BFIN Final Exam Study Guide | Business Finance Comprehensive Review &
Practice Questions 2026
With good accounting knowledge, a financial manager can - ANS ✔✔understand financial data
of the firm
Accounting can help financial managers: - ANS ✔✔to interpret and use financial information in
allocating financial resources more efficiently
The field of finance is closely linked to: - ANS ✔✔accounting and economics
The goal of financial management is: - ANS ✔✔to maximize shareholder's wealth
Which of the following is not a drawback for profit-only focus? - ANS ✔✔investors may receive a
higher dividend payout
Valuation of assets utilizes: - ANS ✔✔the present value model and future expected cash flows
Agency theory describes: - ANS ✔✔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: - ANS
✔✔rewarding CEOs with excessive bonuses
The honesty of the management can be compromised under all the following conditions with
the exception of: - ANS ✔✔when a manager complies with regulatory rules
,One way to align management's interest with that of shareholder's is: - ANS ✔✔granting stock
options to management
Which if the following forms exposes all owners to unlimited liability? - ANS ✔✔both
partnership and proprietorships
Sole Proprietorship is characterized by all of the following except: - ANS ✔✔high organizational
and operating costs
Select the pair of terms that indicates a correct match - ANS ✔✔proprietorship; personal
taxation only
Markets that focus on short-term securities are: - ANS ✔✔money markets
Markets that focus on securities having life longer than one year are: - ANS ✔✔capital market
Which of the following statements is not correct about a firm laded with debt? - ANS ✔✔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. - ANS ✔✔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? - ANS ✔✔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? - ANS
✔✔$170,000
The calculation of ending retained earnings considers the beginning retained earnings, current
period net income or net less, and subtracts dividends - ANS ✔✔True
The calculation of ending retained earnings considers the beginning retained earnings, current
period net income or net loss, and stockholder's equity - ANS ✔✔False
The financial statement that reflects the profitability of a firm over a period of the time is the: -
ANS ✔✔income statement
The statement of cash flows identifies the sources and uses of the firm's cash: - ANS
✔✔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: - ANS ✔✔cash flow from investing activities
Earnings that are retained: - ANS ✔✔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: - ANS
✔✔is an increase in value to an economist
Accounting values are established primarily by: - ANS ✔✔actual transactions
To an accountant, income that is gained or lost during a given period is: - ANS ✔✔verifiable
The economists' value concept: - ANS ✔✔does not include sunk costs
Practice Questions 2026
With good accounting knowledge, a financial manager can - ANS ✔✔understand financial data
of the firm
Accounting can help financial managers: - ANS ✔✔to interpret and use financial information in
allocating financial resources more efficiently
The field of finance is closely linked to: - ANS ✔✔accounting and economics
The goal of financial management is: - ANS ✔✔to maximize shareholder's wealth
Which of the following is not a drawback for profit-only focus? - ANS ✔✔investors may receive a
higher dividend payout
Valuation of assets utilizes: - ANS ✔✔the present value model and future expected cash flows
Agency theory describes: - ANS ✔✔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: - ANS
✔✔rewarding CEOs with excessive bonuses
The honesty of the management can be compromised under all the following conditions with
the exception of: - ANS ✔✔when a manager complies with regulatory rules
,One way to align management's interest with that of shareholder's is: - ANS ✔✔granting stock
options to management
Which if the following forms exposes all owners to unlimited liability? - ANS ✔✔both
partnership and proprietorships
Sole Proprietorship is characterized by all of the following except: - ANS ✔✔high organizational
and operating costs
Select the pair of terms that indicates a correct match - ANS ✔✔proprietorship; personal
taxation only
Markets that focus on short-term securities are: - ANS ✔✔money markets
Markets that focus on securities having life longer than one year are: - ANS ✔✔capital market
Which of the following statements is not correct about a firm laded with debt? - ANS ✔✔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. - ANS ✔✔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? - ANS ✔✔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? - ANS
✔✔$170,000
The calculation of ending retained earnings considers the beginning retained earnings, current
period net income or net less, and subtracts dividends - ANS ✔✔True
The calculation of ending retained earnings considers the beginning retained earnings, current
period net income or net loss, and stockholder's equity - ANS ✔✔False
The financial statement that reflects the profitability of a firm over a period of the time is the: -
ANS ✔✔income statement
The statement of cash flows identifies the sources and uses of the firm's cash: - ANS
✔✔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: - ANS ✔✔cash flow from investing activities
Earnings that are retained: - ANS ✔✔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: - ANS
✔✔is an increase in value to an economist
Accounting values are established primarily by: - ANS ✔✔actual transactions
To an accountant, income that is gained or lost during a given period is: - ANS ✔✔verifiable
The economists' value concept: - ANS ✔✔does not include sunk costs
