Type:
Test Bank
Resource:
Financial Management Theory and Practice
Edition:
15th Edition
Author(s):
Eugen Brigham Michael Ehrhardt
Ch 01 An Overview of Financial Management and the Financial Environment 1. The form of organization for a business is not an important issue, as this decision has very little effect on the income and wealth of the firm's owners. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Easy QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Firm organization KEYWORDS: Bloom’s: Knowledge DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECKG QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJW-CRHU-C3B3-CO4S-RCBACWSU-N3JI-CRSU-N3B3-GOSU-NA5D-CCSU-OATA-GBTG-ECDF-E7JI-YT4D-JFNN4OTI-GO4W-NQNBEE 2. The major advantage of a regular partnership or a corporation as a form of business organization is the fact that both offer their owners limited liability, whereas proprietorships do not. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Easy QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Firm organization KEYWORDS: Bloom’s: Knowledge DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECKF QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMMG-GOHG-EPMF-GJOU-GA3TCengage Learning Testing, Powered by Cognero
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Ch 01 An Overview of Financial Management and the Financial Environment GASS-EP3U-8RSS-RPTT-GOSU-GATT-GRSS-RC3O-CR3U-KPMF-E7JI-YT4D-JFNN4OTI-GO4W-NQNBEE 3. There are three primary disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of the organization, and (3) difficulty of transferring ownership. These combine to make it difficult for partnerships to attract large amounts of capital and thus to grow to a very large size. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Easy QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Partnership KEYWORDS: Bloom’s: Knowledge DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECKR QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJI-GFOS-K3TI-GYAG-EPUG-COSSKPJS-CESU-CPT3-GOSS-R3UR-CESU-YPMB-GC4S-GQJW-E7JI-YT4D-JFNN-4OTIGO4W-NQNBEE 4. Two disadvantages of a proprietorship are (1) the relative difficulty of raising new capital and (2) the owner's unlimited personal liability for the business' debts. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Easy QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Proprietorship KEYWORDS: Bloom’s: Knowledge DATE CREATED: 8/26/2015 10:43 AM Cengage Learning Testing, Powered by Cognero
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Ch 01 An Overview of Financial Management and the Financial Environment DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECKD QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJW-CCHU-CQJO-CA5U-EA31-COSSCCJI-CESS-KAJ3-GOSU-GP3O-GRSU-GPBT-GE5G-RPBU-E7JI-YT4D-JFNN-4OTIGO4W-NQNBEE 5. One key value of limited liability is that it lowers owners' risks and thereby enhances a firm's value. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Easy QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Limited liability KEYWORDS: Bloom’s: Knowledge DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECJU QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJI-C3OS-CPMR-GW5U-N3BAGOSU-OAMR-CRSU-GATI-GOSU-QCJW-GOSU-ECJW-GITD-ECJA-E7JI-YT4D-JFNN4OTI-GO4W-NQNBEE 6. The disadvantages associated with a proprietorship are similar to those under a partnership. One exception relates to the more formal nature of the partnership agreement and the commitment of all partners' personal assets. As a result, partnerships do not have difficulty raising large amounts of capital. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Moderate QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA Cengage Learning Testing, Powered by Cognero
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Ch 01 An Overview of Financial Management and the Financial Environment TOPICS: Partnership KEYWORDS: Bloom’s: Comprehension DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECJ1 QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJS-GY5G-GPJZ-GHAG-CCMNCOSU-KPJU-8YSU-C3DB-GOSS-EAJT-GYSS-GPTT-CFUG-K3DB-E7JI-YT4D-JFNN4OTI-GO4W-NQNBEE 7. The facts that a proprietorship, as a business, pays no corporate income tax, and that it is easily and inexpensively formed, are two key advantages to that form of business. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Moderate QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: FMTP.EHRH.17.01.03 - LO: 1-3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking STATE STANDARDS: United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and analysis of public information LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Proprietorship KEYWORDS: Bloom’s: Comprehension DATE CREATED: 8/26/2015 10:43 AM DATE MODIFIED: 8/26/2015 10:43 AM QUESTION ID: JFND-GO4G-EO5U-ECJT QUESTION GLOBAL ID: GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UDGY3N-4ATT-GO3D-EA3O-CJDI-GWN8-EPRW-EMJI-GE4S-RQDR-8BTG-GPT3-8YSSGQJZ-CRSU-KQJI-GOSU-RP5N-CCSU-CPTT-GC4D-GPUR-E7JI-YT4D-JFNN-4OTIGO4W-NQNBEE 8. Which of the following statements is CORRECT? a. One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt. b. Sole proprietorships are subject to more regulations than corporations. c. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. d. Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones. e. Corporations of all types are subject to the corporate income tax. ANSWER: d Sole proprietorships and partnerships pay personal income tax, but they avoid the corporate RATIONALE: income tax. Small corporations that meet certain requirements can elect to be classified as S Cengage Learning Testing, Powered by Cognero
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