ABNORMAL PSYCHOLOGY MIDTERM EXAMINATION TEST
Questions with Correct Answers (Grade A+)
Question 1: Which one of the following terms is defined as the mixture of a firm's debt and equity
financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital structure.
Answer: E.
Question 2: Which one of the following is defined as a firm's short-term assets and its short-term
liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital structure.
Answer: A
Question 3: A business owned by a solitary individual who has unlimited liability for its debt is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Answer: B
Question 4: A business formed by two or more individuals who each have unlimited liability for all of
the firm's business debts is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Answer: C
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, Question 5: A business partner whose potential financial loss in the partnership will not exceed his or
her investment in that partnership is called a:
A. generally partner.
B. sole proprietor.
C. limited partner
D. corporate shareholder.
E. zero partner.
Answer: C
Question 6: A business created as a distinct legal entity and treated as a legal "person" is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. unlimited liability company.
Answer: A
Question 7: Which one of the following terms is defined as a conflict of interest between the corporate
shareholders and the corporate managers?
A. articles of incorporation
B. corporate breakdown
C. agency problem
D. by laws
E. legal liability.
Answer: C
Question 8: A stakeholder is:
A. a person who owns shares of stock.
B. any person who has voting rights based on stock ownership of a corporation.
C. a person who initially founded a firm and currently has management control over that firm.
D. a creditor to whom a firm currently owes money. correct
E. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a
firm.
Answer: E
Question 9: Which of the following questions are addressed by financial managers? I. How should a
product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money? IV. Should the firm acquire new equipment?
Answer: II, III, & IV
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Questions with Correct Answers (Grade A+)
Question 1: Which one of the following terms is defined as the mixture of a firm's debt and equity
financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital structure.
Answer: E.
Question 2: Which one of the following is defined as a firm's short-term assets and its short-term
liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital structure.
Answer: A
Question 3: A business owned by a solitary individual who has unlimited liability for its debt is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Answer: B
Question 4: A business formed by two or more individuals who each have unlimited liability for all of
the firm's business debts is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Answer: C
Page 1
, Question 5: A business partner whose potential financial loss in the partnership will not exceed his or
her investment in that partnership is called a:
A. generally partner.
B. sole proprietor.
C. limited partner
D. corporate shareholder.
E. zero partner.
Answer: C
Question 6: A business created as a distinct legal entity and treated as a legal "person" is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. unlimited liability company.
Answer: A
Question 7: Which one of the following terms is defined as a conflict of interest between the corporate
shareholders and the corporate managers?
A. articles of incorporation
B. corporate breakdown
C. agency problem
D. by laws
E. legal liability.
Answer: C
Question 8: A stakeholder is:
A. a person who owns shares of stock.
B. any person who has voting rights based on stock ownership of a corporation.
C. a person who initially founded a firm and currently has management control over that firm.
D. a creditor to whom a firm currently owes money. correct
E. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a
firm.
Answer: E
Question 9: Which of the following questions are addressed by financial managers? I. How should a
product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money? IV. Should the firm acquire new equipment?
Answer: II, III, & IV
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