Exam 13: Business Organization and Financial Data

If a corporation files for bankruptcy, creditors may try to get control of the personal assets of the owners of the company to collect on their debts.

Every dollar of a firm's assets must be financed by a dollar of liabilities.

Most of accounting practice is based upon the cash concept.

The income statement reports the revenues generated and expenses incurred by a firm at a given point in time.

Manages accounting, cost analysis, and tax planning.

Partnerships are limited to 35 or fewer owners.

Suppose Ningbo Steel had sales revenue of $10,000 sales revenue, cost of goods sold of $5,000, operating expenses of $3000, interest expense of $1,000, a tax rate of 20%, and 2,000 shares of common stock outstanding. Based on this information, earnings per share was:

One advantage of the corporate form of organization is the ease with which ownership may be transferred.

One of the advantages for corporate stockholders is the limitation on liability.

Which of the following is a source of cash?

The tax liability on unrealized capital gains can be deferred for up to ten years.

Agency costs are the intangible expenses borne by shareholders because of the actual or potential self-serving actions of managers; they include only implicit (no cash is spent explicitly) expenses.

Market value added can be written as: the market value of stock minus the market value of debt plus the book value of stock minus the book value of debt.

Reports the revenues generated and expenses incurred by the firm over an accounting period, such as a quarter or a year.

Generally accepted accounting principles are formulated by the:

Creditors have a fixed claim that usually doesn't change with variations in the value of the firm's assets over time.

A limited liability company can have an unlimited number of shareholders, including other corporations.

Creditors' claims on a firm, which are the financial obligations of the business.

Which of the following are not included in an annual report?

The mission statement should guide every decision management makes.