FNAN 320 ALL QUIZ QUESTIONS WITH VERIFIED
ANSWERS
What is fhe most important type of decision that the financial manager makes? -
Answers - The financial manager's most important job is to make the firm's investment
decisions.
A ___ is when a rich individual or organization purchases a large fraction of the stock of
a poorly performing firm and in doing so gets enough votes to replace the board of
directors and the CEO. - Answers - hostile takeover
What are the main advantages of organizing a firm as a corporation? - Answers - 1.
There is no limit to the number of owners a corporation may have, thus allowing the
corporation to raise substantial amounts of capital
2. The life of the business can continue beyond the death of any of the owners.
3. The liability of the owners is limited to the amount of their investment in the firm
What are the main disadvantages of organizing a firm as a corporation? - Answers - 1.
Income to a corporation is subject to double taxation, once at the corporate level and
again when received by the owners in the form of a dividend
2. The corporation is more complicated and more expensive to set up than other
business entities
What is the difference between a public and private corporation? - Answers - The
shares of a public corporation are traded on an exchange while the shares of a private
corporation are not traded on a public exchange.
Which of the following is NOT a role of financial institutions?
A. Printing money for borrowers
B. Moving funds from savers to borrowers
C. Spreading out risk-bearing
D. Moving funds through time - Answers - Printing money for borrowers
What does the phrase limited liability mean in a corporate context? - Answers - Owner's
liability is limited to the amount they invested in the firm. Stockholders are not
responsible for any encumbrances of the firm; in particular, they cannot be required to
pay back any debts incurred by the firm.
True/ False: Partnerships are the most common types of business firms in the world. -
Answers - False
What is GAAP and who oversees it? - Answers - GAAP stands for Generally Accepted
Accounting Principles.
, GAAP was established by the Financial Accounting Standards Board and is the format
required by the SEC when companies submit their quarterly and annual reports
True/False: The balance sheet shows the assets, liabilities, and stockholder's equity of
a firm over a given length of time. - Answers - False
A company's after-tax profits measured per unit of common stock are known as _____. -
Answers - earnings per share
A consensus estimate of future earnings by individuals that are not employees of the
firm is known as _____. - Answers - Analysts's estimates
Earnings are an important measure to financial managers because investors use
earnings to make forecasts about a company's _________ and ultimately stock price. -
Answers - Cash Flows
Which of the following is NOT one of the financial statements that must be produced by
a public company?
A. The Balance Sheet
B. The Statement of Cash Flows
C. The Statement of Activities
D. The Income Statement - Answers - C. The Statement of Activities
Which of the following is NOT considered to be an operating expense on the income
statement?
A. Corporate taxes
B. Salaries
C. Depreciation and Amortization
D. Administrative expenses and overhead - Answers - A. Corporate taxes
The major components of stockholder's equity are ________. - Answers - common
stock, paid-in surplus, and retained earnings
What is a firm's net income?
A. The last or "bottom" line of the income statement
B. A measure of the firm's profitability over a given period
C. The difference between the sales and other income generated by a firm , and all
costs, taxes, and expenses incurred by the firm in a given period
D. All of the above - Answers - D. All of the above
True/ False: In the United States, publicly traded companies can choose whether or not
they wish to release periodic financial statements. - Answers - False
ANSWERS
What is fhe most important type of decision that the financial manager makes? -
Answers - The financial manager's most important job is to make the firm's investment
decisions.
A ___ is when a rich individual or organization purchases a large fraction of the stock of
a poorly performing firm and in doing so gets enough votes to replace the board of
directors and the CEO. - Answers - hostile takeover
What are the main advantages of organizing a firm as a corporation? - Answers - 1.
There is no limit to the number of owners a corporation may have, thus allowing the
corporation to raise substantial amounts of capital
2. The life of the business can continue beyond the death of any of the owners.
3. The liability of the owners is limited to the amount of their investment in the firm
What are the main disadvantages of organizing a firm as a corporation? - Answers - 1.
Income to a corporation is subject to double taxation, once at the corporate level and
again when received by the owners in the form of a dividend
2. The corporation is more complicated and more expensive to set up than other
business entities
What is the difference between a public and private corporation? - Answers - The
shares of a public corporation are traded on an exchange while the shares of a private
corporation are not traded on a public exchange.
Which of the following is NOT a role of financial institutions?
A. Printing money for borrowers
B. Moving funds from savers to borrowers
C. Spreading out risk-bearing
D. Moving funds through time - Answers - Printing money for borrowers
What does the phrase limited liability mean in a corporate context? - Answers - Owner's
liability is limited to the amount they invested in the firm. Stockholders are not
responsible for any encumbrances of the firm; in particular, they cannot be required to
pay back any debts incurred by the firm.
True/ False: Partnerships are the most common types of business firms in the world. -
Answers - False
What is GAAP and who oversees it? - Answers - GAAP stands for Generally Accepted
Accounting Principles.
, GAAP was established by the Financial Accounting Standards Board and is the format
required by the SEC when companies submit their quarterly and annual reports
True/False: The balance sheet shows the assets, liabilities, and stockholder's equity of
a firm over a given length of time. - Answers - False
A company's after-tax profits measured per unit of common stock are known as _____. -
Answers - earnings per share
A consensus estimate of future earnings by individuals that are not employees of the
firm is known as _____. - Answers - Analysts's estimates
Earnings are an important measure to financial managers because investors use
earnings to make forecasts about a company's _________ and ultimately stock price. -
Answers - Cash Flows
Which of the following is NOT one of the financial statements that must be produced by
a public company?
A. The Balance Sheet
B. The Statement of Cash Flows
C. The Statement of Activities
D. The Income Statement - Answers - C. The Statement of Activities
Which of the following is NOT considered to be an operating expense on the income
statement?
A. Corporate taxes
B. Salaries
C. Depreciation and Amortization
D. Administrative expenses and overhead - Answers - A. Corporate taxes
The major components of stockholder's equity are ________. - Answers - common
stock, paid-in surplus, and retained earnings
What is a firm's net income?
A. The last or "bottom" line of the income statement
B. A measure of the firm's profitability over a given period
C. The difference between the sales and other income generated by a firm , and all
costs, taxes, and expenses incurred by the firm in a given period
D. All of the above - Answers - D. All of the above
True/ False: In the United States, publicly traded companies can choose whether or not
they wish to release periodic financial statements. - Answers - False
