Test vBank vfor vCorporate vFinance, v5th vEdition vby vJonathan vBerk, vDeMarzo
v
v
TEST BANK FOR
v v
Corporate vFinance, vCanadian vEdition, v5th vedition vBerk
vChapter v1-31
,Chapter v1 v v The vCorporation
1.1 The vThree vTypes vof vFirms
1) A vsole vproprietorship vis vowned vby:
A) one vperson
B) two vor vmore vpeople
C) shareholders
D) bankers
vAnswer:
vA
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
2) In vCanada, vwhich vof vthe vfollowing vorganization vforms vaccounts vfor vthe vgreatest
vnumber vof vfirms?
A) Limited vLiability vPartnership
B) Limited vPartnership
C) Sole vProprietorship
D) Publicly vTraded vCorporation
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
3) Which vof vthe vfollowing vorganization vforms vearns vthe vmost vrevenue?
A) Privately vOwned vCorporation
B) Limited vPartnership
C) Publicly vOwned vCorporation
D) Limited vLiability vCompany
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
4) Which vof vthe vfollowing vis vNOT van vadvantage vof va vsole vproprietorship?
A) Single vtaxation
B) Ease vof vsetup
C) Limited vliability
D) No vseparation vof vownership vand
vcontrol vAnswer: v C
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
,5) Which vof vthe vfollowing vstatements vregarding vlimited vpartnerships vis vTRUE?
A) There vis vno vlimit von va vlimited vpartner's vliability.
B) A vlimited vpartner's vliability vis vlimited vby vthe vamount vof vhis vinvestment.
C) A vlimited vpartner vis vnot vliable vuntil vall vof vthe vassets vof vthe vgeneral vpartners vhave
vbeen vexhausted.
D) A vgeneral vpartner's vliability vis vlimited vby vthe vamount vof vhis
vinvestment. vAnswer: v B
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
6) Which vof vthe vfollowing vis/are van vadvantage(s) vof vincorporation?
A) Access vto vcapital vmarkets
B) Limited vliability
C) Unlimited vlife
D) All vof vthe
vabove vAnswer:
vD
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
7) In vCanada, va vlimited vliability vpartnership, vLLP, vis vessentially:
A) a vlimited vpartnership vwithout vlimited vpartners
B) a vlimited vpartnership vwithout va vgeneral vpartner
C) just vanother vname vfor va vlimited vpartnership
D) just vanother vname vfor va
vcorporation vAnswer: v B
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
8) In vCanada, vwhich vof vthe vfollowing vbusiness vorganization vforms vcannot vavoid vdouble
vtaxation?
A) Limited vPartnership
B) Publicly vTraded vCorporation
C) Privately vOwned vCorporation
D) Limited vLiability vCompany
vAnswer: v B
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
9) In vCanada, vthe vdividend vtax vcredit vgives vsome vrelief vby:
A) effectively vgiving va vlower vtax vrate von vdividend vincome vthan von vother vsources vof vincome
B) effectively vgiving va vhigher vtax vrate von vdividend vincome vthan von vother vsources vof vincome
C) effectively vgiving vthe vsame vtax vrate von vdividend vincome vas von vother vsources vof vincome
D) effectively vgiving va vtax vrate vof vzero von vdividend vincome vcompared vto vother vsources vof
vincome vAnswer: v A
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
, 10) Which vof vthe vfollowing vstatements vis vmost vcorrect?
A) An vadvantage vto vincorporation vis vthat vit vallows vfor vless vregulation vof vthe vbusiness.
B) An vadvantage vof va vcorporation vis vthat vit vis vsubject vto vdouble vtaxation.
C) Unlike va vpartnership, va vdisadvantage vof va vcorporation vis vthat vit vhas vlimited vliability.
D) Corporations vface vmore vregulations vwhen vcompared vto
vpartnerships. vAnswer: v D
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
11) In vCanada, vthe vdistinguishing vfeature vof va vcorporation vis vthat:
A) there vis vno vlegal vdifference vbetween vthe vcorporation vand vits vowners
B) it vis va vlegally vdefined, vartificial vbeing, vseparate vfrom vits vowners
C) it vspreads vliability vfor vits vcorporate vobligations vto vall vshareholders
D) it vprovides vlimited vliability vonly vto vsmall
vshareholders vAnswer: v B
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
12) Which vof vthe vfollowing vis/are vsubject vto vdouble vtaxation vin vCanada?
A) Corporation
B) Partnership
C) Sole vproprietorship
D) Both vA vand
vB vAnswer: v A
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
13) Canada vRevenue vAgency, vCRA, vallows van vexemption vfrom vdouble vtaxation vfor vcertain
vflow vthrough ventities vwhere vall vincome vproduced vby vthe vbusiness vflows vto vthe vinvestors
vand vvirtually vno vearnings vare vretained vwithin vthe vbusiness. vThese ventities vare vcalled:
A) Canadian vFederal vCrown vCorporations
B) Canadian vControlled vCorporations
C) Income vTrust vCorporations
D) Foreign vControlled vCorporations
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
v
v
TEST BANK FOR
v v
Corporate vFinance, vCanadian vEdition, v5th vedition vBerk
vChapter v1-31
,Chapter v1 v v The vCorporation
1.1 The vThree vTypes vof vFirms
1) A vsole vproprietorship vis vowned vby:
A) one vperson
B) two vor vmore vpeople
C) shareholders
D) bankers
vAnswer:
vA
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
2) In vCanada, vwhich vof vthe vfollowing vorganization vforms vaccounts vfor vthe vgreatest
vnumber vof vfirms?
