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Chapter Quiz
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1
Jackie intends to major in finance and find employment in corporate financial management. As a finance major, Jackie probably will be required to take several courses in _______.
A)marketing
B)psychology
C)sociology
D)accounting
2
Akiko is a financial manager. Her job is likely to include which of the following activities?
A)preparing a cash flow analysis
B)preparing financial statements
C)preparing a balance sheet
D)preparing a marketing budget
3
Which of the following items would be part of a capital budget?
A)salaries expense
B)supply order
C)inventory costs
D)fleet of new trucks
4
The managers of Seattle Clothing Company regularly compare their actual profits with the firm's projected profits. When deviations occur, the managers take corrective action where necessary. The management of Seattle Clothing is exercising _______.
A)financial derivatives
B)financial control
C)financial planning
D)financial budgeting
5
Cleveland Wholesale Company wants to improve cash flow from accounts receivable collections. Which of the following strategies would most likely help the company achieve this objective?
A)relaxing its credit policy for new customers
B)offering cash discounts to buyers who pay their accounts promptly
C)accepting IOUs from customers who buy in large quantities
D)offering extended payment plans to qualified buyers
6
The reason that money has a time value is _______.
A)inflation increases the amount you can buy with a dollar, over time
B)one dollar will buy you more today than it will two years from now
C)monetary systems tend to become more sophisticated over time
D)a dollar received today is worth more than a dollar received yesterday
7
Tulsa Enterprises has decided to build a $50 million theme park near a large metropolitan area. The company plans to sell shares of ownership to finance the development. Tulsa plans to use ___________ financing for this project.
A)debenture
B)debt
C)deferred
D)equity
8
Michigan Nursery Company offers its customers credit terms of 3/15 net 30. This means that customers can take advantage of a _______.
A)fifteen percent discount if they pay in three days
B)three percent discount if they pay in thirty days
C)three percent discount if they pay in fifteen days
D)fifteen percent discount if they pay in thirty days
9
Jerry is the owner of Tennessee's Treasures, a very successful framing and gift store. Suppliers are anxious to place inventory in Jerry's retail outlet. Some have offered to supply Jerry with their merchandise now, but will not require Jerry to send a payment for up to 60 days. These suppliers are allowing Jerry to take advantage of _______ credit.
A)residual
B)trade
C)asynchronous
D)LIFO
10
Mega Bucks Bank provided HeadCase, Inc., with a long-term loan to expand operations and make its new headband for men. Although interest rates on most long-term loans of the same time period (10 years) were costing businesses 10%, Mega Bucks Bank attached a 12% interest rate on the loan to HeadCase, Inc. Which of the following is a logical reason for this deviation?
A)HeadlCase, Inc. is a fast growing company and as such, it gets a higher reward from the bank.
B)Even though corporate loans may be at 10%, government loans are the guiding factor in interest rates.
C)There is less demand for corporate loans, so the bank must increase the cost to compensate.
D)The firm's credit rating and the adequacy of the collateral are determining factors.







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