Chapter 01
1.
Which one of these is a correct definition?
A.
Net working capital equals current assets plus current liabilities.
B.
Current liabilities are debts that must be repaid in 18 months or less.
C.
Current assets are assets with short lives, such as inventory.
D.
Long-term debt is defined as a residual claim on a firm’s assets.
E.
Tangible assets are fixed assets such as patents.
,2.
The corporate controller is generally responsible for which one of these functions?
A.
capital expenditures
B.
cash management
C.
tax reporting
D.
financial planning
E.
credit management
3.
The corporate treasurer oversees which one of these areas?
A.
financial planning
B.
cost accounting
C.
tax reporting
D.
information systems
E.
financial accounting
,4.
A firm’s capital structure refers to the firm’s:
A.
mixture of various types of production equipment.
B.
investment selections for its excess cash reserves.
C.
combination of cash and cash equivalents.
D.
combination of accounts appearing on the left side of its balance sheet.
E.
proportions of financing from current and long-term debt and equity.
5.
Short-term finance deals with:
A.
the timing of cash flows.
B.
acquiring and selling fixed assets.
C.
financing long-term projects.
D.
capital budgeting.
E.
issuing additional shares of common stock.
, 6.
Which one of these best fits the description of an agency cost?
A.
increasing the dividend payments per share
B.
the benefits received from reducing production costs per unit
C.
the payment of corporate income taxes
D.
the payment required for an outside audit of the firm
E.
the payment of interest on a firm’s debts
7.
Which one of these accounts is included in net working capital?
A.
copyright
B.
manufacturing equipment
C.
common stock
D.
long-term debt
E.
inventory
1.
Which one of these is a correct definition?
A.
Net working capital equals current assets plus current liabilities.
B.
Current liabilities are debts that must be repaid in 18 months or less.
C.
Current assets are assets with short lives, such as inventory.
D.
Long-term debt is defined as a residual claim on a firm’s assets.
E.
Tangible assets are fixed assets such as patents.
,2.
The corporate controller is generally responsible for which one of these functions?
A.
capital expenditures
B.
cash management
C.
tax reporting
D.
financial planning
E.
credit management
3.
The corporate treasurer oversees which one of these areas?
A.
financial planning
B.
cost accounting
C.
tax reporting
D.
information systems
E.
financial accounting
,4.
A firm’s capital structure refers to the firm’s:
A.
mixture of various types of production equipment.
B.
investment selections for its excess cash reserves.
C.
combination of cash and cash equivalents.
D.
combination of accounts appearing on the left side of its balance sheet.
E.
proportions of financing from current and long-term debt and equity.
5.
Short-term finance deals with:
A.
the timing of cash flows.
B.
acquiring and selling fixed assets.
C.
financing long-term projects.
D.
capital budgeting.
E.
issuing additional shares of common stock.
, 6.
Which one of these best fits the description of an agency cost?
A.
increasing the dividend payments per share
B.
the benefits received from reducing production costs per unit
C.
the payment of corporate income taxes
D.
the payment required for an outside audit of the firm
E.
the payment of interest on a firm’s debts
7.
Which one of these accounts is included in net working capital?
A.
copyright
B.
manufacturing equipment
C.
common stock
D.
long-term debt
E.
inventory