A) Limited vLiability vPartnership
B) Limited vPartnership
C) Sole vProprietorship
D) Publicly vTraded vCorporation
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
3) Which vof vthe vfollowing vorganization vforms vearns vthe vmost vrevenue?
A) Privately vOwned vCorporation
B) Limited vPartnership
C) Publicly vOwned vCorporation
D) Limited vLiability vCompany
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
4) Which vof vthe vfollowing vis vNOT van vadvantage vof va vsole vproprietorship?
A) Single vtaxation
B) Ease vof vsetup
C) Limited vliability
D) No vseparation vof vownership vand
vcontrol vAnswer: v C
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
,5) Which vof vthe vfollowing vstatements vregarding vlimited vpartnerships vis vTRUE?
A) There vis vno vlimit von va vlimited vpartner's vliability.
B) A vlimited vpartner's vliability vis vlimited vby vthe vamount vof vhis vinvestment.
C) A vlimited vpartner vis vnot vliable vuntil vall vof vthe vassets vof vthe vgeneral vpartners vhave
vbeen vexhausted.
D) A vgeneral vpartner's vliability vis vlimited vby vthe vamount vof vhis
vinvestment. vAnswer: v B
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
6) Which vof vthe vfollowing vis/are van vadvantage(s) vof vincorporation?
A) Access vto vcapital vmarkets
B) Limited vliability
C) Unlimited vlife
D) All vof vthe
vabove vAnswer:
vD
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
7) In vCanada, va vlimited vliability vpartnership, vLLP, vis vessentially:
A) a vlimited vpartnership vwithout vlimited vpartners
B) a vlimited vpartnership vwithout va vgeneral vpartner
C) just vanother vname vfor va vlimited vpartnership
D) just vanother vname vfor va
vcorporation vAnswer: v B
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
8) In vCanada, vwhich vof vthe vfollowing vbusiness vorganization vforms vcannot vavoid vdouble
vtaxation?
A) Limited vPartnership
B) Publicly vTraded vCorporation
C) Privately vOwned vCorporation
D) Limited vLiability vCompany
vAnswer: v B
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
9) In vCanada, vthe vdividend vtax vcredit vgives vsome vrelief vby:
A) effectively vgiving va vlower vtax vrate von vdividend vincome vthan von vother vsources vof vincome
B) effectively vgiving va vhigher vtax vrate von vdividend vincome vthan von vother vsources vof vincome
C) effectively vgiving vthe vsame vtax vrate von vdividend vincome vas von vother vsources vof vincome
D) effectively vgiving va vtax vrate vof vzero von vdividend vincome vcompared vto vother vsources vof
vincome vAnswer: v A
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
, 10) Which vof vthe vfollowing vstatements vis vmost vcorrect?
A) An vadvantage vto vincorporation vis vthat vit vallows vfor vless vregulation vof vthe vbusiness.
B) An vadvantage vof va vcorporation vis vthat vit vis vsubject vto vdouble vtaxation.
C) Unlike va vpartnership, va vdisadvantage vof va vcorporation vis vthat vit vhas vlimited vliability.
D) Corporations vface vmore vregulations vwhen vcompared vto
vpartnerships. vAnswer: v D
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
11) In vCanada, vthe vdistinguishing vfeature vof va vcorporation vis vthat:
A) there vis vno vlegal vdifference vbetween vthe vcorporation vand vits vowners
B) it vis va vlegally vdefined, vartificial vbeing, vseparate vfrom vits vowners
C) it vspreads vliability vfor vits vcorporate vobligations vto vall vshareholders
D) it vprovides vlimited vliability vonly vto vsmall
vshareholders vAnswer: v B
Diff: v2 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
12) Which vof vthe vfollowing vis/are vsubject vto vdouble vtaxation vin vCanada?
A) Corporation
B) Partnership
C) Sole vproprietorship
D) Both vA vand
vB vAnswer: v A
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
13) Canada vRevenue vAgency, vCRA, vallows van vexemption vfrom vdouble vtaxation vfor vcertain
vflow vthrough ventities vwhere vall vincome vproduced vby vthe vbusiness vflows vto vthe vinvestors
vand vvirtually vno vearnings vare vretained vwithin vthe vbusiness. vThese ventities vare vcalled:
A) Canadian vFederal vCrown vCorporations
B) Canadian vControlled vCorporations
C) Income vTrust vCorporations
D) Foreign vControlled vCorporations
vAnswer: v C
Diff: v1 Type: vMC
Topic: v 1.1 v The vThree vTypes vof vFirms
