LSUS MHA 706 MIDTERM EXAMINATION
PREPARATION TEST 2026 LEADERSHIP AND
HEALTHCARE MANAGEMENT CONCEPTS
REVIEW
◉ A sole proprietorship:
a.) provides limited financial liability for its owner.
b.) involves significant legal costs during the formation process.
c.) has an unlimited life.
d.) has its profits taxed as personal income.
e.) can generally raise significant capital from non-owner sources.
Answer: has its profits taxed as personal income.
◉ Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
a.) Sole proprietorship
b.) General partnership
c.) Limited partnership
d.) Limited liability company
e.) Corporation
Answer: Limited partnership
,◉ Which one of the following statements correctly applies to a sole
proprietorship?
a.) The business entity has an unlimited life.
b.) The ownership can easily be transferred to another individual.
c.) The owner enjoys limited liability for the firm's debts.
d.) Debt financing is easy to arrange in the firm's name.
e.) Obtaining additional equity is dependent on the owner's personal
finances.
Answer: Obtaining additional equity is dependent on the owner's
personal finances.
◉ A corporation:
a.) is ultimately controlled by its board of directors.
b.) is a legal entity separate from its owners.
c.) is prohibited from entering into contractual agreements.
d.) has its identity defined by its bylaws.
e.) has its existence regulated by the rules set forth in its charter.
Answer: is a legal entity separate from its owners.
◉ The primary goal of financial management is to maximize:
a.) current profits.
,b.) market share.
c.) current dividends.
d.) the market value of existing stock.
e.) revenue growth.
Answer: the market value of existing stock.
◉ An agency issue is most apt to develop when:
a.) a firm encounters a period of stagnant growth.
b.) a firm downsizes.
c.) the control of a firm is separated from the firm's ownership.
d.) the firm's owner is also its key manager.
e.) a firm is structured as a general partnership.
Answer: the control of a firm is separated from the firm's ownership.
◉ You contacted your stock broker this morning and placed an order
to sell 300 shares of a stock that trades on the NYSE. This sale will
occur in the:
a.) dealer market.
b.) over-the-counter market.
c.) secondary market.
d.) primary market.
e.) tertiary market.
, Answer: secondary market.
◉ The issuer of a security must be involved in all _____ transactions
involving that security.
a.)exchange-listed
b.)secondary market
c.)over-the-counter
d.)dealer market
e.)primary market
Answer: primary market
◉ Which one of the following parties can sell shares of ABC stock in
the primary market?
a.) ABC company
b.) Any corporation, other than the ABC Company
c.) Any institutional shareholder
d.) Any private individual shareholder
e.) Only officers and directors of ABC Company
Answer: ABC company
◉ According to GAAP, when is income reported?
PREPARATION TEST 2026 LEADERSHIP AND
HEALTHCARE MANAGEMENT CONCEPTS
REVIEW
◉ A sole proprietorship:
a.) provides limited financial liability for its owner.
b.) involves significant legal costs during the formation process.
c.) has an unlimited life.
d.) has its profits taxed as personal income.
e.) can generally raise significant capital from non-owner sources.
Answer: has its profits taxed as personal income.
◉ Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
a.) Sole proprietorship
b.) General partnership
c.) Limited partnership
d.) Limited liability company
e.) Corporation
Answer: Limited partnership
,◉ Which one of the following statements correctly applies to a sole
proprietorship?
a.) The business entity has an unlimited life.
b.) The ownership can easily be transferred to another individual.
c.) The owner enjoys limited liability for the firm's debts.
d.) Debt financing is easy to arrange in the firm's name.
e.) Obtaining additional equity is dependent on the owner's personal
finances.
Answer: Obtaining additional equity is dependent on the owner's
personal finances.
◉ A corporation:
a.) is ultimately controlled by its board of directors.
b.) is a legal entity separate from its owners.
c.) is prohibited from entering into contractual agreements.
d.) has its identity defined by its bylaws.
e.) has its existence regulated by the rules set forth in its charter.
Answer: is a legal entity separate from its owners.
◉ The primary goal of financial management is to maximize:
a.) current profits.
,b.) market share.
c.) current dividends.
d.) the market value of existing stock.
e.) revenue growth.
Answer: the market value of existing stock.
◉ An agency issue is most apt to develop when:
a.) a firm encounters a period of stagnant growth.
b.) a firm downsizes.
c.) the control of a firm is separated from the firm's ownership.
d.) the firm's owner is also its key manager.
e.) a firm is structured as a general partnership.
Answer: the control of a firm is separated from the firm's ownership.
◉ You contacted your stock broker this morning and placed an order
to sell 300 shares of a stock that trades on the NYSE. This sale will
occur in the:
a.) dealer market.
b.) over-the-counter market.
c.) secondary market.
d.) primary market.
e.) tertiary market.
, Answer: secondary market.
◉ The issuer of a security must be involved in all _____ transactions
involving that security.
a.)exchange-listed
b.)secondary market
c.)over-the-counter
d.)dealer market
e.)primary market
Answer: primary market
◉ Which one of the following parties can sell shares of ABC stock in
the primary market?
a.) ABC company
b.) Any corporation, other than the ABC Company
c.) Any institutional shareholder
d.) Any private individual shareholder
e.) Only officers and directors of ABC Company
Answer: ABC company
◉ According to GAAP, when is income reported?
