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Study Resources (Business Management)

    171.Bonds sold at a discount are sold for more than the bond's face value.          172.As interest rates increase, bond prices fall.          173.From an investor's viewpoint, bonds generally provide a safer investment option than does the stock of the same corporation.          174.A U.S. government bond paying 3.25% interest annually is a lower risk than.
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    141.When you place a limit order, it means you are willing to buy or sell the stock at the best price available.          142.An investor placing a market order with a broker agrees to buy or sell a stock immediately at the best price available.          143.If a company announces a stock split, the.
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    171.Effective managers strive to minimize their firm's cost of capital.    The cost of capital is the rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders. Reducing the cost of acquiring funds will increase the firm's profitability.       Multiple Choice Questions  172.________.
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  379.What is ratio analysis? Explain the four different types of ratios and how each is used.      380.What is the difference between a profit [net income after taxes] on an income statement and the cash balance reflected at the bottom of the statement of cash flows?        Multiple Choice Questions  Mini-CaseMinnie A. Wright-Hoff works as.
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    111.Suppliers prefer to offer trade credit to customers with poor credit ratings or no credit history.          112.A promissory note is a written contract between a supplier and a business customer, with a promise that customer will pay supplier a specified amount by a certain date.          113.Family and friends represent "problem free" sources.
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    351.The Chapter 17 Connecting Across Borders box discusses the future of international accounting standards. In summary, the message is:    A.GAAP (Generally Accepted Accounting Standards) created and established in the U.S. will be adopted worldwide by 2014.   B.Accounting professionals do not see an immediate need to standardize accounting practices globally due to the.
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  True / False Questions  1.Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.          2.Managing a firm's resources so that it can meet its goals and objectives is the goal of financial accounting.          3.A financial manager makes recommendations to top executives regarding strategies.
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  306.What is equity financing? Identify and describe the major sources of equity financing.      307.What are two major forms of debt financing? Describe and differentiate between the two types.      308.Explain the term leverage. When is it more favorable for firms to use this strategy?          .
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    41.GAAP refers to a set of standards concerning accounting principles that were established by the Financial Accounting Standards Board.    GAAP refers to generally accepted accounting principles that are established by the Financial Accounting Standards Board.       42.Information contained in a firm's annual report largely represents work done by managerial accountants.    Annual reports are documents.
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    11.While finance is a critical activity for profit-seeking organizations, by definition nonprofit organizations are not required to fulfill the finance function.          12.A comptroller is responsible for the acquiring and managing of funds for an organization.          13.Inability to attract and retain qualified employees is one of the most common ways for a firm.
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    101.Firms are at a disadvantage when issuing bonds because the interest rate that they must pay to bondholders is not tax deductible.          102.As creditors of a firm, bondholders enjoy voting privileges for the firm's board of directors' elections.          103.Both stocks and bonds represent temporary sources of funding for a firm. Eventually they.
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  Essay Questions  371.Explain the differences between managerial and financial accounting, and give examples of the types of problems and issues examined by each of these areas of accounting.          372.Discuss the role of an independent auditor. Provide information about the types of accounting activities they perform and the recent laws that have emerged.
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    21.Accounting information is not relevant for nonprofit organizations.          22.Churches, schools, and charitable organizations all hire accountants.          23.The accounting profession is divided into two main fields: bookkeeping and auditing.          24.Budget preparation is one aspect of managerial accounting.          25.The work of a certified management accountant is intended to enable people outside of the organization to make.
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    41.The long-term financial forecast plays a crucial part in the company's long-term strategic plan.          42.The long-term financial forecast gives top management some sense of the profit potential of various strategic decisions.          43.A budget reflects management's expectations for revenues and allocates the use of specific resources throughout the firm.          44.Budgets are prepared after the.
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    361.Peak Performance Sporting Goods Company continues to perform well in spite of an economic recession. Company executives credit this to the strong partnerships it enjoys with category killer and large discount chains. Last week Peak Performance reported basic EPS [earnings per share] = $.80/share. If the firm has 4,000,000 shares.
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    151.Corporations and brokers prefer to have stock purchases conducted in round lots of 100 shares.          152.A stock split refers to buying a share of stock at a discounted price if full payment is made at the time of purchase.    When companies find their stock price has appreciated sufficiently high such that it.
