
II. Capital structure helps answer the type of financing to be used.
III. One drawback for sole proprietorship is unlimited liability.
IV. One advantage of corporation is the separation of ownership and
management. - ANSWERS✔-All of the Above
\Q\.Which of the following statements is/are true?
I. Agency problem deals with the conflict of interest between the principal
(stockholders) and agent (managers).
II. Capital structure helps answer how much debt should be assumed to fund a
project.
III. Capital budgeting concerns the management of a firm's long-term investments.
,IV. A business formed by two or more individuals who each have unlimited liability
for all of the firm's business debts is called a general partnership. - ANSWERS✔-All
of the Above
\Q\.Which of the following individuals have unlimited liability for a firm's debts
based on their ownership interest? - ANSWERS✔-Both general partners and sole
proprietors
\Q\.Which one of the following actions by a financial manager is most apt to
create an agency problem? - ANSWERS✔-Increasing current profits when doing so
will lower the value of the company's equity
\Q\.Which of the following statements is/are true?
I. Sole proprietorship has only one owner.
II. Both partnership and corporation can have unlimited term of existence.
III. Corporation suffers from double taxation - ANSWERS✔-Only I and III are correct
\Q\.An agency problem occurs when: - ANSWERS✔-Selina's agent went golfing
today instead of meeting with a film producer to sign a movie deal. When
questioned, the agent admitted that the decision is not in the best interests of the
principal, Selina
\Q\.The prospect for both sole proprietorships and partnerships is limited by: -
ANSWERS✔-Inability to access large amounts of funds or the potential death of
the owners
, \Q\.(t/f) Double taxation means that corporate dividends are taxed at both the
corporate level and the personal level - ANSWERS✔-True
\Q\.Financial managers should focus on the interests of _________ and the main
goal for financial management is ________ - ANSWERS✔-Shareholders; mazimize
equity (share price)
\Q\.Which of the following statements is/are true when making an income
statement for Year T?
I. Relevant information of the firm's operation in Year T is needed.
II. Various costs are deducted before distribution to various stakeholders.
III. The bottom of the income statement is net income, which belongs to
stockholder (the residual stakeholder). Net income is distributed to shareholders
in the form of dividends or returned to the company for future operations in the
form of retained earnings.
IV. Entries in the income statement are needed for both the firm's statement of
stockholders' equity and cash flows - ANSWERS✔-All of the above
\Q\.Which of the following statements is/are true about the statement of
stockholders' equity for Year T?
I. It expands the section of the common equity on the balance sheets, i.e., helps
explain the changes from Year T-1 and Year T.
II. The retained earnings portion in the income statement for Year T = entry of
retained earnings on the Year T balance sheet minus entry of retained earnings on
Year T-1 balance sheet.
