Question 1

In partnerships, owners have unlimited liability and may have to cover debts of other less financially sound partners.

Accepted Answer

A) True 
 B)False  True

Question 2

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Accepted Answer

A) True 
 B)False  False

Question 3

The dominant form of organization with respect to receipts and net profits is the

Accepted Answer

A)   sole proprietorship.
B)   partnership.
C)   corporation.
D)   S-corporation.

Question 4

The financial manager places primary emphasis on cash flows, the inflow and outflow of cash.

Accepted Answer

A) True 
 B)False

Question 5

A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is expected to provide earnings over a three-year period as described below.  Based on the profit maximization goal, the financial manager would choose

Accepted Answer

A)   Asset 1.
B)   Asset 2.
C)   Asset 3.
D)   Asset 4.

Question 6

Corporate owner's receive realizable return through

Accepted Answer

A)   earnings per share and cash dividends.
B)   increase in share price and cash dividends.
C)   increase in share price and earnings per share.
D)   profit and earnings per share.

Question 7

Corporate ethics policies typically apply to ________ in dealing with ________.

Accepted Answer

A)   employee actions; customers and creditors
B)   employee actions; customers, vendors, and regulators
C)   management actions; all corporate constituents
D)   employee actions; all corporate constituents

Question 8

The Sarbanes-Oxley Act of 2002 did all of the following EXCEPT

Accepted Answer

A)   tighten audit regulations and controls.
B)   toughen penalties against overcompensated executives.
C)   toughen penalties against executives who commit corporate fraud.
D)   All of the above are true.

Question 9

Cash flow and risk are the key determinants in share price. Increased cash flow results in ________, other things remaining the same.

Accepted Answer

A)   a lower share price
B)   a higher share price
C)   an unchanged share price
D)   an undetermined share price

Question 10

The financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting data, in order to ensure

Accepted Answer

A)   profitability.
B)   the ability to pay dividends.
C)   the ability to acquire new assets.
D)   solvency.

Question 11

If Steve Jobs, the CEO of Apple, were to pass away, what do you think would happen to price of Apple's stock?

Accepted Answer

A)   It would decrease because of the perceived increased risk because of lack of near-term leadership.
B)   It would increase because of the perceived increased risk because of lack of near-term leadership.
C)   It would decrease because of the perceived decreased risk because of lack of near-term leadership.
D)   It would increase because of the perceived decreased risk because of lack of near-term leadership.

Question 12

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

Accepted Answer

A) True 
 B)False  True

Question 13

Profit maximization fails because it ignores all EXCEPT

Accepted Answer

A)   the timing of returns.
B)   earnings per share.
C)   cash flows available to stockholders.
D)   risk.

Question 14

The financial manager prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

Accepted Answer

A) True 
 B)False

Question 15

Managerial finance

Accepted Answer

A)   involves tasks such as budgeting, financial forecasting, cash management, and funds procurement.
B)   involves the design and delivery of advice and financial products.
C)   recognizes funds on an accrual basis.
D)   devotes the majority of its attention to the collection and presentation of financial data.

Question 16

The capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments and may be involved in the financial aspects of implementation of approved investments.

Accepted Answer

A) True 
 B)False

Question 17

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would

Accepted Answer

A)   choose Asset 1.
B)   choose Asset 2.
C)   choose Asset 3.
D)   be indifferent between Asset 1 and Asset 2.

Question 18

The board of directors is responsible for managing day-to-day operations and carrying out the policies established by the chief executive officer.

Accepted Answer

A) True 
 B)False

Question 19

By concentrating on cash flows within the firm the financial manager should be able to

Accepted Answer

A)   prepare tax returns.
B)   speak authoritatively to stockholders.
C)   avoid insolvency.
D)   control expenses.

Question 20

The financial manager may be responsible for any of the following EXCEPT

Accepted Answer

A)   monitoring of quarterly tax payments.
B)   analyzing budget and performance reports.
C)   determining whether to accept or reject a capital asset acquisition.
D)   analyzing the effects of more debt on the firm's capital structure.

Exam 1: The Role of Managerial Finance

In partnerships, owners have unlimited liability and may have to cover debts of other less financially sound partners.

Correct AnswerverifiedTrue

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Correct AnswerverifiedFalse

The dominant form of organization with respect to receipts and net profits is the

Correct AnswerverifiedShow Answer

The financial manager places primary emphasis on cash flows, the inflow and outflow of cash.

Correct AnswerverifiedShow Answer

A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is expected to provide earnings over a three-year period as described below. Based on the profit maximization goal, the financial manager would choose

Correct AnswerverifiedShow Answer

Corporate owner's receive realizable return through

Correct AnswerverifiedShow Answer

Corporate ethics policies typically apply to ________ in dealing with ________.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 did all of the following EXCEPT

Correct AnswerverifiedShow Answer

Cash flow and risk are the key determinants in share price. Increased cash flow results in ________, other things remaining the same.

Correct AnswerverifiedShow Answer

The financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting data, in order to ensure

Correct AnswerverifiedShow Answer

If Steve Jobs, the CEO of Apple, were to pass away, what do you think would happen to price of Apple's stock?

Correct AnswerverifiedShow Answer

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

Correct AnswerverifiedTrue

Profit maximization fails because it ignores all EXCEPT

Correct AnswerverifiedShow Answer

The financial manager prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

Correct AnswerverifiedShow Answer

Managerial finance

Correct AnswerverifiedShow Answer

The capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments and may be involved in the financial aspects of implementation of approved investments.

Correct AnswerverifiedShow Answer

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would

Correct AnswerverifiedShow Answer

The board of directors is responsible for managing day-to-day operations and carrying out the policies established by the chief executive officer.

Correct AnswerverifiedShow Answer

By concentrating on cash flows within the firm the financial manager should be able to

Correct AnswerverifiedShow Answer

The financial manager may be responsible for any of the following EXCEPT

Correct AnswerverifiedShow Answer

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False

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Corporate ethics policies typically apply to in dealing with .

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True

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