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  374.What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?          375.Explain the meaning of the fundamental accounting equation and its relation to the Balance Sheet. If it is helpful, create an example using numbers.          376.Explain the difference between current, fixed, and intangible.
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    331.Costas Calendar Company's Statement of Cash Flows showed the following activities for the year ended December 31, 2010:  The year end cash balance for this firm is:    A.$7,000.00   B.$53,000.00   C.$23,000.00   D.$30,000.00 Statement of Cash Flows shows cash generated from three sources: operating activities; investing activities, and, financing activities. Costas Calendar Company records show a positive cash.
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    131.An investor earns a capital gain when they sell a stock for more than they paid for it.          132.The market price and growth potential of a common stock depends heavily on the performance of the firm in meeting its objectives.          133.A bull market occurs when overall stock prices increase.          134.A bear is an.
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    321.If a firm can reduce its cost of goods sold and continue to sell its product for the same price, we would expect the firm to enjoy an increase in its:    A.revenue.   B.liabilities.   C.employee turnover.   D.gross profit. Gross profit is calculated by subtracting cost of goods sold from sales revenue. Revenues - cost of goods.
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    161.Corporations that issue debenture bonds are required to provide collateral.    Bonds can be either secured or unsecured. Unsecured bonds have no specific assets pledged as collateral. This type of bond is called a debenture.       162.Corporations that issue stock to raise long-term funds accept the legal obligation to repay the amount borrowed.    Stock represents.
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    True / False Questions  1.Securities markets represent the financial marketplaces for stocks and bonds.          2.Securities markets provide private investors a place to buy and sell stocks, bonds, and mutual funds.          3.An initial public offering (IPO) represents the first time a corporation's stock is offered and sold to persons outside of the company.          4.The proceeds.
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    31.To be effective, an internal auditor must be critical of any improprieties or deficiencies found in the financial activities of the firm.    An organization's accounting statements would be less reliable if an internal auditor was biased and subjective in the evaluation of the firm's accounting procedures.       32.Mark manages credit and collections at.
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    71.Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.          72.With added competition, firms prefer not to offer the availability of credit sales to their customers.          73.Accepting credit cards, such as MasterCard or Visa, enables a firm to decrease the expense of extending credit to customers.          74.The cost to a.
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    141.A share of stock represents a company-issued IOU including a promise to repay on a certain date.          142.A bond represents a long-term debt obligation of a corporation or government.          143.An unsecured corporate bond is known as a debenture bond.          144.A debenture bond is backed only by the reputation of the issuer.          145.The types of.
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    151.Venture capital is money that is invested in new or emerging companies that are perceived as having great profit potential.          152.Venture capitalists expect lower than average returns on their investment since they are exposed to little risk.          153.Most companies have the ready cash available to make large purchases.          154.Acquiring funds through equity financing.
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    91.The maturity date of a bond refers to the date on which the interest payment is due to be paid.          92.The maturity date represents the date on which a corporation must pay investors the principal (face value) of their bond.          93.Bond classifications include, but are not limited to Corporate bonds, T-bills, Treasury.
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    51.A cash budget helps managers anticipate borrowing, debt repayment, operating expenses, and short-term investment opportunities.          52.The main objective of financial control is to establish priorities for the purchase of plant and equipment.          53.By identifying variances from the financial plan, managers are able to focus on those departments that require corrective action.          54.Financial control.
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    161.Ken owns 100 shares in XYZ Company, currently selling for $60 per share. His stock split yesterday 3-for-1. The number of shares that Ken owns has tripled.    The value of Ken's stock has, theoretically, remained unchanged. A 3-for-1 stock split would likely decrease the market value of each share to $20..
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    121.Online investors expect more expert advice than investors using traditional brokerage firms.          122.Young investors place more importance on low risk investments, while elderly investors prefer significant growth in the value of their investments.          123.Diversification means buying several different types of investments with the funds you have available for investment.          124.For starters, investors should.
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    61.A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.          62.After recording a business's transactions, bookkeepers usually classify the recorded transactions into groups with common characteristics.          63.A bookkeeper's first task is to record the firm's transactions in a journal.          64.The books where accounting data.
