Financial Management Principles and Applications 8th Edition By Sheridan Titman test bank

private company
 general partnership
 public company
 limited partnership
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: D
Which of the following is a significant disadvantage of a general partnership?
 The cost of forming it is high.
 Each partner is fully responsible for the liabilities incurred by the partnership.
 There is a risk associated with the industry in which it operates.
 Forming the business is very complex.
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
Which legal form of businesses will be examined most frequently in this book?
 The sole proprietorship
 The general partnership
 The limited partnership
 The corporation
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: D
A limited partner is liable [blank].
 for only his or her own share of the partnership’s debts
 for his or her own share of the partnership’s debts and contingently liable for the other partners shares
 only up to the amount invested by that partner
 for none of the partnership’s debts
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: C
A corporation is owned by [blank].
 its Chief Operations Officer
 the shareholders
 the Board of Directors
 its Chief Executive Officer (CEO)
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
The major sources of financing for corporations are [blank].
 partners contributions
 exchanges between shareholders
 interest and dividends
 debt and equity
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: D
A firm’s Treasurer is typically responsible for [blank].
data processing
capital expenditures
cost accounting
financial statements
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
The sole proprietorship is the same as the individual for liability purposes.
True
False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: A
 In a general partnership, all partners have unlimited liability for the actions of any one partner when that partner is conducting business for the firm.
True
False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: A
There is no legal distinction made between the assets of the business and the personal assets of the owners in the limited partnership.
True
False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
The owners of a corporation are liable for the corporation’s obligations up to the amount of their investment.
True
False
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: A
General partners have unrestricted transferability of ownership, while limited partners must have the consent of all partners to transfer their ownership.
True
False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
Ultimate control in a corporation is vested in the board of directors.
True
False
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business
Answer: B
Owners must register and pay yearly fees to their State of residence when establishing a sole proprietorship.
True
False
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.2 Identify the key differences between the three major legal forms of business