Name: ______Date: ______

Test 4: Chapters 14 - 17

  1. Assets include
  2. land.
  3. patents.
  4. cash.
  5. all of the above.
  1. To provide reliable, consistent, and unbiased information to decision makers, accountants follow guidelines, or standards, known as
  2. Financial Accounting Standards Board (FASB).
  3. Generally Accepted Accounting Principles (GAAP).
  4. business transactions.
  5. financial statements.
  1. The basic accounting equation is
  2. Assets + Liabilities = Owners’ equity
  3. Assets = Liabilities + Owners’ equity
  4. Owner’s equity – Assets = Liabilities
  5. Debt + Assets = Equity
  1. Double-entry booking states that every accounting transaction must have an offsetting transaction.
  2. True
  3. False
  1. The financial statement that describes the firm’s financial performance over a specified period of time is
  2. the balance sheet.
  3. the statement of cash flows.
  4. a description of owners’ equity.
  5. the income statement.
  1. The financial document that shows how the company’s finances are doing at a particularpoint in time is called a(n)
  2. Balance sheet
  3. Income Statement
  4. Annual report
  5. Statement of cash flow
  1. The ______budget tracks the firm’s liquid inflows and outflows.
  2. Sales
  3. Transaction
  4. Capital expenditures
  5. Cash
  1. Securities are
  2. stocks and savings accounts.
  3. risk-free or speculative ownership stakes in publicly traded corporations.
  4. obligations on the part of the borrower to provide returns on funds invested or loaned.
  5. bonds and debentures.
  1. An IPO is a(n)______.
  2. high-yield bond
  3. primary market offering
  4. independent price occurrence
  5. secondary market investment
  1. Common stockholders
  2. usually benefit when a company is growing.
  3. have the greatest security of any investor.
  4. have a senior claim to the firm’s assets during bankruptcy.
  5. are guaranteed dividends based on the firm’s annual profits.
  1. What is the key difference between NASDAQ and the New York Stock Exchange (NYSE)?
  2. NASDAQ is completely electronic; the NYSE still has a trading floor.
  3. Tech companies such as Microsoft and Intel are required to trade on NASDAQ.
  4. There are more companies listed on the NYSE than on NASDAQ.
  5. Corporate bonds make up most of the trading on the NYSE; bonds make up less of the volume on the NASDAQ.
  1. Securities sold by corporations are
  2. Treasury bills
  3. Commercial paper
  4. Certificates of deposit
  5. Common Stock
  1. Life insurance companies are nondepository financial institutions.
  2. True
  3. False
  1. Which of the following is NOT a function of the Federal Reserve System?
  2. check clearing
  3. setting monetary policy
  4. stimulus packages
  5. performing banking-related activities for the Treasury Department
  1. ___ are short-term securities issued by the U.S. Treasury and backed by the full faith and credit of the U.S. government.
  2. Bonds
  3. CD’s
  4. Commercial paper
  5. Treasury bills
  1. All of the following are types of securities EXCEPT _____.
  2. Money market instruments
  3. Cash
  4. Bonds
  5. Stock
  1. Bonds with ratings of BBB and above are classified as ____.
  2. Investment-grade bonds
  3. Speculative bonds
  4. Junk bonds
  5. Corporate bonds
  1. An owner of which form of stock would receive dividend payments first?
  2. Preferred stock
  3. Common stock
  4. Convertible securities
  5. Standard stock
  1. All of the following actions result in equity capital EXCEPT ______.
  2. Issuing bonds
  3. Liquidating assets
  4. Issuing stock
  5. Reinvesting earnings
  1. Kaitlyn’s company needs to obtain funds in order to keep the business going; however, she does not want stockholders influencing the direction of her company. What type of financing should Kaitlyn acquire?
  2. Equity capital
  3. Combination of debt and equity capital
  4. Angel investor
  5. Debt capital
  1. All of the following are sources of short-term funds EXCEPT ______.
  2. Trade credit
  3. Bank loans
  4. Commercial paper
  5. Bonds
  1. When a firm receives goods or services from a supplier and agrees to pay for them at a later date, this arrangement is called ______.
  2. A short term loan
  3. A repurchase agreement
  4. Trade credit
  5. Commercial credit
  1. Short-term assets are expected to be converted into cash within _____.
  2. A week
  3. Six months
  4. A month
  5. A year
  1. Two types of divestitures are _____.
  2. Sell-offs and trade-offs
  3. Trade-offs and spin-offs
  4. Buy-offs and spin-offs
  5. Sell-offs and spin-offs
  1. XYZ corp decides to buy ABC Inc. They have broken the company into pieces and created a brand new company out of the divestiture. This is known as:
  2. Sell-Off
  3. Trade-Off
  4. Spin-Off
  5. Buy-Off

Name: ______

Extra Credit:

If you had $10,000 to invest, how would you do it? Use specific examples of how you would achieve short term and long term investment goals.