BFIN300 Midterm Chapter 1 Exam Questions With Solutions
2 views 0 purchase
Course
BFIN300
Institution
BFIN300
BFIN300 Midterm Chapter 1 Exam
Questions With Solutions
sole proprietorship one person owns the business, simplest form of business, best way for
owner to keep all of its profits.
- all liability falls onto the owner
-ex. local business, lemonade stand
Partnership two or more owners. Busin...
BFIN300 Midterm Chapter 1 Exam
Questions With Solutions
sole proprietorship one person owns the business, simplest form of business, best way for
owner to keep all of its profits.
- all liability falls onto the owner
-ex. local business, lemonade stand
Partnership two or more owners. Business interests are not easily transferred
-ex. Law firms, accounting firms
Corporation - most important form of business in the US. Considered a legal person.
Separate and distinct from. shareholders
- ownership can be. easily transferred. shareholders have limited liability
- corporations must pay taxes
double taxation corporation pays taxes on earnings, pays a dividend to shareholders after
taxes are paid by corporate. Taxed on dividends (taxed twice)
Goal of financial management maximize shareholder value
, BFIN300 Midterm Chapter 1 Exam
Questions With Solutions
Sarbanes Oxys Act - Enacted by congress
- Requires that each publicly traded company (listed in exchange) gives assessment of its own
internal controls and financial reporting
- Requires them to hire an independent auditor to evaluate their own assessment of itself
Why do we need the Sarbanes Oxys Act? there was extreme fraud going on. It made
things easier for shareholders. Financial statements need to be accurate
Agency relationship - relationship between management. of a company and shareholders
- management is the agent of a shareholder
(Agency Problem) Conflict of interest examples excessive expenses (corporate expenses),
compensation of management
What happens when management does not perform in the way shareholders expect them to
perform? shareholders have a right to fire them
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller UpperClass. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
