Test Bank for Corporate Finance 4th Edition by Jonathan Berk | Complete 2025–2026 Verified Questions & Answers – Business & Financial Management Exam Prep

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
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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
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3) Which of the following organization forms accounts for the most revenue?
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A) "S" corporation
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B) Limited partnership
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C) "C" corporation

D) Limited liability company Correct 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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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?
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A) There is no limit on a limited partner's liability.
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B) A limited partner's liability is limited by the amount of their investment.
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C) A limited partner is not liable until all the assets of the general partners have been exhausted.
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D) A general partner's liability is limited by the amount of their investment. Correct Answer: B

Diff: 2
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Section: 1.1 The Four Types of Firms Skill: Conceptual
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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 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.
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C) just another name for a limited partnership.
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D) just another name for a corporation. Correct Answer: B
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Diff: 1
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Section: 1.1 The Four Types of Firms Skill: Conceptual
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10) The distinguishing feature of a corporation is that:
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A) their is no legal difference between the corporation and its owners.
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B) it is a legally defined, artificial being, separate from its owners.
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C) it spreads liability for its corporate obligations to all shareholders.
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