CHAPTER 1 INTRODUCTION TO CORPORATE FINANCE
QUIZ AND CORRECT ANSWERS UPDATED 2024 - 2025
Which one of the following terms is defined as the management of a firm's long-term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital structure ANS -D. capital budgeting
A business partner whose potential financial loss in the partnership will not exceed his or her investment
in that partnership is called a:
A. general partner
B. sole proprietor
C. limited partner
D. corporate shareholder
E. zero partner ANS -C. limited partner
Which of the following functions should be the responsibility of the controller rather than the treasurer
A. daily cash deposit
B. income tax returns
C. equipment purchase analysis
D. customer credit approval
E. payment to a vendor ANS -B. Income tax returns
Which of the following should a financial manager consider when analyzing a capital budgeting project?
I. project start up costs
II. timing of all projected cash flows
III. dependability of future cash flows
, IV. dollar amount of each projected cash flow
A. I and IV only
B. I, II, and IV only
C. I, II, and III only
D. II, III, and IV only
E. I, II, III, and IV ANS -E. I, II, III, and IV
Which of the following accounts are included in working capital management?
I. accounts payable
II. accounts receivable
III. fixed assets
IV. inventory
A. I and II only
B. I and III only
C. II and IV only
D. I, II, and IV only
E. II, III, and IV only ANS -D. I, II, and IV only
Which of the following individuals have unlimited liability based on their ownership interest?
I. general partner
II. sole proprietor
III. stockholder
IV. limited partner
A. II only
B. I and II only
C. II and IV only
D. I, II, and III only
E. I, II, and IV only ANS -B. I and II only
QUIZ AND CORRECT ANSWERS UPDATED 2024 - 2025
Which one of the following terms is defined as the management of a firm's long-term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital structure ANS -D. capital budgeting
A business partner whose potential financial loss in the partnership will not exceed his or her investment
in that partnership is called a:
A. general partner
B. sole proprietor
C. limited partner
D. corporate shareholder
E. zero partner ANS -C. limited partner
Which of the following functions should be the responsibility of the controller rather than the treasurer
A. daily cash deposit
B. income tax returns
C. equipment purchase analysis
D. customer credit approval
E. payment to a vendor ANS -B. Income tax returns
Which of the following should a financial manager consider when analyzing a capital budgeting project?
I. project start up costs
II. timing of all projected cash flows
III. dependability of future cash flows
, IV. dollar amount of each projected cash flow
A. I and IV only
B. I, II, and IV only
C. I, II, and III only
D. II, III, and IV only
E. I, II, III, and IV ANS -E. I, II, III, and IV
Which of the following accounts are included in working capital management?
I. accounts payable
II. accounts receivable
III. fixed assets
IV. inventory
A. I and II only
B. I and III only
C. II and IV only
D. I, II, and IV only
E. II, III, and IV only ANS -D. I, II, and IV only
Which of the following individuals have unlimited liability based on their ownership interest?
I. general partner
II. sole proprietor
III. stockholder
IV. limited partner
A. II only
B. I and II only
C. II and IV only
D. I, II, and III only
E. I, II, and IV only ANS -B. I and II only
