Exam 1: Overview of Corporate Finance

The accountant recognizes revenues and expenses on

Wealth maximization as the goal of the firm implies enhancing the wealth of

The separation of ownership and liability make the option of incorporating a private business very appealing.

The accountant evaluates financial statements, develops additional data, and makes decisions based on his or her assessment of the associated returns and risks.

Financial service

A more recent issue that is causing major problems in the business community is

The controller typically handles the accounting activities, such as tax management, data processing, and cost and financial accounting.

Agency costs are the reduction in shareholders' wealth when managers act to maximize their ownwealth instead of shareholder wealth.

Profit maximization does NOT take into consideration

Marginal analysis states that financial decisions should be made and actions taken only when

Profit maximization as the goal of the firm is NOT ideal because

Using certain standardized and generally accepted accounting principles, the accountant prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

One way often used to insure that management decisions are in the best interest of the stockholdersis to

Dividend payments change directly with changes in earnings per share.

The financial manager places primary emphasis on cash flows, the inflow and outflow of cash.

The primary emphasis of the financial manager is the use of

Profit maximization fails because it ignores all EXCEPT

Making financing decisions includes all of the following EXCEPT

The wealth of corporate owners is measured by the share price of the stock.

The likelihood that managers may place personal goals ahead of corporate goals is called agencyproblem.