Anika G.

Pono

BSA-1

Course: Financial Management

Direction: Select the best answer.

1. Which of the following statements does not support the argument that: "maximizing profit is not the
primary objective of the firm"?

a. Accounting profits cannot be measured accurately.

b. Accounting fails to determine the timing of benefits.
c. Accounting does not increase the profit.
d. A change in profit is also a change in risk.

2. Which theory best describes the management of the corporation by people who will act on behalf of
the stockholders?
a. management theory
b. stockholder's theory
c. accounting theory
d. agency theory

3. Mr. T has just been hired as the finance manager of a company. His primary objective should be
_____________.
a. to maximize the company's earnings
b. to maximize profits
c. to maximize the company's price of common stock
d. to eliminate the company's competitors

4. This refers to two or more persons binding themselves to contribute money, property, or industry to
a common fund, with the intention of dividing profits between or among themselves.
a. partnership
b. sole proprietorship
c. corporation
d. none of the above

5. It means that all partners are liable to the extent of their separate property.
a. limited partnership
b. industrial partnership
c. general partnership
d. none of the above

6. Which of the following does not apply to a partnership?

a. limited life
b. limited access to capital
c. a single owner
d. unlimited personal liability
7. It is a business organized as a separate legal entity which can enter into contract, own properties, and
issue stocks.
a. sole proprietorship
b. corporation
c. partnership
d. none of the above

8. It refers to the partner whose contribution merely consists of his or her labor for the business.
a. limited partner
b. capitalist partner
c. general partner
d. industrial partner

9. Which of the following is the primary goal of a finance manager?

a. minimize operating costs
b. minimize interest payments
c. maximize operating income each
d. maximize the value of the firm's stock

10. All of the following mechanisms are used by shareholders to get managers to act in the
shareholders’ best interest except:
a. threat of takeover
b. threat of firing
c. golden parachute
d. giving of stock options