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    91.Successful businesses establish restrictive credit policies encouraging customers to pay cash.    Making credit available helps make current customers happy and attracts new customers. Although extending credit ties up funds and entails risk, many businesses would have trouble surviving without making credit available to customers.       92.Offering cash discounts to customers who pay their.
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    81.Zach purchased 200 shares of Fast Track Corporation last year. This year, he plans to hire an attorney to go after the company for failure to pay dividends. If Zach follows through with his plan, he will probably win the lawsuit because companies are obligated to pay their stockholders dividends.
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    301.Which of the following situations represents a successful use of financial leverage?    A.A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.   B.A firm borrows money at 8% and earns an 11% return on its investment of these funds.   C.A firm attracts the interest.
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  377.Identify the three key financial statements that corporations are required to prepare, and describe the type of information found on each.          378.Identify and explain the differences between LIFO and FIFO inventory valuation methods. What would be the difference in gross margin using FIFO versus LIFO?              .
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  Multiple Choice Questions  Mini-CaseTishian's Funeral Home has been in business for over eighty years. Throughout its history, the firm has been a family-run operation. Today, the business is managed by Mort Tishian, a grandson of the founder. Unfortunately, Mort Tishian's tenure has been plagued with problems neither his father nor grandfather.
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    291.To maximize the benefits of using financial leverage, a firm should:    A.strive to minimize their cost of capital.   B.avoid securing funds through long-term debt financing.   C.limit their investments to projects with minimum risk levels.   D.incorporate in states with relatively low tax rates. Financial leverage involves raising needed funds through borrowing to increase a firm's rate.
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    81.Equity financing must be repaid.          82.Equity financing represents funds acquired from within the firm or through the sale of stock, representing ownership in the company.          83.Business organizations always use long-term financing for (both) short-term and long-term needs, but they never use short-term financing for (both) short-term and long-term needs.          84.Debt financing refers to.
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    101.The finance manager at Preferred Pet Care Inc has asked the company's accountant to prepare a report that shows the amount the firm is spending monthly on veterinary supplies for its western suburb service area, in the hopes of negotiating better payment terms with its suppliers. The purpose of this.
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    71.Posting is a step in the accounting cycle that involves transferring information from the journal into the appropriate accounts in a ledger.          72.There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.          73.The accounting cycle usually involves the work of both the bookkeeper.
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    121.Factoring refers to the process of selling accounts receivable for cash.          122.Factoring refers to the process of selling inventory to generate short-term funds.          123.Factoring represents the least expensive way for a firm to raise short-term funds.          124.A tool that provides lots of convenience, credit cards are a source of a readily available line.
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    51.In large companies, certified internal auditors are usually responsible for preparing tax returns and developing tax strategies for businesses.    Internal auditors perform audits for organizations and also look into operational efficiencies and effectiveness. Tax returns are prepared by tax accountants.       52.As the burden of taxes grows, the role of the auditor becomes.
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    31.A firm's annual report is a yearly statement of the financial condition, progress, and expectations of the organization during one year.          32.An individual who provides accounting services to individuals and businesses on a fee basis is referred to as a private accountant.          33.All firms with more than four employees should have a.
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    281.__________ represent a favorable source of meeting long-term financing needs because there are no interest payments, dividends, or underwriting fees required when using this source.    A.Secured bonds   B.Debentures   C.Warrants   D.Retained earnings         282.__________ provide financing to new or emerging companies with high profit potential. In return, these organizations expect a share of ownership in the company.    A.Commercial.
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    341.__________ earnings per share measures the amount of profit a firm earns per share of outstanding common stock when preferred stock, stock options, warrants and convertible debt securities are also taken into account.    A.Basic   B.Diluted   C.Restricted   D.Broad-based Diluted Earnings per share takes into account stock options, convertible preferred stock, warrants, and other convertible debt securities.
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    21.Tax payments are important to the finance manager because they represent a cash inflow to a firm.    Tax payments are a disbursement. Taxes represent a cash outflow for the firm. Finance managers must stay abreast of changes in tax laws in order to minimize the tax obligations of their firms.       22.An internal.
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