FN6350 Quiz 1

Question 1

Which of the following is NOT an advantage of a sole proprietorship?

   

A) Limited liability

 

 

B) No separation of ownership and control

 

 

C) Ease of setup

 

 

D) Single taxation

 

Question 2

Which of the following statements is FALSE?

 

A) Because a corporation is a separate legal entity, when it fails to repay its debts, the people who lent to the firm, the debt holders are entitled to seize the assets of the corporation in compensation for the default.

 

 

B) In bankruptcy, management is given the opportunity to reorganize the firm and renegotiate with debt holders.

 

   

C) If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the firm.

 

 

D) As long as the corporation can satisfy the claims of the debt holders, ownership remains in the hands of the equity holders.

 

Question 3

Which of the following statements is FALSE?

 

A) On Nasdaq, stocks can and do have multiple market makers who compete with each other. Each market maker must post bid and ask prices in the Nasdaq network where they can be viewed by all participants.

 

 

B) On the floor of the NYSE, prior to 2005 market makers (known on the NYSE as specialists) matched buyers and sellers.

 

 

C) Because customers always buy at the ask and sell at the bid, the bid-ask spread is a transaction cost investors have to pay in order to trade.

 

   

D) Bid prices exceed ask prices.

 

Question 4

Which of the following is NOT a financial statement that every public company is required to produce?

 

A) Income Statement

 

 

B) Statement of Stockholders' Equity

 

 

C) Balance Sheet

 

   

D) Statement of Sources and Uses of Cash

 

Question 5

Which of the following statements regarding the balance sheet is INCORRECT?

 

A) The balance sheet provides a snapshots of the firm's financial position at a given point in time.

 

 

B) The balance sheet reports stockholders' equity on the right hand side.

 

 

C) The balance sheet lists the firm's assets and liabilities.

 

   

D) The balance sheet reports liabilities on the left hand side.

 

Question 6

Which of the following is NOT an operating expense?

 

A) Research and development

 

 

B) Depreciation and amortization

 

 

C) Selling, general and administrative expenses

 

   

D) Interest expense

 

Question 7

Which of the following is NOT a reason why cash flow may not equal net income?

 

A) Capital expenditures are not recorded on the income statement.

 

 

B) Changes in inventory will change cash flows but not income.

 

 

C) Depreciation is deducted when calculating net income.

 

   

D) Amortization is added in when calculating net income.

 

Question 8

Details of acquisitions, spin-offs, leases, taxes, and risk management activities are given:

   

A) in the notes to the financial statements.

 

 

B) in the auditor's report.

 

 

C) in the management discussion and analysis.

 

 

D) in the Securities and Exchange Commission's commentary.

 

Question 9

If Moon Corporation has an increase in sales, which of the following would result in no change in its EBIT margin?

 

A) A proportional decrease in its EBIT

 

 

B) An increase in its operating expenses

 

 

C) A proportional increase in its net income

 

   

D) A proportional increase in its EBIT

 

Question 10

The Sarbanes-Oxley Act (SOX) overhauled incentives and the independence in the auditing process by:

A) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them.

 

  B) putting strict limits on the amount of non-audit fees (consulting or otherwise) that an accounting firm can earn from a firm that it audits.

 

C) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports.

 

D) imposing large compliance costs on small companies.

 

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Status NEW Posted 01 Aug 2017 04:08 PM My Price 10.00

FN6-----------350----------- Qu-----------iz -----------1-----------

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file 1501603813-FN6350 Quiz 1.docx preview (619 words )

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