Essay about FIN 534 Midterm Part 1

1256 Words Feb 12th, 2015 6 Pages
Question 1
2 out of 2 points

Which of the following statements is CORRECT?

Correct Answer: Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones.

Question 2
0 out of 2 points

Which of the following statements is CORRECT?

Correct Answer: One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

Question 3
0 out of 2 points

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this
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Which of the following factors could explain this situation?
Answer

Correct Answer: The company sold a new issue of common stock.

Question 15
0 out of 2 points

Other things held constant, which of the following actions would increase the amount of cash on a company's balance sheet?
Answer

Correct Answer: The company issues new common stock.

Question 16
0 out of 2 points

For managerial purposes, i.e., making decisions regarding the firm's operations, the standard financial statements as prepared by accountants under Generally Accepted Accounting Principles (GAAP) are often modified and used to create alternative data and metrics that provide a somewhat different picture of a firm's operations. Related to these modifications, which of the following statements is CORRECT?
Answer

Correct Answer: The standard statements focus on accounting income for the entire corporation, not cash flows, and the two can be quite different during any given accounting period. However, for valuation purposes we need to discount cash flows, not accounting income. Moreover, since many firms have a number of separate divisions, and since division managers should be compensated on their divisions' performance, not that of the entire firm, information that focuses on the divisions is needed. These factors have led to the development of information that

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