Chapter 1
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| What are the functions of financial management? | 1. How a business obtains funds required to operate, how it uses the funds, and how it uses the income it earns.
2. External forces affect the decisions a business makes.
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| What are the sources of capital? | Owners & Creditors.
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| What is equity capital? | This is when owners invest their own capital into a business, and, therefore, the profits earned belong to the owners.
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| What is debt capital? | This is when a business obtains capital from outsiders through borrowing.
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| What are the forms of business organizations? | 1. Sole proprietorship
2. Partnership
3. Corporation
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| What are the two components of shareholders' equity? | 1. Contributed capital
2. Retained earnings
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| What is contributed capital? | the money invested by owners in the form of shares, both common and preferred.
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| What is retained earnings? | the profits made and retained by a company.
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| What are common shareholders' rights? | 1. The right to vote for the members of the board of directors.
2. The right to receive dividends if declared.
3. The right to a share of assets, in case of liquidation.
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| What are preferred shareholders' rights? | 1. The annual dividend is fixed and must be paid in full before the common shareholders receive any dividend.
2. Upon liquidation, the preferred shareholders must receive all of their capital back, before common shareholders receive and capital back.
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| Preferred shareholders give up which two rights that the common shareholders have? | 1. The right to vote (for the board of directors)
2. The right to participate in earnings growth of the company. They only get their fixed dividend - no matter how well the company is doing.
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| What is the main goal of financial management? | It is the maximization of shareholder wealth!!!
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Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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Created by:
calebgideonmclean
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