Question: A good financial decision will do which of the following?

Answer: Increase shareholders equity

Increase the value of the firm’s existing stock

Question: A corporation is a distinct ________ entity and as such can have a name and take advantage of the legal powers of natural persons

Answer: legal

Question: Some of the cash flow generated by a firm goes back to the financial markets in the form of _____________?

Answer: dividends and debt payments

Question: Which positions generally report to the CFO?

Answer: Controller

Treasurer

Question: What are the two basic classifications under which most potential financial goals fall?

Answer: Earning or increasing profits

Controlling risk

Question: The officer responsible for managing the firm’s cash flows is the ________.

Answer: treasurer

Question: A general partnership has which of the following characteristics?

Answer: It is difficult to transfer ownership.

Each owner has unlimited liability for all firm debts.

Question: Which of the following can be used to encourage managers to act in the best interests of shareholders?

Answer: The threat of termination.

Stock options and bonuses.

Managerial compensation tied to performance.

Monitoring through reports.

Question: Which term applies to the mixture of debt and equity maintained by a firm?

Answer: Capital structure

Question: Which of the following, are possible financial goals for a company?

Answer: Survival

Maximize profits

Minimize costs