What is the Accounting equation?
Assets = Liabilities + Owners' Equity
Liabilities = Assets + Owners' Equity
A share of stock in General Motors that your company owns would be
None of the above
All of the above
"Shareholder wealth" in a firm is represented by:
the number of people employed in the firm.
the book value of the firm's assets less the book value of its liabilities.
the amount of salary paid to its employees.
the market price per share of the firm's common stock.
The long-run objective of financial management is to
maximize earnings per share.
maximize the value of the firm's common stock
maximize return on investment.
maximize market share
What are the earnings per share (EPS) for a company that earned $100,000 last year in after-tax profits, has 200,000 common shares outstanding and $1.2 million in retained earning at the year end?
A(n) _________ would be an example of a principal, while a(n) _______ would be an example of an agent.
The market price of a share of common stock is determined by:
the board of directors of the firm.
the stock exchange on which the stock is listed.
the president of the company.
individuals buying and selling the stock.
The focal point of financial management in a firm is:
the number and types of products or services provided by the firm.
the minimization of the amount of taxes paid by the firm.
the creation of value for shareholders.
the dollars profits earned by the firm.
The decision function of financial management can be broken down into the decisions:
financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and credit management
The controller's responsibilities are primarily_______ in nature, while the treasurer's responsibilities are primarily related to _________.
operational; financial management
financial management; accounting
accounting; financial management
financial management; operations
A company's ________ is (are) potentially the most effective instrument of good corporate governance.
common stock shareholders
board of directors
top executive officers
The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:
a series of corporate scandals involving Enron, WorldCom, Global Crossing, Tyco and numerous others.
a dramatic rise in the Canadian trade deficit.
charges of excessive compensation to top corporate executives.
rising complaints by investors and security analysts over the financial accounting for stock options.
A company has $1,000,000 Owners' Equity and $75,000 in liabilities. What are the assets for the company?
None of the above
A company has cash in the bank of $850,000, inventory of $50,000 and a building worth $100,000. These are the only assets for the company. The company has liabilities that amount to $925,000. How much is owners' equity in this company?
Which of the following is not an asset:
20 kilos of fertilizer
The idea that Managers should try to provide each stakeholder group of the business with a satisfactory level of return is called:
Financial market for long-term loans, bonds and debentures, and shares is called:
The conflict of interest between the shareholders (the principals) and the Managers (agents) of a business, which arises when the Managers seek to maximize their own welfare is called:
The Agency Problem
Systems for directing and controlling a business, is called:
A statement setting out the purpose for which a business exists, is called:
The idea that the main purpose of a business is to maximize the wealth of its owners (shareholders). What is it called?
Financial instruments that allow managers and employees to acquire shares in a business at some future date on favourable terms, is called:
The formula for calculating "Earnings Per Share (EPS)" is:
Net Income / Number of Shares
Liabilities + Owners' Equity