Exam 2 (ch. 6,8-10) Flashcards
Franchising is being used by companies to move into the foreign market
True
A corporation is a voluntary agreement where two or more people run a business for profit.
False
-Partnership-
Do preferred stockholders have the right to vote at a stockholders meeting?
No
A general partnership can have as many partners as it wants.
true
A franchise agreement exempts the franchisee from making any form of payment to use the franchisors products
False
Does the owner of a sole proprietorship share any after-tax profits with the shareholders?
No
What constitutes a sole proprietorship?
A single owner who manages company
Company profit serves as owners income, company debts serve as owner debt
General Partnership vs. Sole Proprietorship
General:
- 2 or more partners
- unlimited liability for any claims against firm
Sole P:
-single owner
Both:
Owners take active role in managing business
What happens in a Verticle Merger?
Combo of firms that are at different stages in production of a good or service.
Creates a buyer-seller relationship
general vs. limited partners
at least 1 general partner actively manages business,accepts unlimited liability.
limited partner gives up right to actively manage in exchange for limited liability.
What takes place in Lateral Expansion?
—–/
Duties of the Board of Dorectors
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
The operating budget of a business represents the overall action plan for that business for a specified time period.
False
-Master Budget-
Horizontal analysis enables managers to make comparisons of financial statements.
True
Is the Financial Standards Board barred from modifying and expanding the Generally Accepted Accounting Principles (GAAP)?
No, it’s one of their jobs
One of the functions of financial managers is to prepare customized reports of the cost overruns of a companies production facilities
idk
A balance sheet provides info on what a company owns and owes
Yes, reports assets, liabilities, and owners equity.
The Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements.
False, it requires them to
What does it mean when company is involved in financial accounting?
Prepare financial statements for use by owners, creditors, suppliers, and external stakeholders
Net income
difference between revenue and expenses in a given period of time
Internal Auditor function
assesses how efficient company’s business practices are
How to calculate owners equity.
owners equity= assets-liabilities
Accrual-basis accounting
Revenues recognized on income statements when cash is earned, not received.
Current Liability
Companies debts or obligations due in the next year & appear on company’s balance sheet
