HFt 4464 Exam 1 With
Complete Solution
The share holders of a corporation have unlimited liability - ANSWER False
Preferred stock is a security that has the features of both debt and equity -
ANSWER False
The goal of hospitality financial management is to maximize the wealth of
the owners. - ANSWER True
The value of dividends is not affected by the date the are received. - ANSWER
False
A good example of an agency relationship in a hotel is the relationship
between a bartender and a server. - ANSWER False
Financial management is the process of classifying financial information. -
ANSWER False
The earnings of a firm are not equivalent to its cash flows. - ANSWER True
The three major decision in financial management involve investing,
financing, and the payment of dividends. - ANSWER True
Financial management cannot be related to other functional areas of
management such as marketing. - ANSWER False
The most common form of business organization in the United States is the
sole proprietorship. - ANSWER True
, Sole Proprietorship - ANSWER Advantages:
Easy to form, greater control, and single taxation.
Disadvantages:
Unlimited Liability and difficulty raising capital
Partnership - ANSWER Advantages:
Easy to form, greater control, and single taxation.
Disadvantages:
Unlimited liability and difficulty raising capital
Limited Liability partnership - ANSWER Advantages:
Easy to form, limited liability, and single taxation.
Disadvantages:
Difficult to raise capital and short lifetime
Corporation - ANSWER Advantages:
Unlimited Life, limited liability, easy to raise capital.
Disadvantages:
Hard to form, increased regulation, double taxation (taxed on both corporate
and personal level)
Complete Solution
The share holders of a corporation have unlimited liability - ANSWER False
Preferred stock is a security that has the features of both debt and equity -
ANSWER False
The goal of hospitality financial management is to maximize the wealth of
the owners. - ANSWER True
The value of dividends is not affected by the date the are received. - ANSWER
False
A good example of an agency relationship in a hotel is the relationship
between a bartender and a server. - ANSWER False
Financial management is the process of classifying financial information. -
ANSWER False
The earnings of a firm are not equivalent to its cash flows. - ANSWER True
The three major decision in financial management involve investing,
financing, and the payment of dividends. - ANSWER True
Financial management cannot be related to other functional areas of
management such as marketing. - ANSWER False
The most common form of business organization in the United States is the
sole proprietorship. - ANSWER True
, Sole Proprietorship - ANSWER Advantages:
Easy to form, greater control, and single taxation.
Disadvantages:
Unlimited Liability and difficulty raising capital
Partnership - ANSWER Advantages:
Easy to form, greater control, and single taxation.
Disadvantages:
Unlimited liability and difficulty raising capital
Limited Liability partnership - ANSWER Advantages:
Easy to form, limited liability, and single taxation.
Disadvantages:
Difficult to raise capital and short lifetime
Corporation - ANSWER Advantages:
Unlimited Life, limited liability, easy to raise capital.
Disadvantages:
Hard to form, increased regulation, double taxation (taxed on both corporate
and personal level)
