Question 1

Commercial paper is short-term promissory notes issued by large corporations.

Accepted Answer

A) True 
 B)False

Question 2

Corporate profits reinvested in the business are called retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

The most basic form of ownership in a corporation is

Accepted Answer

A)  common stock.
B)  bonds.
C)  preferred stock.
D)  debentures.
E)  dividends.F) A) and E)
G) B) and D)

Question 4

Which of the following companies would most likely be able to issue commercial paper?

Accepted Answer

A)  Mike's Pizza Place
B)  A local housing construction company
C)  General Electric
D)  A medium-sized advertising agency
E)  United WayF) A) and B)
G) A) and E)

Question 5

What is a budget? How is it used by a business firm?

Accepted Answer

A budget is a financial statement that p...

Question 6

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Accepted Answer

A)  Long-term loans
B)  Corporate bonds
C)  Debenture bonds
D)  Common stock
E)  Trade creditF) B) and C)
G) All of the above

Question 7

The highest cost of short-term finance generally is

Accepted Answer

A)  trade credit.
B)  unsecured bank loans.
C)  commercial paper.
D)  factoring.
E)  promissory notes.F) A) and B)
G) A) and C)

Question 8

At Furman Company, managers go through a lengthy budgeting process wherein each department manager is required to provide documentation justifying every expected expense. Furman uses ____ budgeting.

Accepted Answer

A)  zero-base
B)  cash
C)  recurring
D)  traditional
E)  responseF) C) and D)
G) A) and E)

Question 9

Short-term business loans must be repaid within 5 years.

Accepted Answer

A) True 
 B)False

Question 10

A written order for a bank to pay a third party a stated amount of money on a specific date is referred to as a

Accepted Answer

A)  letter of credit.
B)  banker's acceptance.
C)  check.
D)  line of credit.
E)  dividend.F) C) and D)
G) A) and E)

Question 11

Of the following, only ___ would not be considered proper financial management during both good and bad times.

Accepted Answer

A)  investing excess cash in CDs, government securities, or conservative securities
B)  making sure that funds are available to meet tax deadlines
C)  paying bills promptly
D)  investing all excess cash in long-term securities
E)  planning for sufficient financing when neededF) A) and C)
G) B) and C)

Question 12

The Fruitiest Candy Company finds that from time to time it needs short-term funds to cover its operating expenses. It wants to establish a prearranged loan with a bank but has not found a bank that will guarantee such a loan. Perplexed by this, the management team asks you how they should proceed. You recommend that they

Accepted Answer

A)  file a suit against the banks.
B)  find a bank out of state or out of the country that will guarantee that the money will be available when needed.
C)  simply file a claim with the FDIC.
D)  retaliate by withdrawing all cash from the local bank and canceling all certificates of deposit.
E)  set up a line of credit with a bank that offers a revolving credit agreement.F) B) and E)
G) A) and E)

Question 13

As a stockholder in the Giant Plants Company, you have the right to vote on all of the following issues except

Accepted Answer

A)  amendments to the corporate charter.
B)  the price the firm charges for its products.
C)  the sale of certain assets.
D)  new issues of preferred stock or bonds.
E)  changes in the amount of common stock issued.F) A) and E)
G) D) and E)

Question 14

​JBP Incorporated's ____ has determined that the company should retain earnings for the year. This has been approved by the board of directors.

Accepted Answer

A)  ​corporate management
B)  ​common stockholders
C)  ​preferred stockholders
D)  ​corporate creditorsE) B) and C)
F) A) and D)

Question 15

____ is (are)  short-term promissory notes with no collateral that are issued by large corporations.

Accepted Answer

A)  Serial bonds
B)  Sinking funds
C)  Convertible bonds
D)  Credit agreements
E)  Commercial paperF) A) and D)
G) C) and E)

Question 16

Dillon Wholesale Foods allows retailers to purchase merchandise using trade credit. For Dillon, this type of transaction

Accepted Answer

A)  is written off as a bad-debt expense.
B)  is an unusual type of transaction between a wholesaler and retailers.
C)  should be paid within thirty to sixty days.
D)  is referred to as a notes payable account by Dillon's accountants.
E)  creates a liability for Dillon Wholesale.F) A) and D)
G) A) and C)

Question 17

Although a corporation does not have to pay dividends on common stock, it is required to pay dividends on preferred stock.

Accepted Answer

A) True 
 B)False

Question 18

What types of businesses obtain venture capital financing? How does venture capital differ from a private placement?

Accepted Answer

Most venture capital firms do not invest...

