Ch 16 OpenStax Homework

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Question #1

Which of the following businesses would be most likely to require an unsecured bank loan, such as a line of credit or a revolving credit agreement?

A a manufacturer of integrated circuits

B a manufacturer of health and beauty aids

C an envelope manufacturer

D a poultry producer

E a Christmas tree farm

Question #2

A(n) _____ is a type of loan often used to finance buildup of inventory for seasonal (cyclical) businesses just before their strongest sales period.

A collateral loan

B unsecured bank loan

C trade credit

D commercial paper loan

E secured bank loan

Question #3

When Magna Manufacturing sells hand on screwdriver sets to Malloy Building Supply Company, Magna bills the tool manufacturer for the screwdriver purchase with terms of payment, which specify when the account is due. This type of unsecured loan is called _____ credit.

A revolving

B trade

C product

D factored

E borrower’s

Question #4

The three main types of unsecured short-term loans are:

A commercial paper, accounts payable, and trade credit

B treasury bills, certificates of deposit, and accounts payable

C trade credit, accounts payable, and bank loans

D accounts payable, notes payable, and loans payable

E trade credit, bank loans, and commercial paper

Question #5

Short-term loans:

A have a maturity of one year or longer

B are shown as a current liability on the balance sheet

C are shown as a capital expenditure on the balance sheet

D do not require any collateral

E are always secured

Question #6

Capital budgeting:

A allows managers to analyze profit and loss statements

B analyzes production costs

C helps select new products

D combines all budgets into a master budget

E selects asset proposals for maximum profitability

Question #7

_____ is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the firm’s value.

A Capital evaluation

B Budget analysis

C Capital budgeting

D Capital allocation

E Budget allocation

Question #8

Which of the following would be an example of a capital expenditure for a superstore that specializes in outdoor grills and other items needed for outside dining?

A order forms

B cardboard sale signs

C a parking lot

D pens and markers

E a handheld calculator

Question #9

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel’s exacting standards, it is building a magnificent revolving restaurant overlooking the Arabian Sea at World. The restaurant structure is an example of a(n):

A capital expenditure

B intangible asset

C material cost

D operating cost

E account receivable

Question #10

Funds invested in long-lived assets, such as land, buildings, machinery, and equipment, are called:

A capital expenditures

B manufacturing expenses

C material costs

D production costs

E operating expenses

Question #11

The cost of inventory to the firm includes all of the following EXCEPT:

A ordering costs

B selling costs

C purchase price

D insurance costs

E handling costs

Question #12

_____ are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed.

A Sales terms

B Revolving accounts

C Credit terms

D Liability procedures

E Credit credentials

Question #13

Grainger Distribution Company sold Long Electronics ten circuit breakers for $179.00 each. Long Electronics will be allowed thirty days to pay the bill. Grainger will carry the $1790.00 on its books as a(n):

A account payable

B account receivable

C marketable security

D current liability

E fixed liability

Question #14

The three most popular types of marketable securities are Treasury bills, certificates of deposit, and:

A checking accounts

B Treasury notes

C commercial paper

D money market funds

E corporate bonds

Question #15

Commercial paper is:

A a type of secured debt

B the same thing as accounts receivable recorded in the ledger

C a type of IOU

D typically issued by stakeholders

E accurately described by none of the above

Question #16

_____ is a short-term unsecured debt issued by a financially strong corporation.

A Investment credit

B Commercial paper

C A treasury bill

D A money market deposit

E A certificate of deposit

Question #17

Short-term investments that are easily converted back to cash and are used by financial managers to achieve higher returns than those offered by checking accounts are:

A marketable credits

B negotiable securities

C management vehicles

D corporate securities

E corporate equities

Question #18

Financial managers often shift temporary funds from checking accounts to _____ securities to earn higher interest returns.

A strategic

B marketable

C operational

D administrative

E commercial

Question #19

Chez Dove is an independent coffeehouse/bookstore that went bankrupt only eight months after opening due to an unexpected demand for cash to fix a leaking roof. Better cash _____ might have allowed the business to continue operation.

A targeting

B maintenance

C capitalization

D administration

E management

Question #20

Making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses is called cash:

A capitalization

B administration

C maintenance

D management

E targeting

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Ch 16 OpenStax Homework

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Below are the questions for the exam with the choices of answers:

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Tyra

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