LSUS FIN701 Final Test 1 Questions with
All Solved Solutions 2026-2027 Updated.
An example of a capital budgeting decision is deciding: - Answer whether or not to purchase a
new machine for the production line.
Capital structure decisions include determining - Answer how much debt should be assumed
to fund a project.
The decision to issue additional shares of stock is an example of - Answer a capital structure
decision
Which one of the following questions is a working capital management decision? - Answer
How much inventory should be on hand for immediate sale?
Which one of the following terms is defined as the management of a firm's long-term
investments? - Answer Capital budgeting
Which one of the following terms is defined as the mixture of a firm's debt and equity
financing? - Answer Capital structure
A firm's short-term assets and its short-term liabilities are referred to as the firm's: - Answer
working capital.
A business owned by a solitary individual who has unlimited liability for the firm's debt is called
a: - Answer sole proprietorship.
A business formed by two or more individuals who each have unlimited liability for all of the
firm's business debts is called a: - Answer general partnership.
A business partner whose potential financial loss in the partnership will not exceed his or her
investment in that partnership is called a: - Answer limited partner.
A business created as a distinct legal entity and treated as a legal "person" is called a(n): -
Answer corporation.
Which one of the following statements concerning a sole proprietorship is correct? - Answer
The owner of a sole proprietorship is personally responsible for all of the company's debts.
, One disadvantage of the corporate form of business ownership is the - Answer double
taxation of distributed profits.
The growth of both sole proprietorships and partnerships is frequently limited by the firm's -
Answer inability to raise cash.
Corporate dividends are: - Answer taxable income of the recipient even though that income
was previously taxed.
Financial managers should primarily focus on the interests of: - Answer shareholders.
The Sarbanes-Oxley Act of 2002 is a governmental response to: - Answer management greed
and abuses
Which one of the following actions by a financial manager is most apt to create an agency
problem? - Answer Increasing current profits when doing so lowers the value of the
company's equity
Which one of the following is a current asset? - Answer Accounts receivable
Which one of the following is included in a firm's market value but yet is excluded from the
firm's accounting value? - Answer Good reputation of the company
Net working capital is defined as: - Answer current assets minus current liabilities.
Which one of the following statements concerning net working capital is correct? - Answer
Net working capital may be a negative value.
Which one of the following accounts is the most liquid? - Answer Accounts Receivable
Which one of the following represents the most liquid asset? - Answer $100 of inventory that
is sold today for $100 cash
Shareholders' equity: - Answer represents the residual value of a firm.
As the degree of financial leverage increases, the: - Answer probability a firm will encounter
financial distress increases.
All Solved Solutions 2026-2027 Updated.
An example of a capital budgeting decision is deciding: - Answer whether or not to purchase a
new machine for the production line.
Capital structure decisions include determining - Answer how much debt should be assumed
to fund a project.
The decision to issue additional shares of stock is an example of - Answer a capital structure
decision
Which one of the following questions is a working capital management decision? - Answer
How much inventory should be on hand for immediate sale?
Which one of the following terms is defined as the management of a firm's long-term
investments? - Answer Capital budgeting
Which one of the following terms is defined as the mixture of a firm's debt and equity
financing? - Answer Capital structure
A firm's short-term assets and its short-term liabilities are referred to as the firm's: - Answer
working capital.
A business owned by a solitary individual who has unlimited liability for the firm's debt is called
a: - Answer sole proprietorship.
A business formed by two or more individuals who each have unlimited liability for all of the
firm's business debts is called a: - Answer general partnership.
A business partner whose potential financial loss in the partnership will not exceed his or her
investment in that partnership is called a: - Answer limited partner.
A business created as a distinct legal entity and treated as a legal "person" is called a(n): -
Answer corporation.
Which one of the following statements concerning a sole proprietorship is correct? - Answer
The owner of a sole proprietorship is personally responsible for all of the company's debts.
, One disadvantage of the corporate form of business ownership is the - Answer double
taxation of distributed profits.
The growth of both sole proprietorships and partnerships is frequently limited by the firm's -
Answer inability to raise cash.
Corporate dividends are: - Answer taxable income of the recipient even though that income
was previously taxed.
Financial managers should primarily focus on the interests of: - Answer shareholders.
The Sarbanes-Oxley Act of 2002 is a governmental response to: - Answer management greed
and abuses
Which one of the following actions by a financial manager is most apt to create an agency
problem? - Answer Increasing current profits when doing so lowers the value of the
company's equity
Which one of the following is a current asset? - Answer Accounts receivable
Which one of the following is included in a firm's market value but yet is excluded from the
firm's accounting value? - Answer Good reputation of the company
Net working capital is defined as: - Answer current assets minus current liabilities.
Which one of the following statements concerning net working capital is correct? - Answer
Net working capital may be a negative value.
Which one of the following accounts is the most liquid? - Answer Accounts Receivable
Which one of the following represents the most liquid asset? - Answer $100 of inventory that
is sold today for $100 cash
Shareholders' equity: - Answer represents the residual value of a firm.
As the degree of financial leverage increases, the: - Answer probability a firm will encounter
financial distress increases.
