Corporate Finance
and the Financial
Manager
16.
Award: 10.00 points
A firm owned by two or more people who each have unlimited liability for all of the firm's debts is
called a:
corporation.
sole proprietorship.
general partnership.
limited partnership.
limited liability company.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
17.
Award: 10.00 points
A partner in a firm knows that the maximum financial loss he or she will experience is the amount he
or she invested in the firm. The partner is called a ______ partner.
general
sole
limited
corporate
zero
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
18.
Award: 10.00 points
A business that is a legal entity separate from the owners, yet treated as a legal person, is called
a(n):
corporation.
sole proprietorship.
general partnership.
limited partnership.
unlimited liability company.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
19.
Award: 10.00 points
A sole proprietorship:
is designed to protect the personal assets of the owner.
may earn profits that are subject to double taxation.
requires the owner to be personally responsible for all of the company's debts.
is the least represented type of firm in the U.S. today.
provides the same benefits to owners that a limited liability company does.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
20.
Award: 10.00 points
A sole proprietorship:
has a limited life.
can generally raise large sums of capital quite easily.
can transfer ownership of the firm more easily than a corporation can.
is taxed the same as a C corporation.
is the most regulated form of organization.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
21.
Award: 10.00 points
______ are personally responsible for 100 percent of the firm’s debts.
General Partners but not sole proprieters
Sole prorprieters but not general partners
All business owners
Both limited and general partners
Both general partners and sole proprietors
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 1 Basic Section: 1.2
Corporate Finance
and the Financial
Manager
22.
Award: 10.00 points
Limited partners benefit from which of the primary advantages?
They have the opportunity to earn tax-free income.
Their responsibility for the firm’s debts is prorated based on their percentage of ownership.
They do not face any potential financial losses.
They have control over the administrative affairs of the partnership.
Their maximum loss cannot exceed the amount of their capital investment.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 2
Intermediate
Section: 1.2
Corporate Finance
and the Financial
Manager
23.
Award: 10.00 points
A general partner:
is personally responsible for 100 percent of the debts of the partnership.
is responsible for 80 percent of the firm’s debts if he or she owns 80 percent of the