| Which one of the following terms is defined as the management of afirm’s long-term investments? | capital budgeting |
| Which one of the following terms is defined as the mixture of a firm’sdebt and equity financing? | capital structure |
| Which one of the following is defined as a firm’s short-term assets andits short-term liabilities? | working capital |
| A business owned by a solitary individual who has unlimited liability forits debt is called a: | sole proprietorship |
| A business formed by two or more individuals who each have unlimitedliability for all of the firm’s business debts is called a: | general partnership |
| A business partner whose potential financial loss in the partnership willnot exceed his or her investment in that partnership is called a: | limited partner |
| A business created as a distinct legal entity and treated as a legal”person” is called a: | corporation |
| Which one of the following terms is defined as a conflict of interestbetween the corporate shareholders and the corporate managers? | agency problem |
| A stakeholder is: | any person or entity other than a stockholder or creditor whopotentially has a claim on the cash flows of a firm. |
| 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? | II, III, and IV only |
| Which one of the following functions should be the responsibility of thecontroller rather than the treasurer? | income tax returns |
| The controller of a corporation generally reports directly to the: | vice president of finance |
| Which one of the following correctly defines the upward chain ofcommand in a typical corporate organizational structure? | the treasurer reports to the vice president of finance |
| Which one of the following is a capital budgeting decision? | deciding whether or not to purchase a new machine for theproduction line |
| Which of the following should a financial manager consider whenanalyzing a capital budgeting project?I. project start up costsII. timing of all projected cash flowsIII. dependability of future cash flowsIV. dollar amount of each projected cash flow | I, II, III, and IV |
| Which one of the following is a capital structure decision? | determining how much debt should be assumed to fund aproject |
| The decision to issue additional shares of stock is an example of whichone of the following? | capital structure decision |
| Which of the following accounts are included in working capitalmanagement?I. accounts payableII. accounts receivableIII. fixed assetsIV. inventory | I, II, and IV only |
| Which one of the following is a working capital management decision? | determining whether to pay cash for a purchase or use thecredit offered by the supplier |
