https://www.stuvia.com/ https://www.stuvia.com/
Multiple Choice Questions
Test Bank for 1. The person generally directly responsible for overseeing the tax management, cost
accounting, financial accounting, and information system functions is the:
A. treasure
r.
Fundamentals
B. directo
r.
C. controlle
r.
D. chairman of the
board.
E. chief executive
officer.
of Corporate 2.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the:
Finance 11th A. treasure
r.
B. directo
r.
C. controlle
r.
D. chairman of the
Edition by
board.
E. chief operations
officer.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
Ross
,https://www.stuvia.com/ https://www.stuvia.com/
3. The process of planning and managing a firm's long-term investments is called:
6. A business owned by a single individual is called a:
A. working capital
management. A. corporatio
B. financial n.
depreciation. B. sole
C. agency cost proprietorship.
analysis. C. general
D. capital partnership.
budgeting. D. limited
E. capital partnership.
structure. E. limited liability
company.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Remember
Topic: What is Corporate Finance? Difficulty level: 1 Easy
Topic: The Corporate Firm
4. The mixture of debt and equity used by a firm to finance its operations is called:
7. A business formed by two or more individuals who each have unlimited liability for
business debts is called a:
A. working capital
management.
B. financial A. corporatio
depreciation. n.
C. cost B. sole
analysis. proprietorship.
D. capital C. general
budgeting. partnership.
E. capital D. limited
structure. partnership.
E. limited liability
AACSB: Analytic company.
Blooms: Remember
Difficulty level: 1 Easy AACSB: Analytic
Topic: What is Corporate Finance? Blooms: Remember
Difficulty level: 1 Easy
5. The management of a firm's short-term assets and liabilities is called: Topic: The Corporate Firm
8. The division of profits and losses among the members of a partnership is formalized in
A. working capital the:
management.
B. debt
management. A. indemnity
C. equity clause.
management. B. indenture
D. capital contract.
budgeting. C. statement of
E. capital purpose.
structure. D. partnership
agreement.
AACSB: Analytic E. group
Blooms: Remember charter.
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
AACSB: Analytic
,https://www.stuvia.com/ https://www.stuvia.com/
Blooms: Remember 11. The rules by which corporations govern themselves are called:
Difficulty level: 1 Easy
Topic: The Corporate Firm
9. A business created as a distinct legal entity composed of one or more individuals or A. indenture
entities is called a: provisions.
B. indemnity
provisions.
A. corporatio C. charter
n. agreements.
B. sole D. bylaw
proprietorship. s.
C. general E. articles of
partnership. incorporation.
D. limited
AACSB: Analytic
partnership. Blooms: Remember
E. unlimited liability Difficulty level: 1 Easy
company. Topic: The Corporate Firm
AACSB: Analytic 12. A business entity operated and taxed like a partnership, but with limited liability for
Blooms: Remember the owners, is called a:
Difficulty level: 1 Easy
Topic: The Corporate Firm
10. The corporate document that sets forth the business purpose of a firm is the: A. limited liability
company.
B. general
A. indenture partnership.
contract. C. limited
B. state tax proprietorship.
agreement. D. sole
C. corporate proprietorship.
bylaws. E. corporatio
D. debt n.
charter.
AACSB: Analytic
E. articles of Blooms: Remember
incorporation. Difficulty level: 1 Easy
Topic: The Corporate Firm
AACSB: Analytic
Blooms: Remember 13. The primary goal of financial management is to:
Difficulty level: 1 Easy
Topic: The Corporate Firm
A. maximize current dividends per share of the
existing stock.
B. maximize the current value per share of the
existing stock.
C. avoid financial
distress.
D. minimize operational costs and maximize firm
efficiency.
E. maintain steady growth in both sales and net
earnings.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
,https://www.stuvia.com/ https://www.stuvia.com/
Topic: The Goal of Financial Management Difficulty level: 1 Easy
Topic: The Agency Problem and Control of the Corporation
14. A conflict of interest between the stockholders and management of a firm is called:
17. The Sarbanes Oxley Act of 2002 is intended to:
A. stockholders'
liability. A. protect financial managers from
B. corporate investors.
breakdown. B. not have any effect on foreign
C. the agency companies.
problem. C. reduce corporate
D. corporate revenues.
activism. D. protect investors from corporate
E. legal abuses.
liability. E. decrease audit costs for U.S.
firms.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Understand
Topic: The Agency Problem and Control of the Corporation Difficulty level: 1 Easy
Topic: Regulation
15. Agency costs refer to:
18. The treasurer and the controller of a corporation generally report to the:
A. the total dividends paid to stockholders over the lifetime
of a firm. A. board of
B. the costs that result from default and bankruptcy directors.
of a firm. B. chairman of the
C. corporate income subject to double board.
taxation. C. chief executive
D. the costs of any conflicts of interest between stockholders and officer.
management. D. presiden
E. the total interest paid to creditors over the lifetime of t.
the firm. E. chief financial
officer.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Understand
Topic: The Agency Problem and Control of the Corporation Difficulty level: 1 Easy
Topic: What is Corporate Finance?
16. A stakeholder is:
A. any person or entity that owns shares of stock of a
corporation.
B. any person or entity that has voting rights based on stock ownership of a
corporation.
C. a person who initially started a firm and currently has management control over
the cash flows of the firm due to his/her current ownership of company stock.
D. a creditor to whom the firm currently owes money and who consequently has a
claim on the cash flows of the firm.
E. any person or entity other than a stockholder or creditor who potentially has a
claim on the cash flows of the firm.
AACSB: Analytic
Blooms: Remember
Multiple Choice Questions
Test Bank for 1. The person generally directly responsible for overseeing the tax management, cost
accounting, financial accounting, and information system functions is the:
A. treasure
r.
