What are the two basic sources of funds for all businesses?

Debt

Equity

Both
debt and equity

None
of the above

True or False
Working capital management is the management of current
assets, such as inventory, and current liabilities, such as money owed to
suppliers.

True

False

What are the forms of business organization discussed in this
chapter?

Sole
Proprietorship

Partnership

Corporation

All
of the above

What is meant by stockholders limited liability?

That
the stockholders legal liability extends to all personal assets as
well.

That
the stockholders legal liability extends only to the debt owed.

That
the stockholders legal liability extends only to the capital contributed or
the amount invested.

None
of the above

What is double taxation?

The employees
of a corporation are subject to double taxation–first when they get their
paychecks and then when they pay state and federal income tax.

The
owners of a corporation are subject to double taxationfirst at the corporate
level and then again at a personal level when they are given dividends.

The
suppliers of a corporation are subject to double taxationfirst when the
corporation pays their invoices and then again when they have
to pay federal taxes.

None
of the above

What are some of the regulations pertaining to boards of
directors that were put in place to reduce agency conflicts?

The
majority of board members must be outsiders.

A
separation of the CEO and chairman of the board positions is recommended.

The
CEO and CFO must certify all financial statements.

All
of the above

Which one of the following mechanisms helps to align management
interests with those of its shareholders?

A
well designed management compensation package

An
efficient managerial labor market

The
Sarbanes-Oxley Act of 2002

All
of the above

One of the best ways to reduce agency conflict is by

designing
an effective compensation package

instituting
severe penalties for bad decisions

hiring
outside monitors to keep track of the manage’s decisions

having
managers report to the board of directors

Which of the following factors or activities can be controlled
by the management of the firm?

The
level of economic activity

Stock
market conditions

Capital
budgeting

The
level of interest rates

Current Liabilities are liabilities that will be converted to
cash within a year

True

False

What are the two basic sources of funds for all businesses?DebtEquityBoth
debt and equityNone
of the aboveTrue or FalseWorking capital management is the management of current
assets, such as inventory, and current liabilities, such as money owed to
suppliers.TrueFalseWhat are the forms of business organization discussed in this
chapter?Sole
ProprietorshipPartnershipCorporationAll
of the aboveWhat is meant by stockholders limited liability?That
the stockholders legal liability extends to all personal assets as
well. That
the stockholders legal liability extends only to the debt owed.That
the stockholders legal liability extends only to the capital contributed or
the amount invested.None
of the aboveWhat is double taxation?The employees
of a corporation are subject to double taxation–first when they get their
paychecks and then when they pay state and federal income tax. The
owners of a corporation are subject to double taxationfirst at the corporate
level and then again at a personal level when they are given dividends.The
suppliers of a corporation are subject to double taxationfirst when the
corporation pays their invoices and then again when they have
to pay federal taxes. None
of the aboveWhat are some of the regulations pertaining to boards of
directors that were put in place to reduce agency conflicts?The
majority of board members must be outsiders.A
separation of the CEO and chairman of the board positions is recommended.The
CEO and CFO must certify all financial statements.All
of the aboveWhich one of the following mechanisms helps to align management
interests with those of its shareholders?A
well designed management compensation packageAn
efficient managerial labor marketThe
Sarbanes-Oxley Act of 2002All
of the aboveOne of the best ways to reduce agency conflict is bydesigning
an effective compensation packageinstituting
severe penalties for bad decisionshiring
outside monitors to keep track of the manage’s decisionshaving
managers report to the board of directorsWhich of the following factors or activities can be controlled
by the management of the firm?The
level of economic activityStock
market conditionsCapital
budgetingThe
level of interest ratesCurrent Liabilities are liabilities that will be converted to
cash within a yearTrueFalse