TEST BANK FOR
Corporate Finance 13th Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Chapter 1
Student name:
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Generally, among those who report directly to the are the treasurer and the
controller of a corporation.
A) board of directors
B) chairperson of the board
C) chief executive officer
D) president
E) chief financial officer
2) A typical chain of command in a corporation is described by which one of the following
statements?
A) The information systems manager reports to the treasurer.
B) The credit manager reports to the treasurer.
C) The controller reports to the chief executive officer.
D) The tax manager reports to the treasurer.
E) The capital expenditures manager reports to the controller.
3) Answering which one of the following questions involves making a capital budgeting
decision?
Version 1 1
, A) How much debt should the firm borrow from a particular lender?
B) Should the firm build a new production facility?
C) Should the firm issue new equity to pay for its growth goals?
D) How much inventory should the firm keep on hand?
E) How much credit should the firm extend to a particular customer?
4) Which one of the following statements is accurate?
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 accounts receivable.
D) Long-term debt is defined as a residual claim on a firm’s assets.
E) Tangible assets are fixed assets such as patents.
5) Among the typical responsibilities of the corporate controller is:
A) capital expenditures management.
B) cash management.
C) tax reporting.
D) financial planning.
E) credit management.
6) is typically the responsibility of the corporate treasurer.
A) Financial planning
B) Cost accounting
C) Tax reporting
D) Information systems
E) Financial accounting
7) A firm’s define(s) its capital structure.
Version 1
yk 2
, A) mixture of various types of production equipment
yk yk yk yk yk yk
B) investment selections for its excess cash reserves yk yk yk yk yk yk
C) combination of cash and cash equivalents yk yk yk yk yk
D) combination of accounts appearing on the left side of its balance sheetyk yk yk yk yk yk yk yk yk yk yk
E) proportions of financing from debt and equity yk yk yk yk yk yk
8) The focus of short-term finance is on:
yk yk yk yk yk yk
A) the timing of cash flows.
yk yk yk yk
B) acquiring and selling fixed assets. yk yk yk yk
C) financing long-term projects. yk yk
D) capital budgeting. yk
E) issuing additional shares of common stock.
yk yk yk yk yk
9) Net working capital includes:
yk yk yk
A) copyrights.
B) manufacturing equipment. yk
C) common stock. yk
D) long-term debt. yk
E) inventory.
10) is defined as planning and managing a firm’s long-term assets.
yk yk yk yk yk yk yk yk yk
A) Working capital management yk yk
B) Cash management
yk
C) Cost accounting management
yk yk
D) Capital budgeting yk
E) Capital structure management
yk yk
11) An amount the firms owes, which it must repay within twelve months, is called a(n):
yk yk yk yk yk yk yk yk yk yk yk yk yk yk
Version 1
yk 3
, A) current liability. yk
B) long-term debt. yk
C) intangible asset. yk
D) accounts receivable. yk
E) current asset. yk
12) The business entity that is typically the least expensive to form is the:
yk yk yk yk yk yk yk yk yk yk yk yk
A) limited liability company. yk yk
B) joint stock company. yk yk
C) general partnership. yk
D) limited partnership. yk
E) sole proprietorship.
yk
13) A yk is a business owned by a single individual.
yk yk yk yk yk yk yk
A) corporation
B) sole proprietorship
yk
C) general partnership yk
D) limited partnership yk
E) limited liability company yk yk
14) Regarding a sole proprietorship, which one of the following statements is accurate?
yk yk yk yk yk yk yk yk yk yk yk
A) It is more difficult to form than other forms of business.
yk yk yk yk yk yk yk yk yk yk
B) Its business profits are taxed twice at the federal level.
yk yk yk yk yk yk yk yk yk
C) Its business profits are taxed separately from the personal income of the owner.
yk yk yk yk yk yk yk yk yk yk yk yk
D) The owner may be forced to sell his or her personal assets to pay the company's
yk yk yk yk yk yk yk yk yk yk yk yk yk yk yk
debts.
E) It has an unlimited life span.
yk yk yk yk yk
15) Regarding a sole proprietorship, which one of the following statements is accurate?
yk yk yk yk yk yk yk yk yk yk yk
Version 1yk 4
Corporate Finance 13th Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Chapter 1
Student name:
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Generally, among those who report directly to the are the treasurer and the
controller of a corporation.