Fundamentals
B. directo
r.
C. controlle
r.
D. chairman of the
board.
E. chief executive
officer.
of Corporate 2.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the:
Finance 11th A. treasure
r.
B. directo
r.
C. controlle
r.
D. chairman of the
Edition by
board.
E. chief operations
officer.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
Ross
,https://www.stuvia.com/ https://www.stuvia.com/
3. The process of planning and managing a firm's long-term investments is called:
6. A business owned by a single individual is called a:
A. working capital
management. A. corporatio
B. financial n.
depreciation. B. sole
C. agency cost proprietorship.
analysis. C. general
D. capital partnership.
budgeting. D. limited
E. capital partnership.
structure. E. limited liability
company.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Remember
Topic: What is Corporate Finance? Difficulty level: 1 Easy
Topic: The Corporate Firm
4. The mixture of debt and equity used by a firm to finance its operations is called:
7. A business formed by two or more individuals who each have unlimited liability for
business debts is called a:
A. working capital
management.
B. financial A. corporatio
depreciation. n.
C. cost B. sole
analysis. proprietorship.
D. capital C. general
budgeting. partnership.
E. capital D. limited
structure. partnership.
E. limited liability
AACSB: Analytic company.
Blooms: Remember
Difficulty level: 1 Easy AACSB: Analytic
Topic: What is Corporate Finance? Blooms: Remember
Difficulty level: 1 Easy
5. The management of a firm's short-term assets and liabilities is called: Topic: The Corporate Firm
8. The division of profits and losses among the members of a partnership is formalized in
A. working capital the:
management.
B. debt
management. A. indemnity
C. equity clause.
management. B. indenture
D. capital contract.
budgeting. C. statement of
E. capital purpose.
structure. D. partnership
agreement.
AACSB: Analytic E. group
Blooms: Remember charter.
Difficulty level: 1 Easy
Topic: What is Corporate Finance?
AACSB: Analytic
,https://www.stuvia.com/ https://www.stuvia.com/
Blooms: Remember 11. The rules by which corporations govern themselves are called:
Difficulty level: 1 Easy
Topic: The Corporate Firm
9. A business created as a distinct legal entity composed of one or more individuals or A. indenture
entities is called a: provisions.
B. indemnity
provisions.
A. corporatio C. charter
n. agreements.
B. sole D. bylaw
proprietorship. s.
C. general E. articles of
partnership. incorporation.
D. limited
AACSB: Analytic
partnership. Blooms: Remember
E. unlimited liability Difficulty level: 1 Easy
company. Topic: The Corporate Firm
AACSB: Analytic 12. A business entity operated and taxed like a partnership, but with limited liability for
Blooms: Remember the owners, is called a:
Difficulty level: 1 Easy
Topic: The Corporate Firm
10. The corporate document that sets forth the business purpose of a firm is the: A. limited liability
company.
B. general
A. indenture partnership.
contract. C. limited
B. state tax proprietorship.
agreement. D. sole
C. corporate proprietorship.
bylaws. E. corporatio
D. debt n.
charter.
AACSB: Analytic
E. articles of Blooms: Remember
incorporation. Difficulty level: 1 Easy
Topic: The Corporate Firm
AACSB: Analytic
Blooms: Remember 13. The primary goal of financial management is to:
Difficulty level: 1 Easy
Topic: The Corporate Firm
A. maximize current dividends per share of the
existing stock.
B. maximize the current value per share of the
existing stock.
C. avoid financial
distress.
D. minimize operational costs and maximize firm
efficiency.
E. maintain steady growth in both sales and net
earnings.
AACSB: Analytic
Blooms: Remember
Difficulty level: 1 Easy
,https://www.stuvia.com/ https://www.stuvia.com/
Topic: The Goal of Financial Management Difficulty level: 1 Easy
Topic: The Agency Problem and Control of the Corporation
14. A conflict of interest between the stockholders and management of a firm is called:
17. The Sarbanes Oxley Act of 2002 is intended to:
A. stockholders'
liability. A. protect financial managers from
B. corporate investors.
breakdown. B. not have any effect on foreign
C. the agency companies.
problem. C. reduce corporate
D. corporate revenues.
activism. D. protect investors from corporate
E. legal abuses.
liability. E. decrease audit costs for U.S.
firms.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Understand
Topic: The Agency Problem and Control of the Corporation Difficulty level: 1 Easy
Topic: Regulation
15. Agency costs refer to:
18. The treasurer and the controller of a corporation generally report to the:
A. the total dividends paid to stockholders over the lifetime
of a firm. A. board of
B. the costs that result from default and bankruptcy directors.
of a firm. B. chairman of the
C. corporate income subject to double board.
taxation. C. chief executive
D. the costs of any conflicts of interest between stockholders and officer.
management. D. presiden
E. the total interest paid to creditors over the lifetime of t.
the firm. E. chief financial
officer.
AACSB: Analytic
Blooms: Remember AACSB: Analytic
Difficulty level: 1 Easy Blooms: Understand
Topic: The Agency Problem and Control of the Corporation Difficulty level: 1 Easy
Topic: What is Corporate Finance?
16. A stakeholder is:
A. any person or entity that owns shares of stock of a
corporation.
B. any person or entity that has voting rights based on stock ownership of a
corporation.
C. a person who initially started a firm and currently has management control over
the cash flows of the firm due to his/her current ownership of company stock.
D. a creditor to whom the firm currently owes money and who consequently has a
claim on the cash flows of the firm.
E. any person or entity other than a stockholder or creditor who potentially has a
claim on the cash flows of the firm.
AACSB: Analytic
Blooms: Remember
