Test Bank - Finance - Intermediate Financial Management 13ED by Eugene F. Brigham Phillip R. DavesOCR All Chapters included<<

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Test Bank - Finance - Intermediate Financial Management 13ED by Eugene F. Brigham Phillip R. Daves>> All Chapters included<<1. The form of organization for a business is not an important issue, as t... his 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 CHAPTER 1—AN OVERVIEW OF FINANCIAL MANAGEMENT AND THE FINANCIAL ENVIRONMENT Cengage Learning Testing, Powered by Cognero Page 2 KEYWORDS: Bloom’s: Knowledge 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 6. If a firm's goal is to maximize its earnings per share, this is the best way to maximize the price of the common stock and thus shareholders' wealth. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: INTE.GENE.16.2 - 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: Value maximization CHAPTER 1—AN OVERVIEW OF FINANCIAL MANAGEMENT AND THE FINANCIAL ENVIRONMENT Cengage Learning Testing, Powered by Cognero Page 3 KEYWORDS: Bloom’s: Knowledge 7. If Firm A's business is to obtain savings from individuals and then invest them in financial assets issued by other firms or individuals, Firm A is a financial intermediary. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: INTE.GENE.16.3 - LO: 1-4 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: Financial intermediaries KEYWORDS: Bloom’s: Knowledge 8. 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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: Comprehension 9. 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 LEARNING OBJECTIVES: INTE.GENE.16.1 - LO: 1-2 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 CHAPTER 1—AN OVERVIEW OF FINANCIAL MANAGEMENT AND THE FINANCIAL ENVIRONMENT Cengage Learning Testing, Powered by Cognero Page 4 LOCAL STANDARDS: United States - OH - Default City - TBA TOPICS: Proprietorship KEYWORDS: Bloom’s: Comprehension 10. 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 RATIONALE: Sole proprietorships and partnerships pay personal income tax, but they avoid the corporate income tax. Small corporations that meet certain requirements can elect to be classified as S Corporations, and then the business is taxed as a partnership. POINTS: 1 [Show More]

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