FIN 3403 latest 2025 Exam 1 QUESTIONS AND CORRECT VERIFIED ANSWERS|LATEST
2025|A+ GUARANTEED
A good financial decision will do which of the following? -CORRECT ANSWER-Increase
shareholders equity
Increase the value of the firm's existing stock
A corporation is a distinct ________ entity and as such can have a name and take advantage
of the legal powers of natural persons -CORRECT ANSWER-legal
Some of the cash flow generated by a firm goes back to the financial markets in the form of
_____________? -CORRECT ANSWER-dividends and debt payments
Which positions generally report to the CFO? -CORRECT ANSWER-Controller
Treasurer
What are the two basic classifications under which most potential financial goals fall? -
CORRECT ANSWER-Earning or increasing profits
Controlling risk
The officer responsible for managing the firm's cash flows is the ________. -CORRECT
ANSWER-treasurer
A general partnership has which of the following characteristics? -CORRECT ANSWER-It is
difficult to transfer ownership.
Each owner has unlimited liability for all firm debts.
,Which of the following can be used to encourage managers to act in the best interests of
shareholders? -CORRECT ANSWER-The threat of termination.
Stock options and bonuses.
Managerial compensation tied to performance.
Monitoring through reports.
Which term applies to the mixture of debt and equity maintained by a firm? -CORRECT
ANSWER-Capital structure
Which of the following, are possible financial goals for a company? -CORRECT ANSWER-
Survival
Maximize profits
Minimize costs
In large firms, financial activity is usually associated with which top officer? -CORRECT
ANSWER-Chief financial officer
The relationship between stockholders and management can best be described as a
_________ relationship. -CORRECT ANSWER-Agency
Because shareholders get paid last after all other obligations are satisfied, they are often
called: -CORRECT ANSWER-Residual owners
The owners of a corporation are called ________. -CORRECT ANSWER-Shareholders
A corporation receives cash from financial markets by selling ________ and _________. -
CORRECT ANSWER-Bonds
Stocks
, The controller is responsible for which of the following tasks? -CORRECT ANSWER-Tax
reporting
Financial accounting
How is ownership transferred in a corporation? -CORRECT ANSWER-Ownership is transferred
by gifting or selling stocks.
What is true of a sole proprietorship? -CORRECT ANSWER-It is the simplest type of business
to form.
A proprietorship has a limited life.
What are among the most important questions to be asked when a business is started? -
CORRECT ANSWER-What long-term investments should be made?
How will everyday financial activities be handled?
Where will long-term financing be obtained to pay for investments?
The life of a corporation __________. -CORRECT ANSWER-is unlimited.
Net working capital is defined as current assets minus current ________. -CORRECT
ANSWER-liabilities
When one owner or creditor sells to another, the transaction takes place in the _________
market. -CORRECT ANSWER-secondary
A business without separate legal authority formed by two or more people is known as a
__________. -CORRECT ANSWER-partnership
A sole proprietorship is a business owned by ________ person(s). -CORRECT ANSWER-one
2025|A+ GUARANTEED
A good financial decision will do which of the following? -CORRECT ANSWER-Increase
shareholders equity
Increase the value of the firm's existing stock
A corporation is a distinct ________ entity and as such can have a name and take advantage
of the legal powers of natural persons -CORRECT ANSWER-legal
Some of the cash flow generated by a firm goes back to the financial markets in the form of
_____________? -CORRECT ANSWER-dividends and debt payments
Which positions generally report to the CFO? -CORRECT ANSWER-Controller
Treasurer
What are the two basic classifications under which most potential financial goals fall? -
CORRECT ANSWER-Earning or increasing profits
Controlling risk
The officer responsible for managing the firm's cash flows is the ________. -CORRECT
ANSWER-treasurer
A general partnership has which of the following characteristics? -CORRECT ANSWER-It is
difficult to transfer ownership.
Each owner has unlimited liability for all firm debts.
,Which of the following can be used to encourage managers to act in the best interests of
shareholders? -CORRECT ANSWER-The threat of termination.
Stock options and bonuses.
Managerial compensation tied to performance.
Monitoring through reports.
Which term applies to the mixture of debt and equity maintained by a firm? -CORRECT
ANSWER-Capital structure
Which of the following, are possible financial goals for a company? -CORRECT ANSWER-
Survival
Maximize profits
Minimize costs
In large firms, financial activity is usually associated with which top officer? -CORRECT
ANSWER-Chief financial officer
The relationship between stockholders and management can best be described as a
_________ relationship. -CORRECT ANSWER-Agency
Because shareholders get paid last after all other obligations are satisfied, they are often
called: -CORRECT ANSWER-Residual owners
The owners of a corporation are called ________. -CORRECT ANSWER-Shareholders
A corporation receives cash from financial markets by selling ________ and _________. -
CORRECT ANSWER-Bonds
Stocks
, The controller is responsible for which of the following tasks? -CORRECT ANSWER-Tax
reporting
Financial accounting
How is ownership transferred in a corporation? -CORRECT ANSWER-Ownership is transferred
by gifting or selling stocks.
What is true of a sole proprietorship? -CORRECT ANSWER-It is the simplest type of business
to form.
A proprietorship has a limited life.
What are among the most important questions to be asked when a business is started? -
CORRECT ANSWER-What long-term investments should be made?
How will everyday financial activities be handled?
Where will long-term financing be obtained to pay for investments?
The life of a corporation __________. -CORRECT ANSWER-is unlimited.
Net working capital is defined as current assets minus current ________. -CORRECT
ANSWER-liabilities
When one owner or creditor sells to another, the transaction takes place in the _________
market. -CORRECT ANSWER-secondary
A business without separate legal authority formed by two or more people is known as a
__________. -CORRECT ANSWER-partnership
A sole proprietorship is a business owned by ________ person(s). -CORRECT ANSWER-one
