The exam is an individual effort and should not be discussed with others. Send your completed exam to your assignment folder by the last day of class. The purpose of the exam is to demonstrate your understanding of both written and discussion materials presented in this course. If you have any questions concerning this exam, please send me an e-mail. I will remove your name and post the question and response in the main news group.
The test is composed of 30 T/F questions worth 2 points each for a total of 60 points, 5 multiple choice worth 2 points each for a total of 10 points, two short answer questions worth 15 points each.
The following are True / False (T/F). Please answer with a T or an F. If you are not sure about a question and feel that it could be ambiguous, please put a brief explanation to justify your answer. Put your answer on the excel answer sheet, answers not submitted with your answer sheet will not be considered. You may do this on up to 2 T/F problems for partial credit, if you attempt to justify more than 2, I will not give you any credit for your justifications. Your justification must be supported by a reasonable position.
1) The internet has had not impact on financial service firms such as Meryl Lynch and Morgan Stanley F
2) The Federal Reserve is governed by the presidents of the world’s 10 largest banks. F
3) A sole proprietorship is taxed the same as a corporation or LLC. F
4) Working capital is the same as cash in the bank. F
5) Depreciation expense is a non-cash item. T
6) The book value and the market value of a stock are always the same number. F
7) The terms “merger,” “consolidation,” and “restructuring” all mean the same thing. F
8) The job of an auditor in a normal financial statement audit is to determine if there is any fraud present. F
9) Zero coupon bonds be issued by any type of entity that has the ability to issue bonds. T
10) There are 13 significant ratios in financial accounting. F
11) There are no differences between tax and financial income. F
12) Extraordinary items are items that are both infrequent in occurrence and unusual in nature. T
13) Proforma financial statements are a very accurate gage of a businesses future income. F
14) The components of fixed and variable costs are typically the same items. F
15) If airlines sold paint, it would much cheaper than at Home Depot or Lowes. F
16) Break even analysis is a useful tool for both large and small businesses. T
17) Seasonal fluctuations can have a dramatic impact on working capital. T
18) Financial leverage is good to have in a business because the more debt, the better off financially a business is. F
19) An individual conducting a sole proprietorship files Schedule C of Form 1040, a partnership files Form 1065, a regular (C) corporation files Form 1120, and an S corporation files Form 1120S. T
20) Tax incentives are the same in every state. F
21) The use of float is an illegal system to maximize cash balances. F
22) Under Check 21, the banks now clear checks must faster. T
23) The 5 Cs of credit are character, capital, capacity, conditions, and collateral. F
24) The average collection period is the A/R divided by the average daily credit sales. F
25) Just in Time inventory management was developed by Ford Motor Company. T
26) Cumulative voting rights allow you to skip an election and vote more than once in the next election. F
27) Poison Pills are effective means to reduce the likelihood of a hostile takeover. T
28) Cumulative preferred dividends are paid first after the bond holders and before any common stock dividends have been paid. T
29) In today’s economic market, borrowing from a bank represents the lowest cost of capital to an organization. T
30) The real rate of return calculation includes a component...