In what important ways do financial managers and the accounting discipline interact? What will be an ideal response? ANSWER Financial managers deal with the management of working capital, capital structure decisions, and capital budgeting. In each of these a financial manager relies heavily on the development of accurate financial statements and the projection […]
Based solely on risk considerations, a mixed debt and equity firm does not have to worry about any financial obligations related to creditors. Indicate whether the statement is true or false ANSWER FALSE
Which of the following best describes cash flow from financing activities? A) Interest expense, minus dividends paid B) Increase (or minus decrease) in stock, plus increase (or minus decrease) in debt, minus interest paid, minus dividends paid C) Interest income, plus dividend income, minus taxes D) Interest paid, plus dividends paid, plus increase (or minus […]
Your company has received a $50,000 loan from an industrial finance company. The annual payments are $6,202.70. If the company is paying 9 percent interest per year, how many loan payments must the company make? A) 13 B) 19 C) 12 D) 15 ANSWER D
Which of the following statements about the liability coverage of the Business Auto Coverage Form is (are) true? I. The insurer agrees to defend the insured and pay all legal defense costs arising out of an accident involving a covered auto. II. The insured is covered for property damage and bodily injury arising out of […]
Based on the information in Table 4-3, the average collection period is A) 27.36 days. B) 17.49 days. C) 20.53 days. D) 38.01 days. ANSWER C
Which of the following forms of business organizations provide limited liability to all its owners? A) general partnership B) corporation C) limited partnership D) both B and C ANSWER B
A regular charge account is one A) that covers a single purchase. B) that is used primarily as a shopping convenience. C) that requires an initial security deposit. D) offered only by travel and entertainment lenders, such as American Express. ANSWER B
From a budgeting view, which of the following statements is not true concerning variances? A) A favorable expense variance means the budgeted amount was more than actual. B) Cumulative variance = current month’s variance + variances of previous months. C) Ideally, cumulative variances for the year will equal zero. D) Ideally, cumulative variances for the […]
A provision included in a claims-made commercial general liability policy provides coverage for claims filed after the policy has expired. This provision is called a(n) A) extended reporting period provision. B) agreed amount endorsement. C) retroactive date provision. D) per-occurrence limit clause. ANSWER Answer: A