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TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham All Chapters Updated A+ $17.49   Add to cart

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TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham All Chapters Updated A+

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TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham All Chapters Updated A+

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  • October 30, 2023
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TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham




Test Bank for Fundamentals of Financial
Management, 14 Edition by Brigham


Multiple Choice: True/False


(1-1) Role of finance FM Answer: a EASY

i. In most corporations, the CFO ranks under the CEO.



a. True

b. False



(1-1) Role of finance FM Answer: b EASY

ii. The Chairman of the Board must also be the CEO.



a. True

b. False



(1-1) Role of finance FM Answer: a EASY

iii. The board of directors is the highest ranking body in a corporation, and the chairman of the board
is the highest ranking individual. The CEO generally works under the board and its chairman, and
the board generally has the authority to remove the CEO under certain conditions. The CEO,
however, cannot remove the board, but he or she can endeavor to have the board voted out and a




Chapter 1: Overview True/False Page 1

, TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham




new board voted in should a conflict arise. It is possible for a person to simultaneously serve as
CEO and chairman of the board, though many corporate control experts believe it is bad to vest
both offices in the same person.



a. True

b. False



(1-3) Forms of organization FM Answer: a EASY

iv. Partnerships and proprietorships generally have a tax advantage over corporations.



a. True

b. False

(1-3) Forms of organization FM Answer: b EASY

v. A disadvantage of the corporate form of organization is that corporate stockholders are more
exposed to personal liabilities in the event of bankruptcy than are investors in a typical
partnership.



a. True

b. False




Chapter 1: Overview True/False Page 2

, TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham




(1-3) Forms of organization FM Answer: b EASY

vi. An advantage of the corporate form of organization is that corporations are generally less highly
regulated than proprietorships and partnerships.



a. True

b. False



(1-3) Forms of organization FM Answer: a EASY

vii. Some partners in a partnership may have different rights, privileges, and responsibilities than
other partners.



a. True

b. False



(1-3) Forms of organization FM Answer: b EASY

viii. One advantage of the corporate form of organization is that it avoids double taxation.



a. True

b. False



(1-3) Forms of organization FM Answer: a EASY

ix. It is generally harder to transfer one’s ownership interest in a partnership than in a corporation.



a. True

b. False



(1-3) Forms of organization FM Answer: a EASY




Chapter 1: Overview True/False Page 3

, TEST BANK for Fundamentals of Financial Management 14th Edition by Houston Brigham




x. One danger of starting a proprietorship is that you may be exposed to personal liability if the
business goes bankrupt. This problem would be avoided if you formed a corporation to operate
the business.



a. True

b. False



(1-3) Forms of organization FM Answer: a EASY

xi. If a corporation elects to be taxed as an S corporation, then it can avoid the corporate tax.
However, its stockholders will have to pay personal taxes on the firm's net income.



a. True

b. False



(1-3) Forms of organization FM Answer: b EASY

xii. If a corporation elects to be taxed as an S corporation, then both it and its stockholders can avoid
all Federal taxes. This provision was put into the Federal Tax Code in order to encourage the
formation of small businesses.



a. True

b. False




Chapter 1: Overview True/False Page 4

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