ASU FIN 300 EXAM 1 UPDATED ACTUAL

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ASU FIN 300 EXAM 1 UPDATED ACTUAL

EXAM WITH CORRECT SOLUTIONS.

Productive assets - correct answer- the long-term tangible and intangible assets a firm uses to generate cash flows

• fundamental decisions in financial management - correct

answer- a. Capital budgeting- which productive assets to buy

• Financing decisions- raising money to buy more p assets,

mainly through selling long term debt and equity

• Working capital decisions- involve how firms manage their

current assets and liabilities. Enough money to pay the bills and any money left over is invested to earn a return

Forms of Business Organization - correct answer- a. Sole proprietorship- earnings taxed as personal income, owner has all of the liability

• Partnership- more management skills with two people,

complicated decision making

• Corporation- separate legal status and ability to recruit

professional management, corporate income taxed twice, conflicting goals between owners and management

• LLC- owners not personally responsible, combine

corporation with sole proprietorship

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C Corporation - correct answer- The most common type of corporation, which is a legal business entity that offers limited liability to all of its owners, who are called stockholders

S Corporation - correct answer- corporation taxed as though it were a partnership with restrictions on shareholders

B Corporation - correct answer- a business that explicitly seeks to blend its social objectives with its financial goals

The goal of the firm - correct answer- maximize shareholder wealth

Sarbanes-Oxley Act - correct answer- A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate.

information asymmetry - correct answer- situation in which one party is more informed than another because of the possession of private information

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