FIN 300 Exam 1 Multiple Choice ACTUAL UPDATED QUESTIONS AND
CORRECT ANSWERS
Profit maximization as a goal of the firm: d. does not consider cash flow or risk
a. is an economic principle and not an accounting one
b. is superior to other goals that could be pursued
c. maximizes the wealth of the owners
d. does not consider cash flow or risk
Wealth maximization as a goal of the firm: b. take a long-run perspective and focuses on the owners of the firm
a. is usually discounted by bondholders
b. takes a long-run perspective and focuses on the
owners of the firm
c. is a long-run perspective used by financial managers
for internal use only
d. is an accounting number
An important advantage a general partner usually has is: b. usually a larger share of profit distribution when the firm is successful
a. limited liability
b. usually a larger share of profit distribution when the
firm is successful
c. unlimited liability
d. profits received are tax-free
, A Subchapter S corporation: b. has limited liability for for its owners
a. is a large corporation
b. has limited liability for its owners
c. is double taxed
d. has unlimited liability for its owners
One of the most important disadvantages of the c. double taxation
corporate form of business is:
a. shares that can be sold
b. professional managers
c. double taxation
d. unlimited owner liability
A manager has responsibilities to stockholders: a. for legal and ethical issues
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
d. only where legal issues apply
Problems with seeking profit as a goal of the firm would b. accountants have different ways of measuring profit
include each of the following except:
a. profit is completely unrelated to cash flow
b. profit goals involve timing issues
c. accountants have different ways of measuring profit
d. profit is only a proxy for cash flow
Which statement is correct about limited partners? d. there is no limit to the number of limited partners that may participate
a. they have management control equal to their percent
of investment
b. they have no tax liability
c. they can lose only one half of their initial investment
d. there is no limit to the number of limited partners that
may participate
Which of the following would least affect the value of a b. market share
firm's stock?
a. cashflows
b. market share
c. timing on cash flows
d. risk associated with receiving cash flows
Which of the following areas of finance is concerned with b. financial managment
internal decision-making of a business?
a. Financial markets and institutions
b. Financial Management
c. Investments
d. Agency Issues
CORRECT ANSWERS
Profit maximization as a goal of the firm: d. does not consider cash flow or risk
a. is an economic principle and not an accounting one
b. is superior to other goals that could be pursued
c. maximizes the wealth of the owners
d. does not consider cash flow or risk
Wealth maximization as a goal of the firm: b. take a long-run perspective and focuses on the owners of the firm
a. is usually discounted by bondholders
b. takes a long-run perspective and focuses on the
owners of the firm
c. is a long-run perspective used by financial managers
for internal use only
d. is an accounting number
An important advantage a general partner usually has is: b. usually a larger share of profit distribution when the firm is successful
a. limited liability
b. usually a larger share of profit distribution when the
firm is successful
c. unlimited liability
d. profits received are tax-free
, A Subchapter S corporation: b. has limited liability for for its owners
a. is a large corporation
b. has limited liability for its owners
c. is double taxed
d. has unlimited liability for its owners
One of the most important disadvantages of the c. double taxation
corporate form of business is:
a. shares that can be sold
b. professional managers
c. double taxation
d. unlimited owner liability
A manager has responsibilities to stockholders: a. for legal and ethical issues
a. for legal and ethical issues
b. only at firms that are public corporations
c. never
d. only where legal issues apply
Problems with seeking profit as a goal of the firm would b. accountants have different ways of measuring profit
include each of the following except:
a. profit is completely unrelated to cash flow
b. profit goals involve timing issues
c. accountants have different ways of measuring profit
d. profit is only a proxy for cash flow
Which statement is correct about limited partners? d. there is no limit to the number of limited partners that may participate
a. they have management control equal to their percent
of investment
b. they have no tax liability
c. they can lose only one half of their initial investment
d. there is no limit to the number of limited partners that
may participate
Which of the following would least affect the value of a b. market share
firm's stock?
a. cashflows
b. market share
c. timing on cash flows
d. risk associated with receiving cash flows
Which of the following areas of finance is concerned with b. financial managment
internal decision-making of a business?
a. Financial markets and institutions
b. Financial Management
c. Investments
d. Agency Issues
