Intro to Business FInal Ch. 17-20

An important difference between accounting and other business functions, such as marketing and management, is that: accounting offers us insight into whether the business is financially sound.
To effectively run a business, it is necessary to: understand and use accounting information.
Which of the following is an example of a financial transaction? a firm purchases a fire policy
Although accounting has several specific uses, the overall purpose of accounting can be summarized as: to provide financial information that is useful to decision makers.
Which of the following responses is the best and most comprehensive? “A company’s accounting information is useful to ____________.” managers, owners, creditors, employees, and the government
Accountants record, classify, and ____________ the results of the financial information they gather. interpret
The reports and financial statements prepared by accountants: provide information that can be used by decision makers both inside and outside the organization.
A person’s pulse rate and blood pressure are indicators of a person’s health. Similarly, _________ can help assess the health of a business. financial statements
Accounting transactions are very important to a firm’s operations. Which of the following activities would affect the firm’s account balances? Buying and selling goods and services
As an accountant, Joe’s responsibilities include: summarizing and interpreting financial information needed by his firm’s managers.
________ examine the data prepared by ________ and then make recommendations to top management regarding strategies for improving the firm. Financial managers; accountants
_____________ is the function in business that is responsible for acquiring funds for the firm, and managing funds within the firm. Finance
Which of the following correctly identifies areas of authority and responsibility for a chief financial officer (CFO)? Accounting and finance
No matter the size of the business, finance is a critical activity for: profit-seeking and nonprofit organizations.
Undercapitalization refers to the problem of: insufficient start-up funds.
Which of the following statements is most accurate? Financial managers need to understand accounting.
Which of the following is a primary area of concern for financial managers? Undercapitalization
Which business function involves credit management/collecting funds from customers? Finance
Which of the following statements about taxes is accurate? Profitable businesses usually pay taxes.
A(n) __________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles. internal auditor
Which of the following situations would be considered insider trading? You call your stockbroker and ask him to buy 500 shares of your company, Best Dressed Computers, Inc., because you just heard from the CEO’s administrative assistant that the CEO just got the boot! You figure that this emotional news has got to help the stock price.
Investors buying bonds and corporations issuing bonds (both) accept investment risk. Which of the following statements is most correct when it comes to the investment that one or the other party accepts? If investor Joe is holding a bond that pays 5% and market interest rates on similar bonds go down, Joe’s bond is now worth more than its face value, and if he needed to sell it on the secondary market, he could probably sell it at a premium.
If Pirate Recording elects to offer an IPO (Initial Public Offering), it will involve preparing full financial disclosure with the __________. The firm is advised to solicit the services of an investment banker/underwriter, who will analyze the market and determine the best price for the new issue of Pirate Recording stock. The offering will then be sold on the ___________. Securities and Exchange Commission; primary market
Penny is concerned about the interest rate risk if the company decides to issue bonds. Penny would like protection from interest rate fluctuation. Therefore, the bond issue’s features should include a(n): call provision.
One funding source under consideration is the issuance of $150 million worth of corporate bonds. A financial advisor predicted that in order for the fast growing company to attract investors, it would have to put up collateral to back up the bond issue. The type of bond the financial advisor suggests is: secured bonds.
If stock is issued in Pirate Recording, analysts predict that the company has potential for strong growth. The prospects for dividend payments to stockholders, at least in the beginning, are not good. Pirate Recording will need to retain its earnings in order to grow rapidly. The firm’s stock would most likely be classified as a(n): growth stock.
Penny is impressed with contemporary high-tech companies that have listed their stock on an electronic telecommunications network of securities dealers who trade the stock. She is referring to firms such as Microsoft [MSFT], Google [GOOG], and Apple [AAPL]. Penny ideally would like her company’s stock listed on the ___________. NASDAQ
The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates? More money will flow into the United States from foreign investors.
It’s no secret these days that the People’s Bank of China is fat with cash from the increasing rate of Chinese exporting. As a smart player on the global stage, which of the following strategic decisions will the People’s Bank of China probably make on a daily basis? Invest its free cash in the securities of other nations where it can get the highest available interest rate, for the shortest period of time.
During Red’s time as head of the Bank of Bramblewood, the bank offered three services: time deposits, demand deposits, and home and business loans. Under Patty’s leadership, the bank offers those same services, a variety of investment opportunities such as mutual funds and bonds, and ___________ through the Internet, which supports a number of services such as paying bills directly from customers’ accounts, direct deposit, and transferring money. online banking
Since the Great Depression and still today, the Bank of Bramblewood has the FDIC designation. This means: individual accounts at the bank are insured by an independent agency of the federal government.
The Bank of Bramblewood promotes a sustainability initiative encouraging all transactions increasingly to be paperless. Each time the bank issues checks or sends out a paper statement, it includes a promotion asking customers to support methods that eliminate paperwork. The bank encourages customers to use debit cards, smart cards, direct deposit and direct payments, as well as online statement retrieval. All of these tools are used in conjunction with the bank’s _______________. electronic funds transfer system
As the bank has grown and expanded to other towns in its region, several of its business customers are participating in global trade. Which of the following services provided by the bank would help companies conduct international business? Letters of credit

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