Study guide
Part 1 Multiple Choice Circle the Best Answer
1. In the past, the study of finance has included
a. antitrust legislation
b. raising capital
c. mergers and acquisitions
d. all of the above
2. The most expensive form of business to organize is generally the:
a. sole proprietorship
b. general partnership
c. limited partnership
d. corporation
3. What is the primary goal of financial management?
a. increased earning
b. maximizing cash flow
c. maximizing shareholder wealth
d. minimizing risk of the firm
4. One of the major disadvantages of a sole proprietorship is
a. that there is unlimited liability to the owner
b. the simplicity of decision making
c. low organizational costs
d. low operating costs
5. A corporation is
a. owned by stockholders who enjoy the privilege of limited liability
b. easily divisible between owners
c. a separate legal entity with unlimited life
d. all of the above
6. Which of the following is not a primary source of capital to firm?
a. Board of Directors
b. Common Stockholders
c. Preferred Stockholder
d. Bondholders
7. Gross profit is equal to
a. sales minus cost of goods sold
b. sales minus selling and administrative expenses
c. sales minus cost of goods sold and selling and administrative expenses
d. sales minus cost of goods sold and depreciation expense
8. During this century, financial management has:
a. undergone dramatic changes
b. basically following the trends of the nineteenth century
c. changed during the Depression, then reverted back to a prior orientation
d. none of the above
9. Which of the following are tax deductible expenses for a business?
a. common stock dividends
b. interest
c. preferred stock dividends
d. none of the above
10. Which of the following are depreciable?
a. warehouse
b. common stock
c. truck
d. a and c
Part 2 True or False
_True 1. Interest Expense is said to
1. In the past, the study of finance has included
a. antitrust legislation
b. raising capital
c. mergers and acquisitions
d. all of the above
2. The most expensive form of business to organize is generally the:
a. sole proprietorship
b. general partnership
c. limited partnership
d. corporation
3. What is the primary goal of financial management?
a. increased earning
b. maximizing cash flow
c. maximizing shareholder wealth
d. minimizing risk of the firm
4. One of the major disadvantages of a sole proprietorship is
a. that there is unlimited liability to the owner
b. the simplicity of decision making
c. low organizational costs
d. low operating costs
5. A corporation is
a. owned by stockholders who enjoy the privilege of limited liability
b. easily divisible between owners
c. a separate legal entity with unlimited life
d. all of the above
6. Which of the following is not a primary source of capital to firm?
a. Board of Directors
b. Common Stockholders
c. Preferred Stockholder
d. Bondholders
7. Gross profit is equal to
a. sales minus cost of goods sold
b. sales minus selling and administrative expenses
c. sales minus cost of goods sold and selling and administrative expenses
d. sales minus cost of goods sold and depreciation expense
8. During this century, financial management has:
a. undergone dramatic changes
b. basically following the trends of the nineteenth century
c. changed during the Depression, then reverted back to a prior orientation
d. none of the above
9. Which of the following are tax deductible expenses for a business?
a. common stock dividends
b. interest
c. preferred stock dividends
d. none of the above
10. Which of the following are depreciable?
a. warehouse
b. common stock
c. truck
d. a and c
Part 2 True or False
_True 1. Interest Expense is said to