71. Examples of factors from the operating environment that would affect a firm’s goals and
strategies include which of the following?
A. goals and strategies of the firm’s competitors
B. barriers to entry of the firm’s industry, such as patents or large investments in buildings and equipment
C. nature of the demand for the firm’s products and services
D. existence and nature of government regulation
E. all of the above
72. To carry out their plans, firms require financing, that is, funds from owners and creditors. Owners provide funds to a firm and in return receive ownership interests. For a corporation, the ownership interests are:
A. Common Stock Shares
B. Corporate Bonds
C. Notes Receivable
D. Notes Payable
E. Certificates of Deposit
73. To carry out their plans, firms require financing, that is, funds from owners and creditors. When the firm raises funds from owners, which of the following is true?
A. there is no obligation to repay these funds
B. there is an obligation to repay these funds
C. firms must distribute cash dividends to that firm’s shareholders at least annually
D. firm must distribute stock dividends to that firm’s shareholders at least annually
E. none of the above are true
74. When creditors provide funds to a firm, which of the following is true?
A. the firm must repay, usually with interest, in specific amounts at specific dates.
B. long-term creditors require repayment from the borrower over a period of
time that exceeds one year.
C. one common form of long-term financing is bonds
D. suppliers of raw materials or merchandise that do not require payment for 30 days provide short-term funds
E. all of the above are true
75. A firm makes investments to obtain productive capacity to carry out its business activities.
Investing activities involve acquiring all of the following except:
A. land, buildings, and equipment.
B. patents, licenses, and other contractual rights
C. common shares or bonds of other firms
D. long-term notes receivable of other firms
E. common shares or bonds of the firm
76. Management operates the productive capacity of the firm to generate earnings. Operating activities include the following except for:
A. Purchasing
B. Research and development
C. Marketing and administration.
D. Production
E. Dividend payments
77. Firms communicate the results of their business activities in the _____.
A. annual report to shareholders
B. weekly press releases
C. monthly press releases
D. annual press releases
E. annual income tax returns
78. In the United States, regulatory requirements applicable to publicly traded firms require the inclusion of a(n) _____, in which management discusses operating results, liquidity (sources and uses of cash), capital resources, and reasons for changes in profitability and risk during the past year.
A. Balance sheet or statement of financial position
B. Management’s Discussion and Analysis
C. Income statement or statement of profit and loss
D. Statement of cash flows.
E. Statement of shareholders’ equity.
79. _____ are economic resources with the potential to provide future economic benefits to a firm.
A. Revenues
B. Expenses
C. Liabilities
D. Assets
E. Shareholder Equity
80. _____ are creditors’ claims for funds, usually because they have provided funds, or goods and services, to the firm.
A. Revenues
B. Expenses
C. Liabilities
D. Assets
E. Shareholder Equity
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