1. Which of the following is the most appropriate definition of corporate governance? A. A system of defined roles for management and the majority shareholders. B. A system of checks and balances to minimize the conflicting interests among shareowners. C. A system of internal controls and procedures by which individual companies are managed.   2.… Read More

1. Which of the following is leastlikely a secondary source of liquidity? A. Negotiating debt contracts. B. Filing for bankruptcy protection and reorganization. C. Not liquidating assets because of the related cost of giving up a company’s asset.   2. The industry average receivables collection period: A. increased from 2012 to 2013. B. decreased from… Read More

1. K-Electric Power Company is a power generation company, while Procter and Gamble is a consumer products company and Toyota Motors is an automobile manufacturing company. Which of the following is most likely to issue special dividends for sharing profits with shareholders in times of profitability, but conserve cash otherwise? A. K-Electric Power Company. B.… Read More

1. Digital Design Corporation has an after-tax cost of debt capital of 7 percent, a cost of preferred stock of 9 percent, a cost of equity capital of 11 percent, and a weighted average cost of capital of 8.5 percent. In raising additional capital, the company intends to maintain its current capital structure. In order… Read More

1. In early 2013, Virgin Atlantic must pay the tax authority $45,000 on the income it earned in 2012. This amount was reported on the company’s financial statements as of 31 December 2012 as: A. income tax expense. B. a deferred tax liability. C. taxes payable.   2. What does the change in valuation allowance… Read More