Principles
of
/
Financial
/
Management -
/ /
Exam 1 Questions With Correct Answers
/ / / / / /
TRUE /or /FALSE
A
/corporation
/is
/considered
/to /be /a /separate /"legal /entity" /from /the /owners /and /has /the /power /of /an /individual /in /that /it
/can /sue /and /be /sued. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The /treasurer /in /medium-to-
large
/size
/firms
/handles
/the
/accounting
/activities,
/such
/as
/tax /management, /data /processing, /and /financial /accounting. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
,The
/main
/goal
/of /the /financial /manager /is /to /increase /the /firms /overall /profit. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
In /
a
/corporation,
/profits /are /generally /measured /in /terms /of /earnings /per /share. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
There /is /a /positive /correlation /between /risk /and /return. /The /higher /the /risk /of /an /investment,
/the /higher /the /required /return /will /be /on /that /investment. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/primary /role /of /the /accountant /in /a /corporation /is /to /develop /and /provide /financial /data /that
/will
/allow
/the
/financial
/manager /to /make /decisions /about /the /firms /financial /position. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
A
/firms
/earning
/are /
a
/true
/representation /of /cash /flows /available /to /the /stockholders /- /correct /answer(s) /✔✔ /FALSE
,TRUE /or /FALSE
Agency
/cost
/are /fees /that /are /paid /by /the /management /of /a /corporation /to /compensate /any /investor /who
/feels /that /he /has /suffered /a /loss /due /to /a /agency /problem. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/accrual
/method
/of
/accounting
/recognizes
/revenues
/at /the /time /of /sale /and /expenses /when /they /are /incurred. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/cash
/method
/of
/accounting
/recognizes
/revenues
/and
/expenses
/only /with /respect /to /the /actual /inflows /and /outflows /of /cash. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
Because
/of
/tax
, /benefits,
/financial /managers /prefer /cash /flows /later /rather /than /sooner. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
In
/general,
/stockholders
/wish /to /incur /higher /risk /in /order /to /ensure /higher /returns. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
The
/stakeholders
/of /
a
/corporation
/are /employees, /customers, /suppliers, /and /creditors. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/ethical
/behavior
/of
/the
/financial
/manager
/has /
a
/substantial
/impact /on /the /shareholder's /wealth /maximization /concept. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
of
/
Financial
/
Management -
/ /
Exam 1 Questions With Correct Answers
/ / / / / /
TRUE /or /FALSE
A
/corporation
/is
/considered
/to /be /a /separate /"legal /entity" /from /the /owners /and /has /the /power /of /an /individual /in /that /it
/can /sue /and /be /sued. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The /treasurer /in /medium-to-
large
/size
/firms
/handles
/the
/accounting
/activities,
/such
/as
/tax /management, /data /processing, /and /financial /accounting. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
,The
/main
/goal
/of /the /financial /manager /is /to /increase /the /firms /overall /profit. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
In /
a
/corporation,
/profits /are /generally /measured /in /terms /of /earnings /per /share. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
There /is /a /positive /correlation /between /risk /and /return. /The /higher /the /risk /of /an /investment,
/the /higher /the /required /return /will /be /on /that /investment. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/primary /role /of /the /accountant /in /a /corporation /is /to /develop /and /provide /financial /data /that
/will
/allow
/the
/financial
/manager /to /make /decisions /about /the /firms /financial /position. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
A
/firms
/earning
/are /
a
/true
/representation /of /cash /flows /available /to /the /stockholders /- /correct /answer(s) /✔✔ /FALSE
,TRUE /or /FALSE
Agency
/cost
/are /fees /that /are /paid /by /the /management /of /a /corporation /to /compensate /any /investor /who
/feels /that /he /has /suffered /a /loss /due /to /a /agency /problem. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/accrual
/method
/of
/accounting
/recognizes
/revenues
/at /the /time /of /sale /and /expenses /when /they /are /incurred. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/cash
/method
/of
/accounting
/recognizes
/revenues
/and
/expenses
/only /with /respect /to /the /actual /inflows /and /outflows /of /cash. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
Because
/of
/tax
, /benefits,
/financial /managers /prefer /cash /flows /later /rather /than /sooner. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
In
/general,
/stockholders
/wish /to /incur /higher /risk /in /order /to /ensure /higher /returns. /- /correct /answer(s) /✔✔ /FALSE
TRUE /or /FALSE
The
/stakeholders
/of /
a
/corporation
/are /employees, /customers, /suppliers, /and /creditors. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
The
/ethical
/behavior
/of
/the
/financial
/manager
/has /
a
/substantial
/impact /on /the /shareholder's /wealth /maximization /concept. /- /correct /answer(s) /✔✔ /TRUE
TRUE /or /FALSE