Question 19

A promissory note that requires a borrower to repay funds in installments is called a(n)

Accepted Answer

A)  term-loan agreement.
B)  installment plan.
C)  lease.
D)  mortgage.
E)  annuity loan agreement.F) B) and D)
G) C) and D)

Question 20

For a corporation, equity capital is obtained from

Accepted Answer

A)  bondholders.
B)  banks.
C)  stockholders.
D)  insurance companies.
E)  credit unions.F) All of the above
G) C) and D)

Exam 16: Mastering Financial Management

Correct Answer
verified

What types of businesses obtain venture capital financing? How does venture capital differ from a private placement?

Correct Answer
verified
Most venture capital firms do not invest...
View Answer

A written order for a bank to pay a third party a stated amount of money on a specific date is referred to as a

Correct Answer
verified

Which of the following companies would most likely be able to issue commercial paper?

Correct Answer
verified

The most basic form of ownership in a corporation is

Correct Answer
verified

Of the following, only ___ would not be considered proper financial management during both good and bad times.

Correct Answer
verified

Short-term business loans must be repaid within 5 years.

Correct Answer
verified

Although a corporation does not have to pay dividends on common stock, it is required to pay dividends on preferred stock.

Correct Answer
verified

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Correct Answer
verified

As a stockholder in the Giant Plants Company, you have the right to vote on all of the following issues except

Correct Answer
verified

What is a budget? How is it used by a business firm?

Correct Answer
verified
A budget is a financial statement that p...
View Answer

At Furman Company, managers go through a lengthy budgeting process wherein each department manager is required to provide documentation justifying every expected expense. Furman uses ____ budgeting.

Correct Answer
verified

Corporate profits reinvested in the business are called retained earnings.

Correct Answer
verified

Dillon Wholesale Foods allows retailers to purchase merchandise using trade credit. For Dillon, this type of transaction

Correct Answer
verified

____ is (are) short-term promissory notes with no collateral that are issued by large corporations.

Correct Answer
verified

JBP Incorporated's ____ has determined that the company should retain earnings for the year. This has been approved by the board of directors.

Correct Answer
verified

A promissory note that requires a borrower to repay funds in installments is called a(n)

Correct Answer
verified

For a corporation, equity capital is obtained from

Correct Answer
verified

Commercial paper is short-term promissory notes issued by large corporations.

Correct Answer
verified

The highest cost of short-term finance generally is

Correct Answer
verified

Exam 16: Mastering Financial Management

Correct AnswerverifiedShow Answer

What types of businesses obtain venture capital financing? How does venture capital differ from a private placement?

Correct AnswerverifiedMost venture capital firms do not invest...View AnswerShow Answer

A written order for a bank to pay a third party a stated amount of money on a specific date is referred to as a

Correct AnswerverifiedShow Answer

Which of the following companies would most likely be able to issue commercial paper?

Correct AnswerverifiedShow Answer

The most basic form of ownership in a corporation is

Correct AnswerverifiedShow Answer

Of the following, only ___ would not be considered proper financial management during both good and bad times.

Correct AnswerverifiedShow Answer

Short-term business loans must be repaid within 5 years.

Correct AnswerverifiedShow Answer

Although a corporation does not have to pay dividends on common stock, it is required to pay dividends on preferred stock.

Correct AnswerverifiedShow Answer

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Correct AnswerverifiedShow Answer

As a stockholder in the Giant Plants Company, you have the right to vote on all of the following issues except

Correct AnswerverifiedShow Answer

What is a budget? How is it used by a business firm?

Correct AnswerverifiedA budget is a financial statement that p...View AnswerShow Answer

At Furman Company, managers go through a lengthy budgeting process wherein each department manager is required to provide documentation justifying every expected expense. Furman uses ____ budgeting.

Correct AnswerverifiedShow Answer

Corporate profits reinvested in the business are called retained earnings.

Correct AnswerverifiedShow Answer

Dillon Wholesale Foods allows retailers to purchase merchandise using trade credit. For Dillon, this type of transaction

Correct AnswerverifiedShow Answer

____ is (are) short-term promissory notes with no collateral that are issued by large corporations.

Correct AnswerverifiedShow Answer

​JBP Incorporated's ____ has determined that the company should retain earnings for the year. This has been approved by the board of directors.

Correct AnswerverifiedShow Answer

A promissory note that requires a borrower to repay funds in installments is called a(n)

Correct AnswerverifiedShow Answer

For a corporation, equity capital is obtained from

Correct AnswerverifiedShow Answer

Commercial paper is short-term promissory notes issued by large corporations.

Correct AnswerverifiedShow Answer

The highest cost of short-term finance generally is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Most venture capital firms do not invest...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A budget is a financial statement that p...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

JBP Incorporated's ____ has determined that the company should retain earnings for the year. This has been approved by the board of directors.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified