Franklyn A Plus Pass
TEST BANK for Corporate Finance
4th Edition by Jonathan Berk & Peter
DeMarzo
ALL CHAPTERS 1-16 WITH VERIFIED QUESTIONS &
CORRECT ANSWERS| A+ PASS
Fr
an
kl
yn
e
A
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, Franklyn A Plus Pass
Chapter 1 The Corporation
1.1The Four Types of Firms
1) A sole proprietorship is owned by:
A) one person.
B) two of more persons.
C) shareholders.
D) bankers. Correct 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?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company Correct Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms Skill: Conceptual
Fr
3) Which of the following organization forms accounts for the most revenue?
an
A) "S" corporation
kl
B) Limited partnership
yn
C) "C" corporation
D) Limited liability company Correct Answer: C
e
Diff: 1
A
Section: 1.1 The Four Types of Firms Skill: Conceptual
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, Franklyn A Plus Pass
4) Which of the following organization forms accounts for the greatest number of firms?
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
D) "C" corporation Correct Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms Skill: Conceptual
5) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control Correct Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
6) Which of the following statements regarding limited partnerships is TRUE?
Fr
A) There is no limit on a limited partner's liability.
an
B) A limited partner's liability is limited by the amount of their investment.
kl
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
yn
D) A general partner's liability is limited by the amount of their investment. Correct Answer: B
Diff: 2
e
Section: 1.1 The Four Types of Firms Skill: Conceptual
A
pl
7) Which of the following is/are an advantage of incorporation?
us
A) Access to capital markets
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, Franklyn A Plus Pass
B) Limited liability
C) Unlimited life
D) All of the above Correct Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
8) Which of the following statements is most correct?
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. Correct Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
9) A limited liability company is essentially:
A) a limited partnership without limited partners.
B) a limited partnership without a general partner.
Fr
C) just another name for a limited partnership.
an
D) just another name for a corporation. Correct Answer: B
kl
Diff: 1
yn
Section: 1.1 The Four Types of Firms Skill: Conceptual
e
10) The distinguishing feature of a corporation is that:
A
A) their is no legal difference between the corporation and its owners.
pl
B) it is a legally defined, artificial being, separate from its owners.
us
C) it spreads liability for its corporate obligations to all shareholders.
Pa
Page | 4
ss
TEST BANK for Corporate Finance
4th Edition by Jonathan Berk & Peter
DeMarzo
ALL CHAPTERS 1-16 WITH VERIFIED QUESTIONS &
CORRECT ANSWERS| A+ PASS
Fr
an
kl
yn
e
A
pl
us
Pa
Page | 1
ss
, Franklyn A Plus Pass
Chapter 1 The Corporation
1.1The Four Types of Firms
1) A sole proprietorship is owned by:
A) one person.
B) two of more persons.
C) shareholders.
D) bankers. Correct 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?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company Correct Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms Skill: Conceptual
Fr
3) Which of the following organization forms accounts for the most revenue?
an
A) "S" corporation
kl
B) Limited partnership
yn
C) "C" corporation
D) Limited liability company Correct Answer: C
e
Diff: 1
A
Section: 1.1 The Four Types of Firms Skill: Conceptual
pl
us
Pa
Page | 2
ss
, Franklyn A Plus Pass
4) Which of the following organization forms accounts for the greatest number of firms?
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
D) "C" corporation Correct Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms Skill: Conceptual
5) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control Correct Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
6) Which of the following statements regarding limited partnerships is TRUE?
Fr
A) There is no limit on a limited partner's liability.
an
B) A limited partner's liability is limited by the amount of their investment.
kl
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
yn
D) A general partner's liability is limited by the amount of their investment. Correct Answer: B
Diff: 2
e
Section: 1.1 The Four Types of Firms Skill: Conceptual
A
pl
7) Which of the following is/are an advantage of incorporation?
us
A) Access to capital markets
Pa
Page | 3
ss
, Franklyn A Plus Pass
B) Limited liability
C) Unlimited life
D) All of the above Correct Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
8) Which of the following statements is most correct?
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. Correct Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms Skill: Conceptual
9) A limited liability company is essentially:
A) a limited partnership without limited partners.
B) a limited partnership without a general partner.
Fr
C) just another name for a limited partnership.
an
D) just another name for a corporation. Correct Answer: B
kl
Diff: 1
yn
Section: 1.1 The Four Types of Firms Skill: Conceptual
e
10) The distinguishing feature of a corporation is that:
A
A) their is no legal difference between the corporation and its owners.
pl
B) it is a legally defined, artificial being, separate from its owners.
us
C) it spreads liability for its corporate obligations to all shareholders.
Pa
Page | 4
ss
