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Chapter Quiz
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1
Which of the following is a current liability?
A)Cash
B)Inventory
C)Accrued salaries
D)Accounts receivable
E)Bonds
2
U.S. Treasury bills, certificates of deposit, commercial papers, and eurodollar loans are examples of:
A)marketable securities.
B)lines of credit.
C)long-term liabilities.
D)long-term assets.
E)junk bonds.
3
Credit extended by suppliers for the purchase of their goods and services is termed:
A)trade credit.
B)a secured credit.
C)an overdraft.
D)a line of credit.
E)a capital budget.
4
Panterra Inc. was loaned money by its bank based solely on the company's good standing in the business community and favourable credit rating. The bank did not demand any collateral for the loan. This type of loan is termed a(n) _____ loan.
A)factor
B)unsecured
C)junk
D)floating
E)serial
5
Olympus Capital, a finance company, buys accounts receivable of Talbot Inc. by paying 75 percent of the total face value of the accounts. Olympus Capital then collects the accounts directly from Talbot's debtors. In this case, Olympus is acting as a _____.
A)factor
B)mediator
C)conciliator
D)stockbroker
E)lockbox
6
Capital budgeting involves:
A)the managing of short-term assets and liabilities of a business.
B)the sale of stocks and bonds for corporations.
C)buying the accounts receivable of a company and assuming responsibility for collecting the accounts.
D)determining the best way to finance a business through long-term liabilities.
E)analyzing the needs of the business and selecting the assets that will maximize its value.
7
Which of the following potential investment projects poses relatively the least risk?
A)Introducing new products in foreign markets
B)Expanding into a new market
C)Introducing new products
D)Buying new equipment for established markets
E)Adding to a product line
8
_____ are the only long-term funds that a company can generate internally.
A)Secured bonds
B)Retained earnings
C)Trade credits
D)Commercial certificates of deposits
E)Serial bonds
9
Which of the following is NOT part of stockholders' equity?
A)Common stock
B)Preferred stock
C)Retained earnings
D)Secured bonds
E)Capital in excess of par
10
A(n) _____ is a network of dealers all over the country linked by computers, telephones, and Teletype machines with no central location.
A)over-the-counter market
B)lockbox
C)floor-traded market
D)floating-rate market
E)eurodollar market





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