Test Bank For Intermediate Financial Management 13th
Edition By Eugene F. Brigham; Phillip R. Daves 9781337395083
Chapter 1-27 Complete Guide .
Which one of these is a disadvantage of the corporate form of business?
A. Access to capital
B. Unlimited personal liability for owners
C. Limited firm life
D. Legal requirements - ANSWER: D. Legal requirements
Which one of the following gives a corporation its permanence?
A. Multiple owners
B. Limited liability
C. Corporation taxation
D. Separation of ownership and control - ANSWER: D. Separation of ownership and control
In a partnership form of organization, income tax liability, if any, is incurred by:
A. the partnership itself.
B. the partners individually.
C. both the partnership and the partners.
D. neither the partnership nor the partners. - ANSWER: B. the partners individually.
Which one of the following would correctly differentiate general partners from limited partners in a
limited partnership?
A. General partners have more job experience.
B. General partners have an ownership interest.
C. General partners are subject to double taxation.
D. General partners have unlimited personal liability. - ANSWER: D. General partners have unlimited
personal liability.
Which form of organization provides limited liability for the firm but yet allows the professionals
working within that firm to be sued personally?
, A. Limited liability partnership
B. Limited liability company
C. Sole proprietorship
D. Professional corporation - ANSWER: D. Professional corporation
Which of the following is least likely to be discussed in the articles of incorporation?
A. How the firm is to be financed
B. The purpose of the business
C. The price range of the shares of stock
D. How the board of directors is to be structured - ANSWER: C. The price range of the shares of stock
When a corporation fails, the maximum that can be lost by an individual shareholder is:
A. the amount of their initial investment.
B. the amount of their share of the profits.
C. their proportionate share required to pay the corporation's debts.
D. the amount of their personal wealth. - ANSWER: A. the amount of their initial investment.
Which of the following is a disadvantage to incorporating a business?
A. Easier access to financial markets
B. Limited liability
C. Becoming a permanent legal entity
D. Profits taxed at the corporate level and the shareholder level - ANSWER: D. Profits taxed at the
corporate level and the shareholder level
Unlimited liability is faced by the owners of:
A. corporations.
B. partnerships and corporations.
C. sole proprietorships and general partnerships.
D. all forms of business organization. - ANSWER: C. sole proprietorships and general partnerships.
Which one of these statements correctly applies to a limited partnership?
A. All partners share the daily management duties.
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