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Intro to Business > Exam 2 (ch. 6,8-10) > Flashcards

Exam 2 (ch. 6,8-10) Flashcards

1
Q

Franchising is being used by companies to move into the foreign market

A

True

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2
Q

A corporation is a voluntary agreement where two or more people run a business for profit.

A

False

-Partnership-

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3
Q

Do preferred stockholders have the right to vote at a stockholders meeting?

A

No

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4
Q

A general partnership can have as many partners as it wants.

A

true

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5
Q

A franchise agreement exempts the franchisee from making any form of payment to use the franchisors products

A

False

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6
Q

Does the owner of a sole proprietorship share any after-tax profits with the shareholders?

A

No

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7
Q

What constitutes a sole proprietorship?

A

A single owner who manages company

Company profit serves as owners income, company debts serve as owner debt

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8
Q

General Partnership vs. Sole Proprietorship

A

General:

  • 2 or more partners
  • unlimited liability for any claims against firm

Sole P:
-single owner

Both:
Owners take active role in managing business

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9
Q

What happens in a Verticle Merger?

A

Combo of firms that are at different stages in production of a good or service.

Creates a buyer-seller relationship

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10
Q

general vs. limited partners

A

at least 1 general partner actively manages business,accepts unlimited liability.

limited partner gives up right to actively manage in exchange for limited liability.

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11
Q

What takes place in Lateral Expansion?

A

—–/

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12
Q

Duties of the Board of Dorectors

A

To est. corporations mission and set broad objectives.

Monitors Ceo performance

Offers advice to CEO

Approves major proposals

Makes sure company adheres to major requirements

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13
Q

The operating budget of a business represents the overall action plan for that business for a specified time period.

A

False

-Master Budget-

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14
Q

Horizontal analysis enables managers to make comparisons of financial statements.

A

True

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15
Q

Is the Financial Standards Board barred from modifying and expanding the Generally Accepted Accounting Principles (GAAP)?

A

No, it’s one of their jobs

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16
Q

One of the functions of financial managers is to prepare customized reports of the cost overruns of a companies production facilities

A

idk

17
Q

A balance sheet provides info on what a company owns and owes

A

Yes, reports assets, liabilities, and owners equity.

18
Q

The Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements.

A

False, it requires them to

19
Q

What does it mean when company is involved in financial accounting?

A

Prepare financial statements for use by owners, creditors, suppliers, and external stakeholders

20
Q

Net income

A

difference between revenue and expenses in a given period of time

21
Q

Internal Auditor function

A

assesses how efficient company’s business practices are

22
Q

How to calculate owners equity.

A

owners equity= assets-liabilities

23
Q

Accrual-basis accounting

A

Revenues recognized on income statements when cash is earned, not received.

24
Q

Current Liability

A

Companies debts or obligations due in the next year & appear on company’s balance sheet

25
Q

term loans carry lower interest rates than commercial paper

A

false

26
Q

covenant

A

restriction placed on borrower by a lender as a condition of providing long term debt

sometimes liability insurance

27
Q

When you buy a Certificate of Deposit the terms are that the funds must remain for a fixed period of time

A

True

28
Q

Statement that forecasts the types/amounts of assets a firm will need in the future

A

Budgeted balance sheet

29
Q

dividing a firms current liabilities by total assets will give you

A

Debt ratio

30
Q

how much income a firm earned per share of common stock outstanding is indicated by

A

Earnings per share (EPS)

31
Q

a trade credit of 1/10 net 30 days means you get a 10% discount if you pay the invoice in 20 days

A

false, 1% discount

32
Q

Financial managers should only focus on short term financial issues

A

False

33
Q

what info does inventory turnover ratio provide?

A

How many times a company has been sold and replaced over a certain period

34
Q

what info does leverage ratio provide?

A

measures the extent to which a firm relies upon debt financing in its capital structure

35
Q

what info does Profitability ratios provide

A

measures rate of return a firm earns on various measures of investments

36
Q

calculate EPS

A

net income-preferred dividends

37
Q

Risk

A

degree of uncertainty regarding the outcome of a decision

Intro to Business (4 decks)

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