Fin 325 Exam 1 practice questions with correct
answers
Capital structure decisions include determining:
a. which one of two projects to accept.
b. how to allocate investment funds to multiple projects.
c. how much debt should be assumed to fund a project.
d. how much inventory will be needed to support a project. Correct
Answer-c. how much debt should be assumed to fund a project
Which one of the following statements concerning the corporate form of
business ownership is correct?
a. The life of a corporation is limited.
b. Transferring ownership of a sole proprietorship is easier than
transferring ownership of a corporation.
c. The profits of a corporation are subject to double taxation.
d. The owner of a corporation is personally responsible for all of the
company's debts Correct Answer-c. The profits of a corp are subject to
double taxation
Shareholders' equity:
a. decreases whenever new shares of stock are issued.
b. represents the residual value of a firm.
, c. is equal to total assets plus total liabilities.
d. is referred to as a firm's financial leverage. Correct Answer-b.
represents the residual value of a firm
Which one of the following is included in a firm's market value but yet
is excluded from the firm's accounting value?
a. Real estate investment
b. Good reputation of the company
c. Equipment owned by the firm
d. Money due from a customer Correct Answer-b. good reputation of the
company (opinion)
According to the statement of cash flows, an increase in inventory will
________ the cash
flow from ________ activities.
A) increase; operating
B) decrease; financing
C) decrease; operating
D) increase; financing
E) increase; investment Correct Answer-C) decrease; operating
A common-size income statement is an accounting statement that
expresses all of a firm's expenses as a percentage of:
A) total assets.
B) total equity.
answers
Capital structure decisions include determining:
a. which one of two projects to accept.
b. how to allocate investment funds to multiple projects.
c. how much debt should be assumed to fund a project.
d. how much inventory will be needed to support a project. Correct
Answer-c. how much debt should be assumed to fund a project
Which one of the following statements concerning the corporate form of
business ownership is correct?
a. The life of a corporation is limited.
b. Transferring ownership of a sole proprietorship is easier than
transferring ownership of a corporation.
c. The profits of a corporation are subject to double taxation.
d. The owner of a corporation is personally responsible for all of the
company's debts Correct Answer-c. The profits of a corp are subject to
double taxation
Shareholders' equity:
a. decreases whenever new shares of stock are issued.
b. represents the residual value of a firm.
, c. is equal to total assets plus total liabilities.
d. is referred to as a firm's financial leverage. Correct Answer-b.
represents the residual value of a firm
Which one of the following is included in a firm's market value but yet
is excluded from the firm's accounting value?
a. Real estate investment
b. Good reputation of the company
c. Equipment owned by the firm
d. Money due from a customer Correct Answer-b. good reputation of the
company (opinion)
According to the statement of cash flows, an increase in inventory will
________ the cash
flow from ________ activities.
A) increase; operating
B) decrease; financing
C) decrease; operating
D) increase; financing
E) increase; investment Correct Answer-C) decrease; operating
A common-size income statement is an accounting statement that
expresses all of a firm's expenses as a percentage of:
A) total assets.
B) total equity.
