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Chapter 01 Introduction to Corporate Finance




Question;25.;Which one of;the following statements concerning a sole proprietorship is correct?;A.;A sole proprietorship is the least common form of business ownership.;B.;The profits of a sole proprietorship are taxed twice.;C.;The owners of a sole proprietorship share profits as;established by the partnership agreement.;D.;The owner of a sole proprietorship may be forced to sell;his/her personal assets to pay company debts.;E.;A sole proprietorship is often structured as a limited;liability company.;26.;Which one of;the following statements concerning a sole proprietorship is correct?;A.;The life of the firm is limited to the life span of the owner.;B.;The owner can generally raise large sums of capital quite;easily.;C.;The ownership of the firm is easy to transfer to another;individual.;D.;The company must pay separate taxes from those paid by the;owner.;E.;The legal costs to form a sole proprietorship are quite;substantial.;27.;Which one of;the following best describes the primary advantage of being a limited partner;rather than a general partner?;A.;Entitlement to a larger portion of the partnership's income;B.;Ability to manage the day-to-day affairs of the business;C.;No potential financial loss;D.;Greater management responsibility;E.;Liability for firm debts limited to the capital invested;28.;A general;partner;A.;has less legal liability than a limited partner.;B.;has more management responsibility than a limited partner.;C.;faces double taxation whereas a limited partner does not.;D.;cannot lose more than the amount of his/her equity investment.;E.;is the term applied only to corporations which invest in;partnerships.;29.;A;partnership;A.;is taxed the same as a corporation.;B.;agreement defines whether the business income will be taxed;like a partnership or a corporation.;C.;terminates at the death of any general partner.;D.;has less of an ability to raise capital than a proprietorship.;E.;allows for easy transfer of interest from one general partner;to another.;30.;Which of the;following are disadvantages of a partnership?;I. Limited life of;the firm;II. Personal;liability for firm debt;III. Greater ability;to raise capital than a sole proprietorship;IV. Lack of ability;to transfer partnership interest;A.;I and II only;B.;III and IV only;C.;II and III only;D.;I, II, and IV only;E.;I, III, and IV only


Paper#55218 | Written in 18-Jul-2015

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