Business: Time Value of Money and Income Statement
Financial Management Mock Midterm
Name___________________________________
1) Which of the following organization forms accounts for the greatest number of firms?
A) Limited Partnership B) "S" Corporation
C) "C" Corporation D) Sole Proprietorship
Section: 1.1 The Four Types of Firms
2) The person charged with running the corporation by instituting the rules and policies set by the board of directors is called
A) the Company President. B) the Chief Operating Officer.
C) the Chief Executive Officer. D) the Chief Financial Officer.
Section: 1.2 Ownership Versus Control of Corporations
3) You overhear your manager saying that she plans to book an Ocean-view room on her upcoming trip to Miami for a meeting. You know that the interior rooms are much less expensive, but that your manager is traveling at the Company 's expense. This use of additional funds is best described as:
A) a publicity problem. B) an agency problem.
C) an adverse selection problem. D) a moral hazard.
Section: 1.2 Ownership Versus Control of Corporations
4) What is the role of an auditor in financial statement analysis?
Section: 2.1 The Disclosure of Financial Information
5) An agency problem can be alleviated by:
A) requiring all firms to be sole proprietorships.
B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers.
C) asking managers to take on more risk than they are comfortable taking.
D) A and B.
Section: 1.2 Ownership Versus Control of Corporations
6) Accounts payable is a
A) Current Asset. B) Long-term Asset.
C) Current Liability. D) Long-term Liability.
Section: 2.2 The Balance Sheet
7) Dustin 's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago. This reduction in value results in
A) an impairment charge. B) goodwill.
C) depreciation expense. D) an operating expense.
Section: 2.2 The Balance Sheet
Use the
Name___________________________________
1) Which of the following organization forms accounts for the greatest number of firms?
A) Limited Partnership B) "S" Corporation
C) "C" Corporation D) Sole Proprietorship
Section: 1.1 The Four Types of Firms
2) The person charged with running the corporation by instituting the rules and policies set by the board of directors is called
A) the Company President. B) the Chief Operating Officer.
C) the Chief Executive Officer. D) the Chief Financial Officer.
Section: 1.2 Ownership Versus Control of Corporations
3) You overhear your manager saying that she plans to book an Ocean-view room on her upcoming trip to Miami for a meeting. You know that the interior rooms are much less expensive, but that your manager is traveling at the Company 's expense. This use of additional funds is best described as:
A) a publicity problem. B) an agency problem.
C) an adverse selection problem. D) a moral hazard.
Section: 1.2 Ownership Versus Control of Corporations
4) What is the role of an auditor in financial statement analysis?
Section: 2.1 The Disclosure of Financial Information
5) An agency problem can be alleviated by:
A) requiring all firms to be sole proprietorships.
B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers.
C) asking managers to take on more risk than they are comfortable taking.
D) A and B.
Section: 1.2 Ownership Versus Control of Corporations
6) Accounts payable is a
A) Current Asset. B) Long-term Asset.
C) Current Liability. D) Long-term Liability.
Section: 2.2 The Balance Sheet
7) Dustin 's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago. This reduction in value results in
A) an impairment charge. B) goodwill.
C) depreciation expense. D) an operating expense.
Section: 2.2 The Balance Sheet
Use the