Quiz 1- FIN

What is the major complaint concerning the Sarbanes-Oxley Act of 2002 by firms?

• the legislative maximum allowable compensation for a CEO

• the legal requirement to disclose project information

• the cost of compliance

• the cost of maintaining an SEC-employed officer at the firm's premises

Which of the following can help align the behavior of managers with the goals of shareholders?

• management compensation

• managerial labor markets

• an independent board of directors

• all of the above

Which of the following is an appropriate goal for the firm?

• profit maximization

• revenue maximization

• shareholder wealth maximization

• tax minimization

Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm?

• sole proprietorship

• partnership

• private corporation

• public corporation

Capital budgeting decisions generally involve

• the fixed asset portion of the balance sheet.

• the short-term portion of the balance sheet.

• the current liability portion of the balance sheet.

• all of the above.

standards prescribed by GAAP are important because

• they make the financial statements of all firms standardized.

• they allow one to examine a firm's performance over time.

• they make it possible for management or analysts to compare the firm's performance to that of other competitors.

• all of the above.

When prices are falling, valuing inventory using the LIFO method rather than FIFO gives

• inventory a higher value but lowers net income.

• inventory a lower value and also lowers net income.

• both inventory and net income a higher value.

• inventory a lower value and net income a higher value.

Trident Corporation had the following cash flows in the current year. Which one of the following is a financing activity cash flow?

• Rent on a warehouse amounting to $1.1 million

• Purchase of $125,000 worth of five-year bonds issued by Towson Utilities

• Preferred dividends to the tune of $330,000 paid to shareholders

• Lease income received on a piece of land

Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $ 412,331, and other assets of $7,822. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. How much retained earnings does the firm have?

• $ 405,648

• $243,648

• $167,918

• $573,566

Trident Manufacturing Company's treasurer identified the following cash flows during this year as significant. It had repaid existing debt to the tune of $425,110, while raising additional debt capital of $750,000. It also repurchased stock in the open markets for a total of $63,250. It paid $233,144 in dividends to its shareholders. What is the net cash provided (used) by financing activities?

• $28,496

• $91,746

• –$28,496

• –$91,746