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Exam 1: The Role and Objective of Financial Management

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Question 31

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The controller normally has responsibility for all ____ related activities, while the treasurer is normally concerned with ____.

A) acquisition; data processing
B) tax; cost accounting
C) tax; financial accounting
D) accounting; expenditure of funds

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Question 32

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Accounting is concerned primarily with matching _____.

A) cost-based revenues and expenses
B) tax liability and future cash flows
C) revenue and long-term debt
D) inventory and cost of sales

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Question 33

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Sole proprietorships, partnerships, and corporations are the three main forms of business organization. There are other types which are referred to as hybrids. Examples of hybrid business forms are _____.

The two most important disciplines on which financial management relies are _____.

The advantages of the corporate form of organization over both sole proprietorships and partnerships include ____.

A major advantage of using the maximization of shareholder wealth as the primary goal of the firm is that this goal considers _____.

A microeconomic concept used in financial management is _____.

Shareholder wealth is measured by the ____ value of the shareholders' common stock holdings.

The difference between a firm's annual after-tax operating profit and its total annual cost of capital is known as _____.

The existence of divergent objectives between owners and managers is one example of a class of problems arising from ____.

____ is (are) referred to as a residual form of ownership in a corporation.

The net present value of an investment made by a firm represents the contribution of that investment to the ____ of the firm.

The bottom-line earnings figure from the accounting system is misleading because _____.

A potential agency conflict can arise between stockholders and creditors because owners may _____.

____ deals with economic decisions of individuals, households, and firms.

Financial decisions should be consistent with the goal of shareholder wealth maximization. However, there may be a divergence between shareholder wealth maximization and the actual goals of management. The primary reason for this is which of the following?

The financial manager uses ____ when determining the firm's most appropriate capital structure.

The major factors that determine the market value of a company's shares of stock include all of the following EXCEPT ____.

Creditors have a fixed financial claim on a company's resources through all of the following EXCEPT _____.

The success of a firm is linked to its stakeholders. This group includes _____.