1) Which of the following represents an attempt to measure the earnings of the firm's operations over a given time period?

A) Balance sheet

B) Cash flow statement

C) Income statement

D) None of the above

2) Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm's gross profit?

A) $18,000,000

B) $15,225,000

C) $5,000,110

D) $6,632,000

3) Which of the following would NOT be included as equity in a corporate balance sheet?

A) Cash

B) Paid in capital

C) Preferred stock

D) Retained earnings

E) Common stock

4) Which of the following does NOT represent cash outflows to the firm?

A) Taxes

B) Interest payments

C) Dividends

D) Purchase of plant and equipment

E) Depreciation

5) The true owners of the corporation are the:

A) holders of debt issues of the firm.

B) preferred stockholders.

C) board of directors of the firm.

D) common stockholders.

6) Working capital management refers to

A) long-term financing decisions.

B) the management of short term cash flows.

C) investing in product development.

D) capital structure.

7) The area of finance that deals with long-term investment decisions is known as

A) capital structure.

B) working capital management.

C) financial strategy.

D) capital budgeting.

8) In a sole proprietorship, the owner is personally responsible without limitation for the liabilities incurred. True/ False

9) Limited partners may actively manage the business. True/ False

10) The owners of a corporation are liable for the corporation's obligations up to the amount of their investment. True/ False