SECTION A 1. Which of the following terms is defined as the mixture of a firm's debt and equity financing? A. Working capital management B. Cost of analysis C. Capital budgeting D. Capital structure 2. Which of the following is an agency cost? A. Accepting an investment opportunity that will add value to the firm B. increasing the quarterly dividend C. investing in a new project that creates firm value D. hiring outside accountants to audit the company's financial statement 3. The goal of a financial manager of a publicly traded corporation should be for: A. Maximize profit B. Maximize cash flow from operating activities C. Maximize the wealth of the shareholder D. Minimize the risk of investing in the firm. 4. A firm's investment decision is also called the: A. Financing decision. B. Capital budgeting decision. C. Capital structure decision. D. None of the above. 5. Conflicts of interest between shareholders and managers of firm result in: A. Principal-agent problem B. Increased agency cost C. Both A and B D. None of the above 6. In the principal-agent framework; A. Shareholders are the principal B. Managers are the agents C. Shareholders are the agents D. A and B Universny of Professional Studue, Acera P. O. Box LG 149, Acci a Graduate Library ge 1 of 10
SECTION A 1. Which of the following terms is defined as the mixture of a firm's debt and equity financing? A. Working capital management B. Cost of analysis C. Capital budgeting D. Capital structure 2. Which of the following is an agency cost? A. Accepting an investment opportunity that will add value to the firm B. increasing the quarterly dividend C. investing in a new project that creates firm value D. hiring outside accountants to audit the company's financial statement 3. The goal of a financial manager of a publicly traded corporation should be for: A. Maximize profit B. Maximize cash flow from operating activities C. Maximize the wealth of the shareholder D. Minimize the risk of investing in the firm. 4. A firm's investment decision is also called the: A. Financing decision. B. Capital budgeting decision. C. Capital structure decision. D. None of the above. 5. Conflicts of interest between shareholders and managers of firm result in: A. Principal-agent problem B. Increased agency cost C. Both A and B D. None of the above 6. In the principal-agent framework; A. Shareholders are the principal B. Managers are the agents C. Shareholders are the agents D. A and B Universny of Professional Studue, Acera P. O. Box LG 149, Acci a Graduate Library ge 1 of 10
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter2: Financial Reporting: Its Conceptual Framework
Section: Chapter Questions
Problem 4C
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Transcribed Image Text:SECTION A
1. Which of the following terms is defined as the mixture of a firm's debt and equity
financing?
A. Working capital management
B. Cost of analysis
C. Capital budgeting
D. Capital structure
2. Which of the following is an agency cost?
A. Accepting an investment opportunity that will add value to the firm
B. increasing the quarterly dividend
C. investing in a new project that creates firm value
D. hiring outside accountants to audit the company's financial statement
3. The goal of a financial manager of a publicly traded corporation should be for:
A. Maximize profit
B. Maximize cash flow from operating activities
C. Maximize the wealth of the shareholder
D. Minimize the risk of investing in the firm.
4. A firm's investment decision is also called the:
A. Financing decision.
B. Capital budgeting decision.
C. Capital structure decision.
D. None of the above.
5. Conflicts of interest between shareholders and managers of firm result in:
A. Principal-agent problem
B. Increased agency cost
C. Both A and B
D. None of the above
6. In the principal-agent framework;
Universiny of Professional Studue, Acera
P. O. Box LG 149, Acc1 a
Graduate Library
Page 1 of 10
A. Shareholders are the principal
B. Managers are the agents
C. Shareholders are the agents
D. A and B
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