Exercise 6

Substitute appropriate terms for the underlined words or phrases in the sentences below:

acquire utilizes primary arrangement last

external consideration repaid expect capital

1. Although Mr. Robinson and his partners had already defined their new product line, they were still searching for the money needed to purchase equipment and materials. _________

2. In general, a business that is able to manage its finances successfully will continue to exist. _________

3. One of the chief elements in financial planning is achieving the correct balance between long-term and short-term capital. _________

4. A company needs sufficient funds to obtain necessary assets such as property, buildings, and inventories. _________

5. When a company wants to expand, one factor that always affects this decision is cost. _________

6. In making investments, a financial manager uses a wide variety of information provided by all departments of the company. _________

7. When an individual or a company borrows money from a bank, this money must be paid back by a specific date. _________

8. Owners anticipate that fixed assets will be used by the company for many years. _________

Exercise 7

Circle the letters of the answers that best complete the sen­tences below:

1. The process of acquiring capital is known as:

1. finance

2. Financier

3. financing

4. financial

2. The unit of ownership in a corporation is a:

1. bond

2. share

3. certificate

4. stock

3. All corporations receive their starting capital by:

1. selling bonds

2. purchasing stock

3. purchasing shares

4. selling stock

4. The sale of corporate bonds is an example of:

1. debt financing

2. bond financing

3. equity financing

4. corporate financing

5. A corporation may be forced to sell its assets if it does not:

1. pay dividends

2. share its profits with stockholders

3. make the required payments to bondholders

4. sell bonds

Exercise 60

Look at the terms in the left-hand column and find the correct synonyms or definitions in the right-hand column. Copy the cor­responding letters in the blanks:

1. ____________ property 2. ____________ equal 3. _________ condition 4. _________ detail 5. _________ accounting equa­tion 6. _________ monetary 7. _________ process 8. _________ express

a) assets equal liabilities plus owner's equity b) provide information item by item c) indicate by words or symbols d) have the same value as e) a series of transactions, changes, or functions that bring about a particular re­sult f) the existing circumstance g) anything owned by a person h) of or pertaining to money

1 E.Jerome McCarthy. Basic Marketing (Homewood, III.: Richard D. Irwin, Inc., 1971), pp. 44-46.

2 Salaried: paid a salary, usually monthly; not owning shares in a firm. Workmen are usually paid a weekly wage (weekly wages).