MBA 610 Exam 1 Questions & Answers 2024/2025
________ are items owed to a creditor. ________ are items owned by a company. ________ represents owners' claims to company resources. - ANSWERSLiabilities; Assets; Stockholders' equity
Under ________ accounting, revenues are recorded when earned...
________ are items owed to a creditor. ________ are items owned by a company. ________ represents
owners' claims to company resources. - ANSWERSLiabilities; Assets; Stockholders' equity
Under ________ accounting, revenues are recorded when earned and expenses are recorded with
related revenues. Under ________ accounting, revenues are recorded when cash is received and
expenses are recorded when cash is paid out. Financial statements are prepared using ________
accounting. - ANSWERSaccrual-basis; cash-basis; accrual-basis
The ________ retains the power and authority to set accounting standards. Currently, this responsibility
has been delegated to the________. - ANSWERSSecurities and Exchange Commission; Financial
Accounting Standards Board
In what order are the four primary financial statements prepared? - ANSWERSIncome statement >
Balance sheet > Statement of stockholders' equity > Statement of cash flows
The difference between net income and dividends paid is known as what? - ANSWERSAddition to
retained earnings
A firm's capital structure refers to the firm's: - ANSWERSproportions of financing from current and long-
term debt and equity.
Short-term finance deals with: - ANSWERSthe timing of cash flows.
Which one of these accounts is included in net working capital? - ANSWERSInventory
The process of planning and managing a firm's long-term assets is called: - ANSWERScapital budgeting.
, The cheapest business entity to form is typically the: - ANSWERSsole proprietorship.
Which one of the following statements concerning a sole proprietorship is correct? - ANSWERSThe
owner may be forced to sell his/her personal assets to pay company debts.
A partnership: - ANSWERScreates an unlimited liability for all general partners for the partnership's
debts.
One disadvantage of the corporate form of business ownership is the: - ANSWERSdouble taxation of
profits.
Corporate bylaws: - ANSWERSestablish the rules by which the corporation regulates its existence.
Given the corporate form of business organization, ownership: - ANSWERStransfers are unlimited.
Partnership profits: - ANSWERSare fully distributed as taxable income to the partners.
Financial managers primarily create firm value by: - ANSWERSinvesting in assets that generate cash in
excess of their cost.
Accounting profits and cash flows are generally: - ANSWERSdifferent because of GAAP rules regarding
the recognition of income.
A firm creates value by: - ANSWERSpaying more cash to its creditors and stockholders than the amount it
received from them.
The primary goal of financial management is to: - ANSWERSmaximize the current value per share of the
existing stock.
A conflict of interest between the stockholders and managers of a firm is referred to as the: -
ANSWERSagency problem.
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