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WorksheetsBusiness Management: Chapter 16 Review
Total questions: 38
Worksheet time: 19mins
A partner's personal contribution in a business is equity capital.
True
False
Retained earnings are a type of equity capital.
True
False
Businesses in financial difficulty often have trouble getting debt capital.
True
False
Common stock is a type of security, but bonds are not.
True
False
Preferred stockholders usually have voting privileges at the stockholders' meetings.
True
False
When a corporation ceases operations, preferred and common stockholders usually get all their investment back from the sale of assets.
True
False
When starting a business, it is usually desirable to issue only common stock.
True
False
Retained earnings are kept in the business in the form of cash only.
True
False
Equipment maintenance and insurance are usually included in a leasing agreement.
True
False
The original cost of obtaining long-term capital is usually higher than that of short-term capital.
True
False
The investment made in a business by its owners is called
working capital
equity capital
creditor capital
cash flow
Retained earnings refer to
money from the sale of bonds
money from the sale of stocks
profits that owners do not save for used in the business
profits that owners do not take out of the business
Banks and other types of lending institutions usually will not loan money to a business unless
debt capital exceeds owner capital
owner capital exceeds debt capital
debt capital and owner capital are nearly equal
borrowed capital exceeds owner capital
If a sole proprietorship fails, which of the owner's assets may be lost.
personal assets invested in the business
personal assets not invested in the business
mortgaged personal property
All of these
Which statement is true of common stockholders?
They have the right to vote at annual meetings, at one vote per share of stock owned.
If the corporation makes a profit, they are paid before creditors.
They are guaranteed dividends every year.
They must purchase stock at its par value.
Which statement is true about preferred stockholders?
Holders are guaranteed dividends.
Holders receive profits of the business before creditors.
Holders typically do not have voting privileges
Holders receive profits after common stockholders.
If the ABC Corporation's net worth is $48,000,000 and there are 3,000,000 shares of stock outstanding, the book value of each share is
$144
$8
$16
$12
The dollar value printed on the stock certificate is known as the
market value
book value
par value
purchase value
Earnings reinvested in the business to replace equipment, add new facilities, or serve as financial protection are called
profits
debt capital
retained earnings
dividends
Short-term debt must be repaid to the lender with interest within
30 days
60 days
90 days
one year
Long-term debt capital is obtained by
purchasing merchandise on credit
getting a commercial loan from a bank
issuing bonds
lending money to businesses
Which statement is true about trade credit?
it is a form of short-term financing
it requires immediate payment
it is a common type of bank credit
it is a form of long-term financing
A common method used to purchase expensive equipment is with
debentures
term loans
bonds
factors
Bonds that are based upon the faith and credit of the corporation that issues them are
mortgage bonds
debentures
coupon bonds
registered bonds
Which statement is true about venture capitalists?
They are protected against losses.
They pass all risks to the company in return for their investment.
They take over management of any company they invest in.
They may get a percentage of ownership in the company in return for their investment.
An organization that assists a business to raise capital through the sales of stocks and bonds is a(n)
factor
underwriter
venture capitalist
sales finance company
When deciding how to get the capital they need, companies consider all of the following EXCEPT
the influence of capital contributors
the cost of capital
interest rates
the foreign exchange rate
The credit terms offered by a business indicate that a bill must be paid in full within 30 days and offers a two percent discount for paying a bill within 10 days. This can be stated on the invoice as
2% on 10
2/10, net 30
2-10-30
30 days or 2/10
A bond secured by specific long-term assets of the issuer.
mortgage bond
debenture
ESOP
security
A bond that allows a bondholder to exchange bonds for a prescribed number of shares of common stock.
convertible bond
mortgage bond
debenture
factor
A firm that specializes in lending money to businesses based on the business's accounts receivables.
factor
sales finance company
ESOP
venture capitalists
A plan that allows employees to become owners of the company they work for through the purchase of stock.
ESOP
convertible bond
crowdfunding
security
A strategy for funding a business idea with small amounts of money from many people.
crowdfunding
investment bank
factor
sales finance company
An organization that helps businesses raise capital through the sale of stocks and bonds.
investment bank
sales finance company
factor
security
A bond that is not secured by assets but based upon the faith and credit of the corporation that issues it.
debenture
mortgage bond
convertible bond
security
Firm that provides capital to a business based on installment sales contracts.
sales finance company
investment bank
factor
ESOP
Something of value pledged as assurance of the fulfillment of an obligation.
security
factor
line of credit
debenture
The authorization to borrow up to a maximum amount for a specified period of time.
line of credit
security
mortgage bond
factor
