Finance

Which one of the following statement is NOT correct?

• The potential conflict of interest between a firm's owners and its managers is referred
  to agency problem.

• The federal government has a tax claim on the cash flows of The Window Store. This
  claim is defined as a claim by one of the firm's stakeholders.

• A sole proprietorship has its profits taxed as personal income

• None of the above

Which one of the following statements correctly applies to a sole proprietorship?

• The business entity has an unlimited life.

• The ownership can easily be transferred to another individual.

• The owner enjoys limited liability for the firm's debts.

• Debt financing is easy to arrange in the firm's name.

• Obtaining additional equity is dependent on the owner's personal finances.

The primary goal of corporation/financial management is to maximize which one of the
following for a corporation?

• Current profits

• Number of shares outstanding

• Stock Price

• Revenue growth

Which one of the following actions best matches the primary goal of financial
management?

• increasing the size of the company by acquiring another firm in a different industry

• decreasing the variable costs while increasing the fixed costs per unit sold

• increasing the market value of the equity by improving the efficiency of operations

• decreasing the liquidity of the firm while increasing the long-term debt

• increasing the net working capital while maintaining the same level of sales

Which one of the following applies to a general partnership?

• The firm's operations must be controlled by a single partner.

• Any one of the partners can be held solely liable for all of the partnership's debt.

• The profits of the firm are taxed as a separate entity.

• Each partner's liability for the firm's debts is limited to each partner's investment in the
  firm.

• The profits of a general partnership are taxed the same as those of a corporation.

Which of the following are advantages of the corporate form of organization?
I. Ability to raise large sums of equity capital
II. Ease of ownership transfer
III. Profits taxed at the corporate level
IV. Limited liability for all owners

• I and II only

• III and IV only

• II, III, and IV only

• I, II, and IV only

• I, II, III, and IV

Which one of the following best matches the primary goal of financial management
(corporation)?

• Increasing the dollar amount of each sale

• Increasing traffic flow within the firm's stores

• Transforming fixed costs into variable costs

• Increasing the firm's liquidity

• Increasing the market value of firm

Which one of the following statements is NOT correct?

• An agency conflict could arise when management is separated from ownership.

• The following can effectively align management's priorities with shareholders'
  interests: Compensating managers with shares of stock that must be held for 3 years before the
  shares can be sold.

• The following is an effective means of aligning management goals with shareholder
  interests: Management bonuses tied to performance goals

• A corporation is a legal entity separate from its owners.

• None of the above.

Net working capital is defined as:

• the depreciated book value of a firm's fixed assets.

• the value of a firm's current assets.

• available cash minus current liabilities.

• total assets minus total liabilities.

• current assets minus current liabilities.

Which one of the following statements is correct?

• Corporation pay tax first before they pay interest payment.

• Cash flow from assets is defined as operating cash flow minus the change in net working
  capital plus (net) capital spending.

• Operating cash flow is defined as the cash that a firm generates from its normal business
  activities.

• None of the above