1. Which of the following business organizational forms subjects the owner(s) to unlimited liability?
- sole proprietorship
- partnership
- corporation
- a and b
2. Which of the following business organizational forms is easiest to raise capital?
- sole proprietorship
- partnership
- corporation
- a and b
3. Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm?
- partnership
- public corporation
- sole proprietorship
- private corporation
4. Which of the following factors or activities can be controlled by the management of the firm?
- Stock market conditions.
- Capital budgeting.
- The level of economic activity.
- The level of interest rates.
5. The legal system and market forces impose substantial costs on individuals and institutions that engage in unethical behavior. Which of the following would not be an example of the above?
- Financial losses.
- Agency conflicts.
- Legal fines.
- Jail time.
6. The most common reason that corporate firms use the futures and options markets is
- none of these.
- to hedge risk.
- to take risk.
- to make deposits.
7. Galan Associates prepared its financial statement for 2008 based on the information given here. The company had cash worth $1,234, inventory worth $13,480, and accounts receivables of $7,789. The company's net fixed assets are $42,331, and other assets are $1,822. It had accounts payables of $9,558, notes payables of $2,756, common stock of $22,000, and retained earnings of $14,008. How much long-term debt does the firm have?
- $54,342
- $76,342
- $12,314
- $18,334
8. Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts receivables of $47,199, inventory of $63,781, and cash of $21,461. It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of the firm is
- $63,510
- $68,931
- none of these
- $69,655
9. Which of the following best represents cash flows to investors?
- Earnings before interest and taxes times 1 minus the firm's tax rate.
- Net income, minus dividends paid to preferred stockholders.
- Cash flow from operating activity, minus cash flow invested in net working capital, minus cash flow invested in long-term assets.
- Cash flow from operating activity, plus cash flow generated from net working capital.