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Which one of the following statements is correct?
Correct answer(s):
- Corporations can raise large amounts of capital generally easier than partnerships can.
A limited partnership:
Correct answer(s):
- has a greater ability to raise capital than a sole proprietorship.
A general partner:
Correct answer(s):
- is solely responsible for all the partnership debts.
Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?
Correct answer(s):
- maximum loss limited to the capital invested
Which one of the following statements concerning a sole proprietorship is correct?
Correct answer(s):
- A sole proprietorship is taxed the same as a C corporation.
Which one of the following statements concerning a sole proprietorship is correct?
Correct answer(s):
- The owner of a sole proprietorship is personally responsible for all of the company's debts.
Which one of the following is a working capital management decision?
Correct answer(s):
- determining whether to pay cash for a purchase or use the credit offered by the supplier
The decision to issue additional shares of stock is an example of which one of the following?
Correct answer(s):
- capital structure decision
Which one of the following is a capital structure decision?
Correct answer(s):
- determining how much debt should be assumed to fund a project
Which one of the following is a capital budgeting decision?
Correct answer(s):
- deciding whether or not to purchase a new machine for the production line
Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?
Correct answer(s):
- The treasurer reports to the vice president of finance.
The controller of a corporation generally reports directly to the:
Correct answer(s):
- vice president of finance.
Which one of the following functions should be the responsibility of the controller rather than the treasurer?
- daily cash deposit
- income tax returns
- equipment purchase analysis
- customer credit approval
Correct answer(s):
- income tax returns
A stakeholder is:
Correct answer(s):
- any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.
Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
Correct answer(s):
- agency problem
A business created as a distinct legal entity and treated as a legal “person” is called a:
Correct answer(s):
- corporation.
A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:
Correct answer(s):
- limited partner.
A business formed by two or more individuals who each have unlimited liability for all of the firm’s business debts is called a:
Correct answer(s):
- general partnership.
A business owned by a solitary individual who has unlimited liability for its debt is called a:
Correct answer(s):
- sole proprietorship.
Which one of the following is defined as a firm’s short-term assets and its short-term liabilities?
Correct answer(s):
- working capital