ARIZONA STATE FIN 300 EXAM PREP 2026
QUESTIONS AND SOLUTIONS GRADED A+
◉ 3 fundamental decisions in financial management. Answer: 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. Answer: 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
, ◉ C Corporation. Answer: 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. Answer: corporation taxed as though it were a
partnership with restrictions on shareholders
◉ B Corporation. Answer: a business that explicitly seeks to blend its
social objectives with its financial goals
◉ The goal of the firm. Answer: maximize shareholder wealth
◉ Sarbanes-Oxley Act. Answer: A law passed by Congress that requires
the CEO and CFO to certify that their firm's financial statements are
accurate.
◉ information asymmetry. Answer: situation in which one party is more
informed than another because of the possession of private information
◉ financial asset. Answer: claim on the property or income of a
borrower
◉ Real Assets. Answer: assets used to produce goods and services
QUESTIONS AND SOLUTIONS GRADED A+
◉ 3 fundamental decisions in financial management. Answer: 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. Answer: 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
, ◉ C Corporation. Answer: 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. Answer: corporation taxed as though it were a
partnership with restrictions on shareholders
◉ B Corporation. Answer: a business that explicitly seeks to blend its
social objectives with its financial goals
◉ The goal of the firm. Answer: maximize shareholder wealth
◉ Sarbanes-Oxley Act. Answer: A law passed by Congress that requires
the CEO and CFO to certify that their firm's financial statements are
accurate.
◉ information asymmetry. Answer: situation in which one party is more
informed than another because of the possession of private information
◉ financial asset. Answer: claim on the property or income of a
borrower
◉ Real Assets. Answer: assets used to produce goods and services