A) board of directors
B) chairperson of the board
C) chief executive officer
D) president
E) chief financial officer
2) A typical chain of command in a corporation is described by which one of the following
statements?
A) The information systems manager reports to the treasurer.
B) The credit manager reports to the treasurer.
C) The controller reports to the chief executive officer.
D) The tax manager reports to the treasurer.
E) The capital expenditures manager reports to the controller.
3) Answering which one of the following questions involves making a capital budgeting
decision?
Version 1 1
, A) How much debt should the firm borrow from a particular lender?
B) Should the firm build a new production facility?
C) Should the firm issue new equity to pay for its growth goals?
D) How much inventory should the firm keep on hand?
E) How much credit should the firm extend to a particular customer?
4) Which one of the following statements is accurate?
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 accounts receivable.
D) Long-term debt is defined as a residual claim on a firm’s assets.
E) Tangible assets are fixed assets such as patents.
5) Among the typical responsibilities of the corporate controller is:
A) capital expenditures management.
B) cash management.
C) tax reporting.
D) financial planning.
E) credit management.
6) is typically the responsibility of the corporate treasurer.
A) Financial planning
B) Cost accounting
C) Tax reporting
D) Information systems
E) Financial accounting
7) A firm’s define(s) its capital structure.
Version 1
yk 2
, A) mixture of various types of production equipment
yk yk yk yk yk yk
B) investment selections for its excess cash reserves yk yk yk yk yk yk
C) combination of cash and cash equivalents yk yk yk yk yk
D) combination of accounts appearing on the left side of its balance sheetyk yk yk yk yk yk yk yk yk yk yk
E) proportions of financing from debt and equity yk yk yk yk yk yk
8) The focus of short-term finance is on:
yk yk yk yk yk yk
A) the timing of cash flows.
yk yk yk yk
B) acquiring and selling fixed assets. yk yk yk yk
C) financing long-term projects. yk yk
D) capital budgeting. yk
E) issuing additional shares of common stock.
yk yk yk yk yk
9) Net working capital includes:
yk yk yk
A) copyrights.
B) manufacturing equipment. yk
C) common stock. yk
D) long-term debt. yk
E) inventory.
10) is defined as planning and managing a firm’s long-term assets.
yk yk yk yk yk yk yk yk yk
A) Working capital management yk yk
B) Cash management
yk
C) Cost accounting management
yk yk
D) Capital budgeting yk
E) Capital structure management
yk yk
11) An amount the firms owes, which it must repay within twelve months, is called a(n):
yk yk yk yk yk yk yk yk yk yk yk yk yk yk
Version 1
yk 3
, A) current liability. yk
B) long-term debt. yk
C) intangible asset. yk
D) accounts receivable. yk
E) current asset. yk
12) The business entity that is typically the least expensive to form is the:
yk yk yk yk yk yk yk yk yk yk yk yk
A) limited liability company. yk yk
B) joint stock company. yk yk
C) general partnership. yk
D) limited partnership. yk
E) sole proprietorship.
yk
13) A yk is a business owned by a single individual.
yk yk yk yk yk yk yk
A) corporation
B) sole proprietorship
yk
C) general partnership yk
D) limited partnership yk
E) limited liability company yk yk
14) Regarding a sole proprietorship, which one of the following statements is accurate?
yk yk yk yk yk yk yk yk yk yk yk
A) It is more difficult to form than other forms of business.
yk yk yk yk yk yk yk yk yk yk
B) Its business profits are taxed twice at the federal level.
yk yk yk yk yk yk yk yk yk
C) Its business profits are taxed separately from the personal income of the owner.
yk yk yk yk yk yk yk yk yk yk yk yk
D) The owner may be forced to sell his or her personal assets to pay the company's
yk yk yk yk yk yk yk yk yk yk yk yk yk yk yk
debts.
E) It has an unlimited life span.
yk yk yk yk yk
15) Regarding a sole proprietorship, which one of the following statements is accurate?
yk yk yk yk yk yk yk yk yk yk yk
Version 1yk 4
