FIN 200 CheckPoint Week Two Quiz

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1) The partnership form of an organization

A. has unlimited life.

B. avoids the double taxation of earnings and dividends found in the corporate form of organization.

C. usually provides limited liability to the partners.

D. simplifies decision making.

2) The Sarbanes-Oxley Act was passed in an effort to

A. guarantee outside auditors can control corporate accounting practices.

C. ensure that partnerships divide profits among partners in a fair manner.

D. control corrupt corporate behavior.

3) The primary disadvantage of accrual accounting is that

A. it does not recognize accounts receivable.

B. it does not match revenues and expenses in the period in which they are incurred.

D. it does not adequately show the actual cash flow position of the firm.

4) A firm's purchase of plant and equipment would be considered a

A. source of cash for investment activities.

B. use of cash for financing activities.

D. use of cash for investment activities.

5) Which of the following is not an asset utilization ratio?

B. Inventory turnover

C. Return on assets

D. Average collection period

6) Asset utilization ratios

A. are most important to stockholders.

B. relate balance sheet assets to income statement sales.

C. measure how much cash is available for reinvestment into current assets.

D. measures the firm's ability to generate a profit on sales.

7) Refer to the figure above. The firm's fixed asset turnover ratio is

B. 2.0x.

C. 1.6x.

D. 1.3x.

8) The Bubba Corp. had earnings before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:

A. 20%

B. 5%

C. 12%

D. 25%