Question 1

Which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?

Accepted Answer

A)   Corporations generally face fewer regulations.
B)   Less of a corporation's income is generally subject to federal taxes.
C)   Corporate shareholders are exposed to unlimited liability,but this factor is offset by the tax advantages of incorporation.
D)   Corporate investors are exposed to unlimited liability.
E)   Corporations generally find it easier to raise large amounts of capital.F) B) and D)
G) A) and E)

Question 2

Which of the following statements is CORRECT?

Accepted Answer

A)   One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership.
B)   Corporations face fewer regulations than proprietorships.
C)   One disadvantage of operating a business as a proprietor is that the firm is subject to double taxation,because taxes are levied at both the firm level and the owner level.
D)   It is generally less expensive to form a corporation than a proprietorship because,with a proprietorship,extensive legal documents are required.
E)   If a partnership goes bankrupt,each partner is exposed to liabilities only up to the amount of his or her investment in the business.F) A) and B)
G) B) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

In order to maximize its shareholders' value,a firm's management must attempt to maximize the stock price in the long run,or the stock's "intrinsic value."

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is CORRECT?

Accepted Answer

A)   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.
B)   The more capital a firm is likely to require,the smaller the probability that it will be organized as a corporation.
C)   It is generally easier to transfer one's ownership interest in a partnership than in a corporation.
D)   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.
E)   Corporate shareholders are exposed to unlimited liability,but this factor is offset by the tax advantages of incorporation.F) A) and B)
G) A) and C)

Exam 1: An Overview of Financial Management

Which of the following statements is CORRECT?

Correct Answer
verified

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

Correct Answer
verified

In order to maximize its shareholders' value,a firm's management must attempt to maximize the stock price in the long run,or the stock's "intrinsic value."

Correct Answer
verified

Which of the following statements is CORRECT?

Correct Answer
verified

Which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?

Correct Answer
verified

Exam 1: An Overview of Financial Management

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In order to maximize its shareholders' value,a firm's management must attempt to maximize the stock price in the long run,or the stock's "intrinsic value."

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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