Test Bank for Corporate Finance, 3rd Edition by Jonathan Berk and Peter DeMarzo, All chapters

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TEST BANK
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Corporate Finance, 3rd Edition by Jonathan
Berk, Peter Demarzo
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Corporate Finance, 3e (Berk/DeMarzo)
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Chapter 1 The Corporation
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1.1 The Four Types of Firms

1) A sole proprietorship is owned by:
A) one person.
B) two of more persons.
C) shareholders.
D) bankers.
Answer: A
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Definition

2) Which of the following organization forms for a business does NOT avoid double taxation?
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A) Limited partnership
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B) "C" corporation
C) "S" corporation
D) Limited liability company
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Answer: B
Diff: 1
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Section: 1.1 The Four Types of Firms
Skill: Conceptual
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3) Which of the following organization forms accounts for the most revenue?
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A) "S" corporation
B) Limited partnership
C) "C" corporation
D) Limited liability company
Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

4) Which of the following organization forms accounts for the greatest number of firms?
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
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D) "C" corporation
Answer: C
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Diff: 1
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Section: 1.1 The Four Types of Firms
Skill: Conceptual
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5) Which of the following is NOT an advantage of a sole proprietorship?
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A) Single taxation
B) Ease of setup
C) Limited liability
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D) No separation of ownership and control
Answer: C
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Diff: 2
Section: 1.1 The Four Types of Firms
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Skill: Conceptual

6) Which of the following statements regarding limited partnerships is TRUE?
A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

7) Which of the following is/are an advantage of incorporation?
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A) Access to capital markets
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B) Limited liability
C) Unlimited life
D) All of the above
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Answer: D
Diff: 2
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Section: 1.1 The Four Types of Firms
Skill: Conceptual
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8) Which of the following statements is most correct?
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A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
C) Unlike a partnership, a disadvantage of a corporation is that has limited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
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