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Exam (elaborations)

MGMT 200 Exam 3 with correct answers

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MGMT 200 Exam 3 with correct answers

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MGMT 200 Exam 3 with correct answers |\ |\ |\ |\ |\ |\




Which of the following is not an advantage of debt
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\



financing?
a. The ownership interest of current stockholders is
|\ |\ |\ |\ |\ |\ |\ |\



unchanged |\




b. Interest is tax deductible
|\ |\ |\ |\




c. Debt financing often has no maturity date
|\ |\ |\ |\ |\ |\ |\




d. The cost of borrowing may be lower than the return on
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



equity - CORRECT ANSWERS ✔✔Debt financing often has
|\ |\ |\ |\ |\ |\ |\ |\



no maturity date
|\ |\




Which of the following is not a primary source of long-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\



term debt financing?
|\ |\




a. Bonds
|\




b. Leases
|\




c. Accounts Payable
|\ |\




d. Notes Payable - CORRECT ANSWERS ✔✔Accounts
|\ |\ |\ |\ |\ |\ |\



Payable


A company's capital structure refers to:
|\ |\ |\ |\ |\




a. Its mixture of paid-in capital versus retained earnings
|\ |\ |\ |\ |\ |\ |\ |\




b. Its mixture of current versus long-term assets
|\ |\ |\ |\ |\ |\ |\

, c. Its mixture of liabilities and stockholders' equity
|\ |\ |\ |\ |\ |\ |\




d. Its mixture of current versus long-term liabilities -
|\ |\ |\ |\ |\ |\ |\ |\ |\



CORRECT ANSWERS ✔✔Its mixture of liabilities and
|\ |\ |\ |\ |\ |\ |\



stockholders' equity |\




In each succeeding payment on an installment note:
|\ |\ |\ |\ |\ |\ |\




a. The amount that goes to interest expense decreases
|\ |\ |\ |\ |\ |\ |\ |\




b. The amounts paid for both interest and principal
|\ |\ |\ |\ |\ |\ |\ |\ |\



increase proportionately |\




c. The amount that goes to interest expense is unchanged
|\ |\ |\ |\ |\ |\ |\ |\ |\




d. The amount that goes to interest expense increases -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\



CORRECT ANSWERS ✔✔The amount that goes to interest
|\ |\ |\ |\ |\ |\ |\ |\



expense decreases |\




Airline Accessories obtains a $100,000, three year loan, at
|\ |\ |\ |\ |\ |\ |\ |\



6% interest, with monthly payments of $3,042. What
|\ |\ |\ |\ |\ |\ |\ |\ |\



amount would be recorded for interest expense for the
|\ |\ |\ |\ |\ |\ |\ |\ |\



first full month?
|\ |\




a. 3,042
|\




b. 2,542
|\




c. 500
|\




d. 6,000 - CORRECT ANSWERS ✔✔500
|\ |\ |\ |\ |\

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