4. Which of the following companies faces the problem of undercapitalization?

A large corporation that has been hit with a major lawsuit because one of its products has a design flaw that has led to serious injuries.
A small new company struggling because it has insufficient start-up funds.
A medium sized company that has decided to buy out a smaller competitor.
An electric utility that has recently experienced a significant increase in the cost of coal and labor.

MY ANSWER B

5. Tiffany's work in the finance department of her firm consists of checking accounting records and financial statements to verify that proper procedures are followed. Tiffany activities are those of a(n):
internal auditor.
comptroller.
CPA.
financial advisor.
MY ANSWER A

6. The managers of Dakota Clothing regularly compare their actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Dakota Clothing is exercising financial:
derivatives.
control.
planning.
budgeting.
MY ANSWER C

2. No matter the size of the business, finance is a critical activity for:

As Hector was packing to return to Sate University after his summer vacation, he realized that he owed many valuable such as a laptop computer, a stereo system, and a DVD player. An accountant would list all of these as Hector’s:

For question 4, you are correct. The company that faces the problem of undercapitalization is the small new company struggling because it has insufficient start-up funds.

For question 5, your answer is incorrect. The correct answer is "internal auditor." Tiffany's activities of checking accounting records and financial statements to verify proper procedures are followed align with the responsibilities of an internal auditor.

For question 6, your answer is incorrect. The correct answer is "control." The managers of Dakota Clothing are exercising financial control by comparing actual profits with projected profits and taking corrective action when necessary.

For question 4, the company that faces the problem of undercapitalization is the small new company struggling because it has insufficient start-up funds. To determine this, we need to understand what undercapitalization means. Undercapitalization is a financial condition where a company does not have enough capital or funding to meet its current and future business needs. In this scenario, the small new company is struggling because it lacks sufficient start-up funds, indicating that it is undercapitalized.

For question 5, Tiffany's activities of checking accounting records and financial statements to verify proper procedures indicate that she is an internal auditor. To determine this, we need to understand the roles and responsibilities of different financial positions. A comptroller typically manages the financial accounts and supervises the accounting staff, a CPA (Certified Public Accountant) is a professional designation for individuals who have passed the CPA exam and are qualified to perform accounting and auditing tasks, and a financial advisor provides advice on investments and financial planning. Among these options, internal auditors are responsible for checking and verifying financial records within a company, making it the most appropriate answer.

For question 6, the managers of Dakota Clothing comparing actual profits with projected profits and taking corrective action when deviations occur indicates that they are exercising financial control. To determine this, we need to understand the concept of financial control. Financial control involves monitoring and comparing actual financial outcomes with projected or planned outcomes and taking corrective actions when necessary. In this scenario, the managers of Dakota Clothing are using feedback from the comparison to make necessary corrections, which aligns with the definition of financial control.