4. Partnerships zand zproprietorships zgenerally zhave za ztax zadvantage zover zcorporations.
a. True
b. False
ANSWER: z True
5. A zdisadvantage zof zthe zcorporate zform zof zorganization zis zthat zcorporate zstockholders zare zmore zexposed zto
zpersonal zliabilities zin zthe zevent zof zbankruptcy zthan zare zinvestors zin za ztypical zpartnership.
a. True
b. False
ANSWER: z False
6. An zadvantage zof zthe zcorporate zform zof zorganization zis zthat zcorporations zare zgenerally zless zhighly
zregulated zthan zproprietorships zand zpartnerships.
a. True
b. False
ANSWER: z False
7. Some zpartners zin za zpartnership zmay zhave zdifferent zrights, zprivileges, zand zresponsibilities zthan zother zpartners.
a. True
Copyright zCengage zLearning. zPowered zby Page
zCognero. z1
,Name: Class: Date:
1. zAn zOverview zof zFinancial
Management.
b. False
ANSWER: z True
8. One zadvantage zof zthe zcorporate zform zof zorganization zis zthat zit zavoids zdouble ztaxation.
a. True
b. False
ANSWER: z False
9. It zis zgenerally zharder zto ztransfer zone's zownership zinterest zin za zpartnership zthan zin za zcorporation.
a. True
b. False
ANSWER: z True
10. One zdanger zof zstarting za zproprietorship zis zthat zyou zmay zbe zexposed zto zpersonal zliability zif zthe zbusiness
zgoes zbankrupt. zThis zproblem zwould zbe zavoided zif zyou zformed za zcorporation zto zoperate zthe zbusiness.
a. True
b. False
ANSWER: z True
11. If za zcorporation zelects zto zbe ztaxed zas zan zS zcorporation, zthen zit zcan zavoid zthe zcorporate ztax. zHowever, zits
zstockholders zwill zhave zto zpay zpersonal ztaxes zon zthe zfirm's znet zincome.
a. True
b. False
ANSWER: z True
12. If za zcorporation zelects zto zbe ztaxed zas zan zS zcorporation, zthen zboth zit zand zits zstockholders zcan zavoid zall
zFederal ztaxes. zThis zprovision zwas zput zinto zthe zFederal zTax zCode zin zorder zto zencourage zthe zformation zof
zsmall zbusinesses.
a. True
b. False
ANSWER: z False
13. It zis zgenerally zless zexpensive zto zform za zcorporation zthan za zproprietorship zbecause, zwith za zproprietorship,
zextensive zlegal zdocuments zare zrequired.
a. True
b. False
ANSWER: z False
14. The zmore zcapital za zfirm zis zlikely zto zrequire, zthe zgreater zthe zprobability zthat zit zwill zbe zorganized zas za zcorporation.
a. True
b. False
ANSWER: z True
15. One zdisadvantage zof zforming za zcorporation zrather zthan za zpartnership zis zthat zthis zmakes zit zmore zdifficult zfor
zthe zfirm's zinvestors zto ztransfer ztheir zownership zinterests.
a. True
Copyright zCengage zLearning. zPowered zby Page z2
zCognero.
, Name: Class: Date:
1. zAn zOverview zof zFinancial
Management.
b. False
ANSWER: z False
17. In zorder zto zmaximize zits zshareholders' zvalue, za zfirm's zmanagement zmust zattempt zto zmaximize zthe zstock
zprice zin zthe zlong zrun, zor zthe zstock's z"intrinsic zvalue."
a. True
b. False
ANSWER: z True
18. If zmanagement zoperates zin za zmanner zdesigned zto zmaximize zthe zfirm's zexpected zprofits zfor zthe zcurrent
zyear, zthis zwill zalso zmaximize zthe zstockholders' zwealth zas zof zthe zcurrent zyear.
a. True
b. False
ANSWER: z False
19. In zorder zto zmaximize zits zshareholders' zvalue, za zfirm's zmanagement zmust zattempt zto zmaximize zthe zexpected zEPS.
a. True
b. False
ANSWER: z False
20. In zorder zto zmaximize zits zshareholders' zvalue, za zfirm's zmanagement zmust zattempt zto zmaximize zthe zstock
zprice zon za zspecific ztarget zdate.
a. True
b. False
ANSWER: z False
21. As za zresult zof zfinancial zscandals zoccurring zduring zthe zpast zdecade, zthere zhas zbeen za zstrong zpush zto
zimprove zbusiness zethics.
a. True
b. False
ANSWER: z True
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