ASU FIN 300 EXAM 1 QUESTIONS AND
CORRECT ANSWERS. VERIFIED
2025/2026.
Productive assets - ANS the long-term tangible and intangible assets a firm uses to generate
cash flows
3 fundamental decisions in financial management - ANS a. Capital budgeting- which
productive assets to buy
b. Financing decisions- raising money to buy more p assets, mainly through selling long term
debt and equity
c. Working capital decisions- involve how firms manage their current assets and liabilities.
Enough money to pay the bills and any money left over is invested to earn a return
Forms of Business Organization - ANS a. Sole proprietorship- earnings taxed as personal
income, owner has all of the liability
b. Partnership- more management skills with two people, complicated decision making
c. Corporation- separate legal status and ability to recruit professional management, corporate
income taxed twice, conflicting goals between owners and management
d. LLC- owners not personally responsible, combine corporation with sole proprietorship
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, C Corporation - ANS The most common type of corporation, which is a legal business entity
that offers limited liability to all of its owners, who are called stockholders
S Corporation - ANS corporation taxed as though it were a partnership with restrictions on
shareholders
B Corporation - ANS a business that explicitly seeks to blend its social objectives with its
financial goals
The goal of the firm - ANS maximize shareholder wealth
Sarbanes-Oxley Act - ANS A law passed by Congress that requires the CEO and CFO to certify
that their firm's financial statements are accurate.
information asymmetry - ANS situation in which one party is more informed than another
because of the possession of private information
financial asset - ANS claim on the property or income of a borrower
Real Assets - ANS assets used to produce goods and services
primary market - ANS market for selling financial assets that can only be redeemed by the
original holder
secondary market - ANS previously issued securities are traded among investors
money market - ANS market in which money is lent for periods of less than a year
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
CORRECT ANSWERS. VERIFIED
2025/2026.
Productive assets - ANS the long-term tangible and intangible assets a firm uses to generate
cash flows
3 fundamental decisions in financial management - ANS a. Capital budgeting- which
productive assets to buy
b. Financing decisions- raising money to buy more p assets, mainly through selling long term
debt and equity
c. Working capital decisions- involve how firms manage their current assets and liabilities.
Enough money to pay the bills and any money left over is invested to earn a return
Forms of Business Organization - ANS a. Sole proprietorship- earnings taxed as personal
income, owner has all of the liability
b. Partnership- more management skills with two people, complicated decision making
c. Corporation- separate legal status and ability to recruit professional management, corporate
income taxed twice, conflicting goals between owners and management
d. LLC- owners not personally responsible, combine corporation with sole proprietorship
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, C Corporation - ANS The most common type of corporation, which is a legal business entity
that offers limited liability to all of its owners, who are called stockholders
S Corporation - ANS corporation taxed as though it were a partnership with restrictions on
shareholders
B Corporation - ANS a business that explicitly seeks to blend its social objectives with its
financial goals
The goal of the firm - ANS maximize shareholder wealth
Sarbanes-Oxley Act - ANS A law passed by Congress that requires the CEO and CFO to certify
that their firm's financial statements are accurate.
information asymmetry - ANS situation in which one party is more informed than another
because of the possession of private information
financial asset - ANS claim on the property or income of a borrower
Real Assets - ANS assets used to produce goods and services
primary market - ANS market for selling financial assets that can only be redeemed by the
original holder
secondary market - ANS previously issued securities are traded among investors
money market - ANS market in which money is lent for periods of less than a year
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
