multiple choice 1 activities result when a company obtains financial resources from 4352251

 

MULTIPLE CHOICE

1.________ activities result when a company obtains financial resources from owners.

a.Investing

b.Operating

c.Financing

d.Risk free

2.The following amounts of capital were obtained to start operations of Lightning Enterprises at the beginning of 2007:

Owners' contribution of cash$80,000

Owners' contribution of machinery & equipment18,000

Loan from the bank46,000

$144,000

What is the amount of liabilities for this firm?

a.$18,000

b.$46,000

c.$98,000

d.$126,000

e.$144,000

3.The Angstrom Company was established at the beginning of 2007 with the following capital:

Owners' cash contributions$46,000

Cash obtained from a group of creditors30,000

Loan obtained from the local bank10,000

Total$86,000

What is the amount of the contributed capital for this firm?

a.$10,000

b.$40,000

c.$46,000

d.$76,000

e.$86,000

4.Investing activities involve

a.the purchase of machinery and equipment

b.purchasing office supplies

c.obtaining financial resources from financial markets

d.payment of employee salaries

5.The methods an organization uses to obtain financial resources from investors, owners, and creditors are called

a.operating activities

b.financing activities

c.investing activities

d.marketing activities

6.A decision whether to borrow money or sell stock is an example of

a.a financing decision

b.an investing decision

c.an operating decision

d.a future decision

7.Which of the following is a financing activity?

a.inventory for resale is purchased on credit

b.equipment to be used in the firm is purchased with cash

c.employees are paid their weekly wages in cash

d.a loan is obtained from the bank

8.Which one of the following is an investing activity?

a.sale of worn out factory equipment

b.sale of inventory to customers

c.collection of a loan

d.borrowing money from a bank

9.Paying off of a bank loan is a(n) ____________ activity?

a.operating

b.financing

c.investing

d.operating if it was a short-term loan; financing if it was a long-term loan

10.Assets can be defined as

a.resources under an organization's legal control

b.obligations of the organization

c.the amount of investment made by owners in a business

d.the profits earned by a corporation

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