IS2635 Long Test 1 PDF

Question 1 If a company pays more in dividends than it generates in net income, its balance of retained earnings reported on the balance sheet will fall. True False Question 2 They are direct owners and are elected by the shareholders who manage the corporation. Treasurer Board of...

Question 1 If a company pays more in dividends than it generates in net income, its balance of retained earnings reported on the balance sheet will fall. True False Question 2 They are direct owners and are elected by the shareholders who manage the corporation. Treasurer Board of directors Chief Financial Officer Financial Manager Question 3 Which of the following items is included as part of a company’s current assets? Unrealized gain on investments Equipment Accounts receivable Accounts payable Question 4 One drawback of forming a corporation is that it subjects the firm to limited liability. True False Question 5 This answers the question: “how to raise funds in order to finance the investment and operating activities of the firm?” Operating Decision Investing Decision Financing Decision Capital Decision Question 6 They are responsible for managing the monetary resources of the corporation in order to maximize the firm’s value. Treasurer Chief Financial Officer Board of directors Financial Manager Question 7 The primary goal of a publicly owned firm interested in serving its stockholders should be to: Minimize the chances of losses. Maximize expected total corporate profit. Maximize the stock price per share. Maximize expected EPS. Question 8 Privately owned corporations do not undergo IPO. True False Question 9 Controllers are responsible for the custody of financial records, preparation of the financial statements, and interpretation of financial statements. True False Question 10 Financing Decision is also known as Capital Budgeting. (Investing Decision) True False Question 11 Organized by the state for the government to promote the general welfare of the public. Non-stock Corporation Public Corporation Stock Corporation Private Corporation Question 12 Academic institutions are: Public Corporation Private Corporation Stock Corporation Non-stock Corporation Question 13 They focus on the financial aspect of the corporation; has the responsibility of raising and managing the capital or funds of the company. Treasurer Chief Financial Officer Board of directors Financial Manager Question 14 It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship. True False Question 15 All else equal, which of the following actions will increase the amount of cash on a company’s balance sheet? The company pays a dividend. The company issues new common stock. The company repurchases common stock. The company purchases a new piece of equipment. Question 16 One of the disadvantages of the sole proprietorship form of organization is that there is unlimited liability. True False Question 17 Last year, Yoru Company had negative net cash flow; however, cash on its balance sheet increased. Which of the following could explain this? The company dramatically increased its capital expenditures. The company issued a large amount of long-term debt. The company repurchased some of its common stock. The company had large depreciation and amortization expenses. Question 18 It is not possible to limit the liabilities of some of the partners. (Possible thru limited partnership) True False Question 19 Last year, Yuki Company had positive net cash flow, yet cash on the balance sheet decreased. Which of the following could explain the company’s financial performance? The company issued new common stock. The company sold off some of its assets. The company purchased a lot of new fixed assets. The company issued new long-term debt. Question 20 De facto corporations exist in fact and in law. (exists only in fact but not in law) True False Question 21 Partnership is the simplest form of business organization. (Sole Proprietorship) True False Question 22 Dividends paid reduce the net income that is reported on a company’s income statement. True False Question 23 On its 2022 balance sheet, Primo Books had retained earnings equal to $510 million. On its 2023 balance sheet, retained earnings were also equal to $510 million. Which of the following statements is correct? If the company’s net income in 2022 was $200 million, dividends paid must have also equaled $200 million If the company lost money in 2022, they must have paid dividends. The company did not pay dividends in 2022. The company must have had net income equal to zero in 2022. Question 24 This answers the question: “how much funds will be allocated to support the day-to-day transactions of the firm?” Investing Decision Financing Decision Capital Decision Operating Decision Question 25 In partnership, the business has a juridical personality separate and distinct from that of each partner. True False Question 26 Controllers are responsible for planning and formulation of financial corporate strategies. (Chief Financial Officer) True False Question 27 One disadvantage of being a sole proprietor is that you have to pay corporate taxes, even though you don’t realize the benefits of being a corporation. True False Question 28 The partnership form of organization has easy transferability of ownership. True False Question 29 The death of one of the partners will result in the dissolution of the partnership. True False Question 30 The lower the risk, the higher expected return. (The higher the risk, the higher the expected return.) True False Question 31 Enacted to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Anti-Money Laundering Act of 2003 Anti-Money Laundering Act of 2001 Anti-Money Laundering Act of 2002 Anti-Money Laundering Act of 2011 Question 32 Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership? Corporations generally face fewer regulations. Corporations generally face lower taxes. Corporations enjoy unlimited liability. Corporations generally find it easier to raise capital. Question 33 This defines corporation as an artificial being created by the operation of the law, having the right of succession and powers, attributes and properties expressly authorized by law or incident to its existence. Securities and Exchange Commission (SEC) Philippine Stock Exchange (PSE) Corporation Code of the Philippines (CCP) Article 1776 Question 34 IPO means: Initial Public Offering Inherent Public Offering Initial Product Offering Inherent Product Offering Question 35 Corporations face fewer regulations than sole proprietorships. True False Question 36 Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders. True False Question 37 Accounts receivable show up as current liabilities on the balance sheet. True False Question 38 Which of the following statements is true? Correct! Effective from July 1, 2020, Philippine corporations are taxed at a rate of 25% (reduced from 30%). Effective from July 1, 2020, Philippine corporations are taxed at a rate of 20% (reduced from 25%). Effective from July 1, 2021, Philippine corporations are taxed at a rate of 25% (reduced from 30%). Effective from July 1, 2021, Philippine corporations are taxed at a rate of 20% (reduced from 25%). Question 39 Defines partnership as a contract of two or more persons who bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Article 1776 Article 1767 Article 1677 Article 7167 Question 40 Which of the following statements is true? One of the benefits of incorporating your business is that you become entitled to receive unlimited liability. None of the statements is correct. Sole proprietorships are subject to more regulations than corporations. Sole proprietorships do not have to pay corporate tax