FIN 301 module 1 2 3 Exam Questions with Latest Update
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Course
FIN 301
Institution
FIN 301
One disadvantage of the corporate form of business ownership is the:
A. double taxation of distributed profits
B. firm's greater ability to raise capital than other forms of ownership.
C. limited liability of its shareholders for the firm's debts.
D. firm's potential for an unlimited life. - ...
FIN 301 module 1 2 3 Exam Questions
with Latest Update
One disadvantage of the corporate form of business ownership is the:
A. double taxation of distributed profits
B. firm's greater ability to raise capital than other forms of ownership.
C. limited liability of its shareholders for the firm's debts.
D. firm's potential for an unlimited life. - Answer-A
Agency problems are most associated with:
A. limited partnerships.
B. corporations.
C. general partnerships.
D. sole proprietorships. - Answer-B
Which one of the following actions by a financial manager is most apt to create an
agency problem?
A. Refusing to lower selling prices if doing so will reduce the net profits
B. Refusing to expand the company if doing so will lower the value of the equity
C. Increasing current profits when doing so lowers the value of the company's equity
D. Agreeing to pay bonuses based on the market value of the company's stock rather
than on its level of sales - Answer-C
Which business form is the most regulated form of organization?
A. Limited liability company
B. Sole proprietorship
C. General partnership
D. Corporation - Answer-D
Which one of the following terms is defined as the mixture of a firm's debt and equity
financing?
A. Operating or Capital Management or Working Capital Management
B. Investment or Capital Distribution or Capital Budgeting
C. Cost analysis
D. Financing or Capital Acquisition or Capital Structure - Answer-D
A firm's short-term assets and its short-term liabilities are referred to as the firm's:
A. Financing or Capital Acquisition or Capital Structure
, B. Investment or Capital Distribution or Capital Budgeting
C. debt
D. Operating or Capital Management or Working Capital Management - Answer-D
Which of the following individuals have unlimited liability for a firm's debts based on their
ownership interest?
A. Only general partners
B. Only sole proprietors
C. Both limited and general partners
D. Both general partners and sole proprietors - Answer-D
A business partner whose potential financial loss in the partnership will not exceed his
or her investment in that partnership is called a:
A. limited partner.
B. zero partner.
C. general partner.
D. sole proprietor. - Answer-A
Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture
but wants to limit his liability to his initial investment and has no interest in the daily
operations. Sam will contribute his full efforts on a daily basis but has limited funds to
invest in the business. Alfredo will be involved as an active consultant and manager and
will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's
debts as they feel they have nothing to lose by doing so. All three individuals will share
in the firm's profits and wish to keep the initial organizational costs of the business to a
minimum. Which form of business entity should these individuals adopt?
A. Sole proprietorship
B. General partnership
C. Limited partnership
D. Corporation - Answer-C
Which one of the following terms is defined as the management of a firm's long-term
investments?
A. Agency cost analysis
B. Operating or Capital Management or Working Capital Management
C. Investment or Capital Distribution
D. Financing or Capital Acquisition - Answer-C
Which one of the following questions is an Operating or Capital Management or working
capital management decision?
A. How much inventory should be on hand for immediate sale?
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