Name: ______Date: ______
Test 4: Chapters 14 - 17
- Assets include
 - land.
 - patents.
 - cash.
 - all of the above.
 
- To provide reliable, consistent, and unbiased information to decision makers, accountants follow guidelines, or standards, known as
 - Financial Accounting Standards Board (FASB).
 - Generally Accepted Accounting Principles (GAAP).
 - business transactions.
 - financial statements.
 
- The basic accounting equation is
 - Assets + Liabilities = Owners’ equity
 - Assets = Liabilities + Owners’ equity
 - Owner’s equity – Assets = Liabilities
 - Debt + Assets = Equity
 
- Double-entry booking states that every accounting transaction must have an offsetting transaction.
 - True
 - False
 
- The financial statement that describes the firm’s financial performance over a specified period of time is
 - the balance sheet.
 - the statement of cash flows.
 - a description of owners’ equity.
 - the income statement.
 
- The financial document that shows how the company’s finances are doing at a particularpoint in time is called a(n)
 - Balance sheet
 - Income Statement
 - Annual report
 - Statement of cash flow
 
- The ______budget tracks the firm’s liquid inflows and outflows.
 - Sales
 - Transaction
 - Capital expenditures
 - Cash
 
- Securities are
 - stocks and savings accounts.
 - risk-free or speculative ownership stakes in publicly traded corporations.
 - obligations on the part of the borrower to provide returns on funds invested or loaned.
 - bonds and debentures.
 
- An IPO is a(n)______.
 - high-yield bond
 - primary market offering
 - independent price occurrence
 - secondary market investment
 
- Common stockholders
 - usually benefit when a company is growing.
 - have the greatest security of any investor.
 - have a senior claim to the firm’s assets during bankruptcy.
 - are guaranteed dividends based on the firm’s annual profits.
 
- What is the key difference between NASDAQ and the New York Stock Exchange (NYSE)?
 - NASDAQ is completely electronic; the NYSE still has a trading floor.
 - Tech companies such as Microsoft and Intel are required to trade on NASDAQ.
 - There are more companies listed on the NYSE than on NASDAQ.
 - Corporate bonds make up most of the trading on the NYSE; bonds make up less of the volume on the NASDAQ.
 
- Securities sold by corporations are
 - Treasury bills
 - Commercial paper
 - Certificates of deposit
 - Common Stock
 
- Life insurance companies are nondepository financial institutions.
 - True
 - False
 
- Which of the following is NOT a function of the Federal Reserve System?
 - check clearing
 - setting monetary policy
 - stimulus packages
 - performing banking-related activities for the Treasury Department
 
- ___ are short-term securities issued by the U.S. Treasury and backed by the full faith and credit of the U.S. government.
 - Bonds
 - CD’s
 - Commercial paper
 - Treasury bills
 
- All of the following are types of securities EXCEPT _____.
 - Money market instruments
 - Cash
 - Bonds
 - Stock
 
- Bonds with ratings of BBB and above are classified as ____.
 - Investment-grade bonds
 - Speculative bonds
 - Junk bonds
 - Corporate bonds
 
- An owner of which form of stock would receive dividend payments first?
 - Preferred stock
 - Common stock
 - Convertible securities
 - Standard stock
 
- All of the following actions result in equity capital EXCEPT ______.
 - Issuing bonds
 - Liquidating assets
 - Issuing stock
 - Reinvesting earnings
 
- 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?
 - Equity capital
 - Combination of debt and equity capital
 - Angel investor
 - Debt capital
 
- All of the following are sources of short-term funds EXCEPT ______.
 - Trade credit
 - Bank loans
 - Commercial paper
 - Bonds
 
- When a firm receives goods or services from a supplier and agrees to pay for them at a later date, this arrangement is called ______.
 - A short term loan
 - A repurchase agreement
 - Trade credit
 - Commercial credit
 
- Short-term assets are expected to be converted into cash within _____.
 - A week
 - Six months
 - A month
 - A year
 
- Two types of divestitures are _____.
 - Sell-offs and trade-offs
 - Trade-offs and spin-offs
 - Buy-offs and spin-offs
 - Sell-offs and spin-offs
 
- 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:
 - Sell-Off
 - Trade-Off
 - Spin-Off
 - 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.
