Download Name: Date: Test 4: Chapters 14 - 17 Assets include land. patents

Name: _______________________________ Date: __________________________
Test 4: Chapters 14 - 17
1. Assets include
a. land.
b. patents.
c. cash.
d. all of the above.
2. To provide reliable, consistent, and unbiased information to decision makers, accountants follow
guidelines, or standards, known as
a. Financial Accounting Standards Board (FASB).
b. Generally Accepted Accounting Principles (GAAP).
c. business transactions.
d. financial statements.
3. The basic accounting equation is
a. Assets + Liabilities = Owners’ equity
b. Assets = Liabilities + Owners’ equity
c. Owner’s equity – Assets = Liabilities
d. Debt + Assets = Equity
4. Double-entry booking states that every accounting transaction must have an offsetting
transaction.
a. True
b. False
5. The financial statement that describes the firm’s financial performance over a specified period
of time is
a. the balance sheet.
b. the statement of cash flows.
c. a description of owners’ equity.
d. the income statement.
6. The financial document that shows how the company’s finances are doing at a particular point
in time is called a(n)
a. Balance sheet
b. Income Statement
c. Annual report
d. Statement of cash flow
7. The ________ budget tracks the firm’s liquid inflows and outflows.
a. Sales
b. Transaction
c. Capital expenditures
d. Cash
8. Securities are
a. stocks and savings accounts.
b. risk-free or speculative ownership stakes in publicly traded corporations.
c. obligations on the part of the borrower to provide returns on funds invested or loaned.
d. bonds and debentures.
9. An IPO is a(n)_________________.
a. high-yield bond
b. primary market offering
c. independent price occurrence
d. secondary market investment
10. Common stockholders
a. usually benefit when a company is growing.
b. have the greatest security of any investor.
c. have a senior claim to the firm’s assets during bankruptcy.
d. are guaranteed dividends based on the firm’s annual profits.
11. What is the key difference between NASDAQ and the New York Stock Exchange (NYSE)?
a. NASDAQ is completely electronic; the NYSE still has a trading floor.
b. Tech companies such as Microsoft and Intel are required to trade on NASDAQ.
c. There are more companies listed on the NYSE than on NASDAQ.
d. Corporate bonds make up most of the trading on the NYSE; bonds make up less of the
volume on the NASDAQ.
12. Securities sold by corporations are
a. Treasury bills
b. Commercial paper
c. Certificates of deposit
d. Common Stock
13. Life insurance companies are nondepository financial institutions.
a. True
b. False
14. Which of the following is NOT a function of the Federal Reserve System?
a. check clearing
b. setting monetary policy
c.
stimulus packages
d. performing banking-related activities for the Treasury Department
15. ___ are short-term securities issued by the U.S. Treasury and backed by the full faith and credit
of the U.S. government.
a. Bonds
b. CD’s
c. Commercial paper
d. Treasury bills
16. All of the following are types of securities EXCEPT _____.
a. Money market instruments
b. Cash
c. Bonds
d. Stock
17. Bonds with ratings of BBB and above are classified as ____.
a. Investment-grade bonds
b. Speculative bonds
c. Junk bonds
d. Corporate bonds
18. An owner of which form of stock would receive dividend payments first?
a. Preferred stock
b. Common stock
c. Convertible securities
d. Standard stock
19. All of the following actions result in equity capital EXCEPT ________.
a. Issuing bonds
b. Liquidating assets
c. Issuing stock
d. Reinvesting earnings
20. Kaitlyn’s company needs to obtain funds in order to keep the business going; however, she does
not want stockholders influencing the direction of her company. What type of financing should
Kaitlyn acquire?
a. Equity capital
b. Combination of debt and equity capital
c. Angel investor
d. Debt capital
21. All of the following are sources of short-term funds EXCEPT ________.
a. Trade credit
b. Bank loans
c. Commercial paper
d. Bonds
22. When a firm receives goods or services from a supplier and agrees to pay for them at a later
date, this arrangement is called ________.
a. A short term loan
b. A repurchase agreement
c. Trade credit
d. Commercial credit
23. Short-term assets are expected to be converted into cash within _____.
a. A week
b. Six months
c. A month
d. A year
24. Two types of divestitures are _____.
a. Sell-offs and trade-offs
b. Trade-offs and spin-offs
c. Buy-offs and spin-offs
d. Sell-offs and spin-offs
25. XYZ corp decides to buy ABC Inc. They have broken the company into pieces and created a
brand new company out of the divestiture. This is known as:
a. Sell-Off
b. Trade-Off
c. Spin-Off
d. Buy-Off
Name: __________________________________________
Extra Credit:
If you had $10,000 to invest, how would you do it? Use specific examples of how you would achieve
short term and long term investment goals.