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

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

Flashcards in Exam 2 (ch. 6,8-10) Deck (37):
1

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

True

2

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

False

-Partnership-

3

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

No

4

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

true

5

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

False

6

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

No

7

What constitutes a sole proprietorship?

A single owner who manages company

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

8

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

9

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

10

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.

11

What takes place in Lateral Expansion?

-----/

12

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

13

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

False

-Master Budget-

14

Horizontal analysis enables managers to make comparisons of financial statements.

True

15

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

No, it's one of their jobs

16

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

idk

17

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

Yes, reports assets, liabilities, and owners equity.

18

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

False, it requires them to

19

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

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

20

Net income

difference between revenue and expenses in a given period of time

21

Internal Auditor function

assesses how efficient company's business practices are

22

How to calculate owners equity.

owners equity= assets-liabilities

23

Accrual-basis accounting

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

24

Current Liability

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

25

term loans carry lower interest rates than commercial paper

false

26

covenant

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

sometimes liability insurance

27

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

True

28

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

Budgeted balance sheet

29

dividing a firms current liabilities by total assets will give you

Debt ratio

30

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

Earnings per share (EPS)

31

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

false, 1% discount

32

Financial managers should only focus on short term financial issues

False

33

what info does inventory turnover ratio provide?

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

34

what info does leverage ratio provide?

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

35

what info does Profitability ratios provide

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

36

calculate EPS

net income-preferred dividends

37

Risk

degree of uncertainty regarding the outcome of a decision