BUS 100 EXAM 2 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

BUS 100 EXAM 2 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 Sole Proprietorship - Answers one owner responsible for own debt Partenership - Answers Business owned by two or more people. More liable to personal loss General Partnership - Answers partnership in which partners share equally in both responsibility and liability limited partnership - Answers A partnership with one or more general partners and one or more limited partners. S coporation - Answers special IRS taxes avoids double taxation, have up to 100 share holders C Corporation - Answers double taxation, easy to sell, venture capital friendly Corporations - Answers (articles of incorporation) legal document filled with a state government to establish the existence. (bylaws) represents the rules of corp (board of directors) elected by stockholders rep'd by interest (LLC) limited liability company - Answers owners are not personally liable for claims for claims against it, flexible tax treatment, meant to last limited duration business models - Answers franchise(franchisor/franchisee), multi-level marketing, pyramid scheme, Ponzi scheme Multi-level marketing - Answers network marketing= direct selling legal. involves non-salaried independent distributors who participate with the chance to make own business successful through a business opportunity. pyramid scheme - Answers An illegal form of multi-level marketing in which emphasis is placed on collecting initial fees from as many people as possible Ponzi Scheme - Answers a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. The first stage in activity-based costing is to: - Answers identify specific activities that create indirect costs and determine the factors that drive the costs of these activities. Tania, a management accountant in a cosmetics company, is asked by her manager to calculate the profit or loss earned by the company in a given time period . To get the required data, Tania is most likely to: - Answers subtract the company's expenses from its revenues. Aegirine Corp., a publicly traded firm based in New Mexico, manufactures iron. According to U.S. securities laws, the firm must: - Answers let an independent CPA (Certified Public Accountant) firm perform an annual external audit of its financial statements. Daniel, the owner of a bookstore, decides to reinvest his personal profits from the current fiscal year toward renovating the store and expanding its inventory. In the context of owners' equity, the profits that Daniel reinvests in the bookstore are called: - Answers retained earnings. The preparation of operating budgets begins with the development of a(n) _____. - Answers sales budget The chief financial officer of NoveauNoir Production Company requests his accountant, Felipe, to prepare a customized report of the cost overruns at the company's production facility in Los Angeles. In this scenario, Felipe is a managerial accountant. - Answers true The Securities and Exchange Commission hires Tim to procure and analyze data on the state's tax revenues and expenditures to ensure that they are recorded and reported in accordance with regulations and requirements. In this case, Tim is most likely a(n) _____. - Answers government accountant The management of a sugar manufacturing company sets aside a sum of $50,000 in its budget for the purchase of new machinery that would double the production. In the given scenario, the management is in the process of planning the _____ of the company. - Answers operating budget Fred, a financial accountant at a multinational company, is asked by his supervisor to find out the exact income the company earns from the sale of its products over the next five weeks. To do this, for the next five weeks, Fred matches the revenue earned from the sale of the company's products and matches the expenses incurred by the company to the revenue they help produce. In this scenario, which of the following has Fred used to get the required information? - Answers Accrual-basis accounting The current liabilities of a company are reflected in the: - Answers wages owed to the workers for work that they have already completed. _____ is the profit or loss a firm earns in the time period covered by the financial statement that reports the revenues and expenses. - Answers Net income The Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements. - Answers false David, a financial accountant at a multinational company, is asked to study the comparative financial statements of a prospective partner firm. He uses comparative income statements to determine the changes in the assets and liabilities of the firm and whether the net income of the firm has increased or decreased over the past five years. In this scenario, David is most likely using _____. - Answers horizontal analysis In the context of balance sheets, the accounting equation tells us that the value of a firm's assets must be: - Answers equal to the amount of financing provided by owners plus the amount provided by creditors to purchase those assets. Ashley, a manager at a toy manufacturing company, needs to create a financial document for the company that would show how the company's operating, investing, and financing activities are expected to affect the asset, liability, and owners' equity accounts. To prepare this document, Ashley needs to collect data from: - Answers the budgeted income