Test Bank – Financial Management: Theory and Practice 17th Edition | Eugene Brigham & Michael Ehrhardt | Exam Prep | Latest Update 2026 | Graded A+

TEST BANK for Financial Management: Theory & Practice
17th Edition Eugene F. Brigham & Michael C. Ehrhardt

,1. The form of organization for a business is not an important issue, as this decision has very little effect on the
income and wealth of the firm's owners.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1-3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and
: analysis of public information
LOCAL STANDARDS United States - OH - Default City - TBA
:
TOPICS: Firm organization
KEYWORDS: Bloom’s:
Knowledge DATE CREATED: 8/26/2015
10:43 AM DATE MODIFIED: 8/26/2015
10:43 AM
QUESTION ID: JFND-GO4G-EO5U-ECKG
QUESTION G GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UD-GY3N-4ATT-
LOBAL ID: GO3D-EA3O-CJDI-GWN8-EPRW-EMJW-CRHU-C3B3-CO4S-RCBA-CWSU-N3JI-CRSU-N3B3- GOSU-
NA5D-CCSU-OATA-GBTG-ECDF-E7JI-YT4D-JFNN-4OTI-GO4W-NQNBEE

2. The major advantage of a regular partnership or a corporation as a form of business organization is the fact
that both offer their owners limited liability, whereas proprietorships do not.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1-3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and
: analysis of public information
LOCAL STANDARDSUnited States - OH - Default City - TBA
:
TOPICS: Firm organization
KEYWORDS: Bloom’s:

,DATE MODIFIED: 8/26/2015 10:43 AM
QUESTION ID: JFND-GO4G-EO5U-ECKF
QUESTION G GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UD-GY3N-4ATT-
LOBAL ID: GO3D-EA3O-CJDI-GWN8-EPRW-EMMG-GOHG-EPMF-GJOU-GA3T-GASS-EP3U-8RSS-RPTT- GOSU-
GATT-GRSS-RC3O-CR3U-KPMF-E7JI-YT4D-JFNN-4OTI-GO4W-NQNBEE

3. There are three primary disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of the
organization, and (3) difficulty of transferring ownership. These combine to make it difficult for partnerships to
attract large amounts of capital and thus to grow to a very large size.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1-3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of finance, and
: analysis of public information
LOCAL STANDARDSUnited States - OH - Default City - TBA
:
TOPICS: Partnership
KEYWORDS: Bloom’s:
Knowledge DATE CREATED: 8/26/2015
10:43 AM DATE MODIFIED: 8/26/2015
10:43 AM
QUESTION ID: JFND-GO4G-EO5U-ECKR
QUESTION G GCID-E7BW-1TBP-8YHU-NC3Z-GC5D-GCTT-8BUN-43JT-CFO1-43JT-GR4N-43UD-GY3N-4ATT-
LOBAL ID: GO3D-EA3O-CJDI-GWN8-EPRW-EMJI-GFOS-K3TI-GYAG-EPUG-COSS-KPJS-CESU-CPT3-GOSS- R3UR-
CESU-YPMB-GC4S-GQJW-E7JI-YT4D-JFNN-4OTI-GO4W-NQNBEE

4. Two disadvantages of a proprietorship are (1) the relative difficulty of raising new capital and (2) the owner's
unlimited personal liability for the business' debts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1-3
IVES:

, NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS: