Untitled Quiz

Questions and Answers

What is the amount a business earns after deducting what it spends for salaries and other expenses?

Dividends

Revenue

Interest

Profit (correct)

What does the electronic transfer of funds from the business's checking account to the employees' checking account represent?

Check kiting system

Direct deposit (correct)

Electronic check conversation

Debit card system

The emergence of an information-based economy is an important part of which environment in which businesses operate?

Global

Competitive

Technological (correct)

Economic and legal

If the Fed plans to raise the discount rate to 7%, what does this indicate?

Bank borrowing funds from the Fed will now pay 7% on the amount they borrow Signup and view all the answers

In order to make an intelligent investment decision, entrepreneurs should what?

Compare risks of potential investments to expected profits Signup and view all the answers

If the Fed increases interest rates in the U.S., what is likely to happen?

Foreign investors are likely to transfer funds to U.S. investments Signup and view all the answers

To implement a policy of empowerment, an organization will restructure so that what happens?

Employees assume more responsibility Signup and view all the answers

As a factor of production, the term capital includes what?

Tools, machinery, and buildings Signup and view all the answers

Traditionally, banks provide loans to individuals and companies according to what?

Creditworthiness Signup and view all the answers

Which of the following represents a nonbank?

Life insurance company Signup and view all the answers

A significant decrease in the money supply tends to have what effect?

Send the economy into a recession Signup and view all the answers

Which of the following provides the same result as a check?

Debit card Signup and view all the answers

Based on the information that the dollar has fallen sharply against the euro, Arturo expects that:

American goods will be more expensive in Spain Signup and view all the answers

World-class businesses attempt to meet the needs of:

All stakeholders Signup and view all the answers

Due to population shifts, what is likely to happen?

Businesses that cater to older consumers will see higher growth Signup and view all the answers

Acquiring funds through borrowing represents what?

Debt financing Signup and view all the answers

Which of the following presents an effective technique to improve cash management?

Speed up collections and slow down payments Signup and view all the answers

Investment bankers perform what function regarding new issues of bonds or stock?

Underwrite Signup and view all the answers

Which of the following represents a disadvantage of issuing bonds?

Bonds increase the firm's debt Signup and view all the answers

Which of the following represents a capital expenditure?

Purchasing a building for office space Signup and view all the answers

Corporations receive the proceeds from the sale of their stock in which market?

The primary market Signup and view all the answers

Dividends on preferred stock are:

Normally fixed if and when paid Signup and view all the answers

One of the challenges of effective financial management is:

To have sufficient cash without compromising investments Signup and view all the answers

When retained earnings are not enough for long-term needs, businesses may raise funds by:

Selling common stock Signup and view all the answers

Mineral Mining Corporation is utilizing what to provide for an orderly retirement of their bonds?

Sinking fund Signup and view all the answers

Which situation represents successful use of financial leverage?

A firm borrows money at 8% and earns an 11% return Signup and view all the answers

Julia experienced what issue in her failed business?

Undercapitalization Signup and view all the answers

The corporate certificate issued to an investor that has loaned money is called a:

Bond Signup and view all the answers

Buying several different investment alternatives to spread the risk achieves what?

Diversification Signup and view all the answers

The CFO solicited investments to prevent bankruptcy, representing what kind of financing?

A short term debt financing Signup and view all the answers

When companies owe money to creditors and suppliers, these amounts are recorded as:

Liabilities Signup and view all the answers

The balance sheet shows how the capital is structured in the business, including what?

Balance sheet Signup and view all the answers

Net profit refers to:

Net earnings after deduction of all expenses, including tax Signup and view all the answers

The acid test ratio helps determine what?

Ability to repay short term debts despite inventory sales difficulties Signup and view all the answers

Although accounting has several uses, its overall purpose can be summarized as:

To provide financial information useful to decision-makers Signup and view all the answers

An evaluation and unbiased opinion about the accuracy of a firm's financial statements is called a:

Independent report Signup and view all the answers

Leverage ratios indicate the extent to which what has been used to fund a business's operations?

Debt Signup and view all the answers

The three important financial statements prepared by accountants are:

Balance sheet, income statement, and statement of cash flows Signup and view all the answers

What is the net worth (owners equity) for the business if assets total $3.5 million and liabilities total $1.3 million?

$2.2 million Signup and view all the answers

The balance sheet reflects which fundamental accounting equation?

Assets = Liabilities + Owners equity Signup and view all the answers

Study Notes

Profit and Financial Concepts

Profit is the amount earned by a business after deducting expenses such as salaries.
Direct Deposit is an electronic transfer of funds from a business's account to employees, representing a cashless payday.
The technological environment influences businesses with the emergence of an information-based economy.
A planned increase in the discount rate indicates banks will pay 7% on borrowed funds from the Federal Reserve.

Investment Strategies and Market Conditions

Entrepreneurs should compare risks and potential profits to make informed investment choices.
An increase in U.S. interest rates can lead foreign investors to increase their investments in the U.S.
Empowerment within organizations involves employees assuming greater responsibility for decisions.
Capital as a production factor comprises tools, machinery, and buildings essential for business operations.