statement, the capital expenditure budget, and the cash budget In the context of budgeting, a flexible budget: - Answers is designed to show the appropriate budgeted level of costs for each different level of sales Machvile Corporation, a robotics company, decides to acquire Chancera Inc., a start-up company that operates within the same industry. To better assess its decision, the management of Machvile Corporation needs to find out the value of Chancera Inc.'s total assets. The management has information regarding Chancera Inc.'s liabilities and stockholders' equity. In this scenario, the management should most likely use the _____ to get the required information. - Answers accounting equation What is accounting? - Answers planning, recording, analyzing, and interpreting financial information revenue - Answers income Balance Sheet - Answers Assets = Liabilities + Stockholders' Equity assets= resources owned by company liabilities= resources owed to creditors stock equity= resources owed to stockholders Net Income - Answers Revenues - Expenses Westbro Inc., a home appliances company, wants to invest in marketing new products. In order to generate funds for the process, it issues its own formal IOUs and sells them to its investors. Which of the following sources of long-term funds is being used by Westbro Inc. in the given scenario? - Answers corporate bonds As the recession of loomed over both large and small businesses, many firms looked for ways to deleverage. The term deleveraging implies that: - Answers the firms replaced much of the debt in their capital structure with equity. Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days. - Answers true A factor is a restriction lenders impose on borrowers as a condition of providing long-term debt financing. - Answers false Initiatium, a software development firm, utilized $2 million to create a new software. Half of the total budget was acquired from loans from different sponsors while the rest was funded by the firm. The debt ratio amounts to 0.5. The given scenario illustrates the analysis of _____. - Answers leverage ratios When conflicts arise between the long-term interests of owners and those of other stakeholders, the fiduciary duty required of financial managers generally leads them to make decisions that are most consistent with the interests of ownership. - Answers true For a corporation, direct investment from owners occurs when: - Answers it sells newly issued stock An advantage of factoring is that: - Answers get money back almost immediately if using firms Which of the following statements best describes a money market mutual fund? - Answers It pools funds from many investors and uses these funds to purchase very safe, highly liquid securities. _____ is a guaranteed line of credit in which a bank makes a binding commitment to provide a business with funds up to a specified credit limit at any time during the term of the agreement. - Answers revolving credit agreement Leverage ratios measure the extent to which a firm uses _____. - Answers financial leverage The _____ of a firm uses information from the sales budget and various cost budgets to develop a forecast of net earnings for the planning period. - Answers budgeted income statements Which of the following is the most commonly used liquidity ratio? - Answers current ratio Bon Suede, a shoe manufacturing company, produces ten thousand units of shoes of a distinct design. In 2015, the company was able to sell all the units within six months of manufacture, prompting the company to produce an additional ten thousand units. Which of the following financial ratios has most likely been analyzed in the given scenario? - Answers asset management ratios _____ are safe and highly liquid assets that many firms list with their cash holdings on their balance sheet. - Answers cash equivalents Unlike the debt in a firm's capital structure, the equity in a firm's capital structure: - Answers imposes no required payments Dominic and Matherson, a finance management company, lends money to Ebok, a fast food chain, in order to help Ebok market its new product. Dominic and Matherson provides financial support in the form of bonds. Which of the following financing options is being used by Ebok in the given scenario? - Answers long term debt The _____ is an asset management ratio that measures how quickly a firm sells its stock to generate revenue. - Answers inventory turnover ratio An online food delivery service goes out of business owing to stiff competition. The company has long overdue taxes because of which its stockholders do not receive the proceeds of the company after its dissolution. In this case, the company is not able to fulfill the _____ of its stockholders. - Answers rights to residual claim on assets Which of the following is a difference between common stockholders and preferred stockholders? - Answers common stockholders are assured a greater capital gain than preferred stockholders when a company experiences strong earnings Colbert Blanc is a financial intermediary that helps firms raise their capital by facilitating the firms in issuing new securities and making sure that the securities are sold out in the market. In this scenario, Colbert Blanc is a(n) _____. - Answers investment bank in the context of choosing a broker, which of the following statements is true of robo advisors? - Answers they help people set and track their financial goals