Question

Answer the 5 multiple choice questions and write a paragraph as explanation of your answer.

Required/ Graded

5 questions: CU 1.5

Points: 3

1.Which of the three finance and accounting decisions concerns determining the best capital structure for the firm and includes examining various methods by which the firm can raise capital?

A) Investment

B) Dividend

C) Financing

D) Capital budgeting

E) Implementation

2. The three all-encompassing internal resource categories used in the resource-based view are physical resources, human resources, and

A) financial resources.

B) shareholder resources.

C) organizational resources.

D) non-renewable resources.

E) technological resources.

3. Who should perform an internal audit?

A) A private auditing firm

B) The organization's accounting department

C) Representative managers and employees from throughout the firm

D) A small team of top-level managers

E) The chief executive officer

4. Integration strategies are sometimes collectively referred to as which of the following categories of strategies?

A) Horizontal integration

B) Diversification

C) Vertical integration

D) Stuck-in-the-middle

E) Hierarchical integration

5. Bankruptcy

A) should never be used as a strategy.

B) should be used only when one is legally forced to do so.

C) can be an effective type of retrenchment strategy.

D) should only be used for large firms.

E) should only be used for small, private firms.

Answer 1

1. C) Financing

Explanation- A financing decision is concerned with the amount of finance to be raised from equity shares, preference shares, debentures, bank loans etc. These decisions concerns determining the best capital structure for the firm, it is a decision on the capital structure of the company.

2. C) organizational resources.

Explanation-According to the Resource-Based View (RBV) approach, for achieving and sustaining competitive advantage, the internal resources are more important than external factors. The three all encompassing categories are physical resources, human resources, and organizational resources.

Physical resources-machines, plant and equipment, location, technology, raw materials.

Human resources - skills, abilities, employees, training, experience, intelligence, knowledge.

organizational resources- firm structure, copyrights, databases, planning processes, information systems, patents, trademarks.

3. A) A private auditing firm

Explanation-A private auditing firm perform an internal audit by

a. Ensuring information security and regulatory compliance

b. Evaluating company performance.

c. Managing risks

d. Assisting an organization in defining areas where improvement is needed.

e. Accomplishing goals by providing information.

4. C) Vertical integration

Explanation-Vertical integration is one of the strategy used by businesses that involves the acquisition of business operations within the same production vertical. Thus to increase the firm’s power in the market, this strategy is used by the company to gain control over its suppliers.

5. C) can be an effective type of retrenchment strategy.

Explanation-Bankruptcy is a liquidation procedure, it is used by a firm when they are unable to operate, when a corporation sees no hope to obtain the necessary creditor agreement.

Retrenchment is not considered as a general remedy for firms suffering the crisis. During bankruptcy proceedings, stakeholders are the key players.