Banking and Financial Tools

Loans are traditionally granted by banks based on the recipient's creditworthiness.
Non-banking financial entities include life insurance companies, which provide investment alternatives.
A significant decrease in the money supply can lead to an economic recession.
A debit card functions like a check by withdrawing directly from a checking account.

Economic Trends and Stakeholder Considerations

A declining dollar against the euro implies Spanish wines may become cheaper in the U.S.
World-class businesses aim to satisfy all stakeholders, balancing the interests of customers, employees, and owners.
Shifts in population demographics increase demand for services that cater to older consumers.

Financing and Fundraising

Debt financing is the process of acquiring funds through borrowing, distinct from equity financing.
Effective cash management is achieved by speeding up collections while slowing down payments.
Investment bankers underwrite new bond or stock issues for firms.
Issuing bonds creates additional debt on a firm’s balance sheet.

Capital Expenditures and Market Structures

A capital expenditure example is purchasing office space or a building.
Corporations sell stock primarily in the primary market, where they receive proceeds.
Preferred stock dividends are typically fixed, ensuring reliability for investors.

Challenges in Financial Management

Effective financial management requires maintaining enough cash on hand without hindering investment potential.
When internal funds suffice, businesses can raise funds through selling common stock.
Regular deposits accrued to retire bonds are part of a sinking fund strategy.

Financial Leverage and Risk Management

Financial leverage is effectively used when a firm borrows at a lower interest rate than the return earned on investments.
An example of undercapitalization occurs when a lack of funds hampers business promotion efforts.
A bond signifies a loan from an investor to a corporation or government entity.
Diversification in investments spreads risk across several alternatives.

Accounting Principles

Liabilities are listed on the balance sheet as outstanding amounts owed to creditors.
The balance sheet illustrates the capital structure of a business, covering assets and debts at a given time.
Net profit refers to the earnings remaining after all expenses are deducted, including taxes.
The acid test ratio assesses a company's ability to cover short-term debts without relying on inventory sales.

Financial Statements and Reporting

The three essential financial statements used in accounting are the balance sheet, income statement, and statement of cash flows.
Calculating net worth, owners equity results from total assets minus liabilities.
The foundational accounting equation states that assets = liabilities + owners’ equity.

Audit and Financial Clarity

An independent report provides unbiased evaluations of a firm's financial statements.
Leverage ratios highlight the degree to which a company has used debt for operational funding.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Untitled Quiz

Questions and Answers

What is the amount a business earns after deducting what it spends for salaries and other expenses?

What does the electronic transfer of funds from the business's checking account to the employees' checking account represent?

The emergence of an information-based economy is an important part of which environment in which businesses operate?

If the Fed plans to raise the discount rate to 7%, what does this indicate?

In order to make an intelligent investment decision, entrepreneurs should what?

If the Fed increases interest rates in the U.S., what is likely to happen?

To implement a policy of empowerment, an organization will restructure so that what happens?

As a factor of production, the term capital includes what?

Traditionally, banks provide loans to individuals and companies according to what?

Which of the following represents a nonbank?

A significant decrease in the money supply tends to have what effect?

Which of the following provides the same result as a check?

Based on the information that the dollar has fallen sharply against the euro, Arturo expects that:

World-class businesses attempt to meet the needs of:

Due to population shifts, what is likely to happen?

Acquiring funds through borrowing represents what?

Which of the following presents an effective technique to improve cash management?

Investment bankers perform what function regarding new issues of bonds or stock?

Which of the following represents a disadvantage of issuing bonds?

Which of the following represents a capital expenditure?

Corporations receive the proceeds from the sale of their stock in which market?

Dividends on preferred stock are:

One of the challenges of effective financial management is:

When retained earnings are not enough for long-term needs, businesses may raise funds by:

Mineral Mining Corporation is utilizing what to provide for an orderly retirement of their bonds?

Which situation represents successful use of financial leverage?

Julia experienced what issue in her failed business?

The corporate certificate issued to an investor that has loaned money is called a:

Buying several different investment alternatives to spread the risk achieves what?

The CFO solicited investments to prevent bankruptcy, representing what kind of financing?

When companies owe money to creditors and suppliers, these amounts are recorded as:

The balance sheet shows how the capital is structured in the business, including what?

Net profit refers to:

The acid test ratio helps determine what?

Although accounting has several uses, its overall purpose can be summarized as:

An evaluation and unbiased opinion about the accuracy of a firm's financial statements is called a:

Leverage ratios indicate the extent to which what has been used to fund a business's operations?

The three important financial statements prepared by accountants are:

What is the net worth (owners equity) for the business if assets total $3.5 million and liabilities total $1.3 million?

The balance sheet reflects which fundamental accounting equation?

Study Notes

Profit and Financial Concepts

Investment Strategies and Market Conditions

Banking and Financial Tools

Economic Trends and Stakeholder Considerations

Financing and Fundraising

Capital Expenditures and Market Structures

Challenges in Financial Management

Financial Leverage and Risk Management

Accounting Principles

Financial Statements and Reporting

Audit and Financial Clarity

Studying That Suits You

More Quizzes Like This

Untitled Quiz

Untitled Quiz

Untitled Quiz

Untitled Quiz