Tom is planning to build a home. He is weighing many factors, including construction materials, location, and other considerations. Which of the following statements is true with regard to homeowners insurance and Tom’s new home? A) The higher the construction costs are in the area, the lower Tom’s homeowners insurance premiums will be. B) The […]
What are the duties of a treasurer? Of a controller? What will be an ideal response? ANSWER The treasurer generally handles the firm’s financial activities, including cash and credit management, making capital expenditure decisions, raising funds, financial planning, and managing any foreign currency received by the firm. The controller is responsible for managing […]
To generate cash to invest in fixed assets, a firm can issue equity or obtain a loan from a bank. This is an example of which cash-related activity in cash flow management? A) Operating activity B) Profitability activity C) Investing activity D) Financing activity ANSWER D
To evaluate or compare investment proposals, we must adjust the value of all cash flows to a common date. Indicate whether the statement is true or false ANSWER TRUE
The acid-test ratio of a firm would be unaffected by which of the following? A) Inventories are sold on a short-term credit basis. B) Common stock is sold and the money is invested in marketable securities. C) Inventories are sold for cash. D) Accounts payable are reduced by obtaining a short-term loan. ANSWER […]
Robert purchased an unendorsed Homeowners 3 policy. He is concerned that if his personal property is destroyed, the insurer will take depreciation into consideration when determining the loss settlement and will pay him less than the amount needed to purchase new property. Which endorsement can Robert add to his Homeowners 3 policy to address this […]
Which of the following accounts belongs in the liability section of a balance sheet? A) interest expense B) preferred stock C) accumulated depreciation D) accounts payable ANSWER D
The ________ is the critical connection between the pro forma income statement and the pro forma balance sheet. A) change in net working capital B) change in cost of goods sold C) change in dividends D) change in retained earnings ANSWER D
________ depends on any excess cash that a firm has above and beyond day-to-day working capital needs, as well as a firm’s capacity to issue more debt while maintaining its current credit rating. A) Financial flexibility B) Shareholder control C) Risk and timing D) Impact and cost ANSWER A
Jane would like to save money on her homeowners premium. All of the following steps will help her to reduce her homeowners premium EXCEPT A) raising the deductible in the homeowners policy to a higher amount. B) shopping around a homeowners policy. C) installing burglar alarms, smoke detectors, and dead-bolt locks. D) adding a personal […]
