BA 318 Midterm || Possible Questions Accurately Answered.
What is a corporation? correct answers A legal entity that can enter into contracts. Difficult and
costly to form
Who owns a corporation? correct answers Shareholders, more specifically the common
stockholders
What do you have as an owner in a corporation? correct answers Limited liability
What does limited liability mean? correct answers If the corporation goes bankrupt and owes lots
of folks money, no one can come after your personal assets.
Your losses are limited to the amount of money you invested in the stock
Who runs the corporation? correct answers Managers
What are managers? correct answers Caretaker or agents for the Shareholders
What can the makeup of the shareholders change without happening? correct answers Wont
affect the operation of the corporation allowing for corporations to have long lives
What is a public corporation? correct answers They have a wide shareholder base and their
ownership claims (stock) trade on a public exchange
What is the disadvantage of the corporate form? correct answers Double taxation
What is double taxation correct answers When income taxes are paid twice on the same source of
earned income on the corporate and personal level
, What is the role of financial managers in any CORPORATION correct answers Caretaker of the
shareholder's agents
Pick what projects to invest in
How to pay for projects
Ensure firm has money to meet daily obligations
What is capital budgeting correct answers Deciding what lines of business to be in, and what
long term assets such as buildings and machinery need to be purchased.
What is debt correct answers Money that is owed or due
What is equity correct answers The values of the shares issues by a company
What is capital structure? correct answers The overall mix of debt and equity of a firm
What is working capital management correct answers Ensuring the firm has enough money to
meet its day to day obligations and invest in all profitable projects
What are the roles of financial managers in any ORGANIZATION correct answers Investment or
capital budgeting decisions
Financing or capital structure decisions
What are investment or capital budgeting decisions? correct answers Decisions regarding real
assets
What are real assets correct answers Assets that are used to produce goods and services
What are examples of investment or capital budgeting decisions correct answers In what should
we invest?
What is a corporation? correct answers A legal entity that can enter into contracts. Difficult and
costly to form
Who owns a corporation? correct answers Shareholders, more specifically the common
stockholders
What do you have as an owner in a corporation? correct answers Limited liability
What does limited liability mean? correct answers If the corporation goes bankrupt and owes lots
of folks money, no one can come after your personal assets.
Your losses are limited to the amount of money you invested in the stock
Who runs the corporation? correct answers Managers
What are managers? correct answers Caretaker or agents for the Shareholders
What can the makeup of the shareholders change without happening? correct answers Wont
affect the operation of the corporation allowing for corporations to have long lives
What is a public corporation? correct answers They have a wide shareholder base and their
ownership claims (stock) trade on a public exchange
What is the disadvantage of the corporate form? correct answers Double taxation
What is double taxation correct answers When income taxes are paid twice on the same source of
earned income on the corporate and personal level
, What is the role of financial managers in any CORPORATION correct answers Caretaker of the
shareholder's agents
Pick what projects to invest in
How to pay for projects
Ensure firm has money to meet daily obligations
What is capital budgeting correct answers Deciding what lines of business to be in, and what
long term assets such as buildings and machinery need to be purchased.
What is debt correct answers Money that is owed or due
What is equity correct answers The values of the shares issues by a company
What is capital structure? correct answers The overall mix of debt and equity of a firm
What is working capital management correct answers Ensuring the firm has enough money to
meet its day to day obligations and invest in all profitable projects
What are the roles of financial managers in any ORGANIZATION correct answers Investment or
capital budgeting decisions
Financing or capital structure decisions
What are investment or capital budgeting decisions? correct answers Decisions regarding real
assets
What are real assets correct answers Assets that are used to produce goods and services
What are examples of investment or capital budgeting decisions correct answers In what should
we invest?
