Question: Stakeholder

Answer: someone who has a claim on the cash flows of the firm.

Question: A good capital budgeting decision is:

Answer: one in which the perceived benefits of the project are more than the cost of the asset.

Question: Which of the following business organizational forms create(s) a tax liability on income at the personal income tax rate?

Answer: Both Sole proprietorship and Partnership

Question: Which form(s) of business organization generate(s) the majority of business revenues and profits in the United States?

Answer: Corporation

Question: Which organizational form best enables the owners of a firm to monitor the professional conduct of each other owners of the firm?

Answer: Partnership

Question: Which of the following is responsible for performing an independent audit of a firm’s financial statements?

Answer: CPA firm

Question: In a public corporation, which of the following reports directly to the owners of a firm?

Answer: Board of directors

Question: Which of the following would generally NOT increase shareholders’ wealth?

Answer: Receiving larger cash flows.

Question: From the owner’s perspective, which of the following should be the primary focus of managers?

Answer: None of the above should be the primary focus.

Question: From the owner’s perspective, which of the following should be the goal of a firm?

Answer: Stockholders’ wealth maximization