BFIN Final Exam Questions with Correct Answers Latest Update

BFIN Final Exam Questions with Correct Answers Latest Update With good accounting knowledge, a financial manager can - Answers understand financial data of the firm Accounting can help financial managers: - Answers to interpret and use financial information in allocating financial resources more efficiently The field of finance is closely linked to: - Answers accounting and economics The goal of financial management is: - Answers to maximize shareholder's wealth Which of the following is not a drawback for profit-only focus? - Answers investors may receive a higher dividend payout Valuation of assets utilizes: - Answers the present value model and future expected cash flows Agency theory describes: - Answers the potential conflicts between the goals of management and that of shareholders Fairness in financial management refers to all of the following with the exception of: - Answers rewarding CEOs with excessive bonuses The honesty of the management can be compromised under all the following conditions with the exception of: - Answers when a manager complies with regulatory rules One way to align management's interest with that of shareholder's is: - Answers granting stock options to management Which if the following forms exposes all owners to unlimited liability? - Answers both partnership and proprietorships Sole Proprietorship is characterized by all of the following except: - Answers high organizational and operating costs Select the pair of terms that indicates a correct match - Answers proprietorship; personal taxation only Markets that focus on short-term securities are: - Answers money markets Markets that focus on securities having life longer than one year are: - Answers capital market Which of the following statements is not correct about a firm laded with debt? - Answers the firm is viewed by investors with high growth potentials New common stock is sold by firms in the ________ market and individuals trade securities in ________ market. - Answers primary; secondary On January 1, 2018, total assets for Jahara Corp were $136,000; on December 31, 2018, total assets were $157,000. On January 1, 2018, total liabilities were $110,000; on December 31, 2018, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologies' capital for 2019? - Answers increase of $13,000 In 1990, Dolomites Company purchased a building for $170,000. In 2020, a real estate professional says the building has a fair value of $1,000,000. In 2020, a similar building down the street recently sold for $900,000. What value, before consideration of accumulated depreciation, is reported for the building on the balance sheet at December 31, 2020? - Answers $170,000 The calculation of ending retained earnings considers the beginning retained earnings, current period net income or net less, and subtracts dividends - Answers True The calculation of ending retained earnings considers the beginning retained earnings, current period net income or net loss, and stockholder's equity - Answers False The financial statement that reflects the profitability of a firm over a period of the time is the: - Answers income statement The statement of cash flows identifies the sources and uses of the firm's cash: - Answers between the beginning and the year end of the fiscal period the statement of cash flows is composed of cash flow from operations, cash flow from financing activities, and: - Answers cash flow from investing activities Earnings that are retained: - Answers are used to purchase assets, pay liabilities and other expenses The value of a firm's land as a result of a golf course being built in the adjacent property: - Answers is an increase in value to an economist Accounting values are established primarily by: - Answers actual transactions To an accountant, income that is gained or lost during a given period is: - Answers verifiable The economists' value concept: - Answers does not include sunk costs The balance sheet assets may include all except - Answers contingent liabilities Investors reflect the value changes of company's assets or liabilities by: - Answers raising or lowering the market share prices For a public company in Canada following IFRS, value of the asset are reported on a : - Answers market basis Accounting policies: - Answers will influence the recorded values on the balance sheet The cash flow statement contains information on the firm's - Answers liquidity, management of financing and investment activities Amortization represents an attempt to: - Answers allocate the initial cost of an asset over its useful life Free cash flow is equal to cash flow from operating activities minus: - Answers capital expenditures and dividends Cash demands and funding are examined by the way of: - Answers operating, investing and financing activities IFRS requires public to report assets at: - Answers market value IFRS oversees the accounting standards for: - Answers publically traded companies For private companies, the application of accounting rules under IFRS is: - Answers optional Double taxation means - Answers shareholders pay both personal taxes and corporate taxes Joey's Tasty Chicken has $200,000 earnings before taxes. Assuming a tax rate of 30%. What is the after-tax income? - Answers $140,00 All of the following are decisions heavily impacted by federal income tax considerations except: - Answers cash budgeting and dividend policy decisions Two firms have the same earnings before interest and taxes of $400,000 and both have a tax rate of 40%. Firm A has $10,000 interest expense whereas firm B has no interest expense. The two firms' earnings after tax (EAT) are: - Answers The difference in EAT is smaller than that of interest expense due to the tax reduction on interest expense A firm with a 40% tax rate is indifferent between paying $100,000 in interest and $60,000 in common stock dividends because: - Answers the aftertax interest expense equals the dividend payment of $60,000. The ability of a firm to pay off short-term obligations as they come due is indicated by: -