Which of the following is NOT a disadvantage of a sole proprietorship as a form of business organization compared to the corporate form of business organization? A) Access to the capital markets B) Unlimited liability of the owners C) Subject to the double taxation D) Limited liability of the shareholders ANSWER D
Date: September 19th, 2020
Why is the price/earnings ratio a common and popular technique for evaluating stocks? Why do fast growing firms have higher P/E ratios? What is a long-run average P/E ratio for larger publicly traded firms in the United States? What are some limitations to using this technique to evaluate stock prices? ANSWER P/E ratios […]
Date: September 19th, 2020
The real rate of return is the return earned above the A) variability of returns measured by standard deviation. B) inflation risk premium. C) risk-adjusted return. D) default risk premium. ANSWER B
Date: September 19th, 2020
David started a public accounting firm. David is concerned that accountants on his staff may give incorrect accounting advice, and the accounting firm may be sued. What type of liability insurance should David purchase to protect against such claims? A) errors and omissions insurance B) directors and officers liability insurance C) general liability insurance D) […]
Date: September 19th, 2020
Which of the following statements is (are) true with respect to the treatment of legal defense costs under the ISO Commercial General Liability policy? I. Legal defense costs usually are counted against the policy limit. II. Once the insurer has paid out the applicable limit of liability, the insurer’s duty to defend ends. A) I […]
Date: September 19th, 2020
Jennifer was just asked to serve on the Board of an insurance company. Jennifer is concerned that if the company is mismanaged, the policyowners, stockholders, and employees might sue the management team. What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company’s Board? A) commercial […]
Date: September 19th, 2020
Is it possible for a company that has negative net income and negative operating cash flow to end the year with an increase in cash and an increase in stock price? Explain your answer. What will be an ideal response? ANSWER Yes! Many start-up companies or research companies in high growth industries are […]
Date: September 19th, 2020
This form of business ownership does NOT avoid double taxation. A) Limited partnership B) “S” corporation C) “C” corporation D) Limited liability company ANSWER C
Date: September 19th, 2020
Table 3-3 Marlett Company Financial Information December 2009 December 2010 Net Income $2,000 $4,000 Accounts receivable 750 1,250 Accumulated depreciation 1,000 1,400 Common stock 4,500 5500 Paid-in capital 7,500 8500 Retained earnings 1,500 3,500 Accounts payable 750 950 Based on the information in Table 3-3, prepare a statement of cash flows for 2010. Assume that […]
Date: September 19th, 2020
The ________ is the maximum a firm can grow with internally generated equity and new borrowing sufficient to maintain the current long-term-debt to equity ratio. A) internal growth rate B) sustainable growth rate C) return on equity D) return on assets ANSWER B
Date: September 19th, 2020
