TEST BANK For Corporate Finance 6th edition by Berk & DeMarzo, Verified Chapters 1 - 31, Complete Newest Version

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TEST BANK For Corporate Finance 6th edition by Berk & DeMarzo, Verified Chapters 1 - 31, Complete Newest Version

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Institution Corporate Finance 6th Edition, Berk & DeMarzo

Course Corporate Finance 6th Edition, Berk & DeMarzo

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TEST BANK For Corporate Finance 6th Edition by Berk & DeMarzo, Verified Chapters 1 - 31, Complete Newest Version

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1
© 2022 Pearson Canada
dd dd dd

Inc.

,Chapter 1-31 dd

Chapter 1 dd The Corporation dd

1.1 The Three Types of Firms
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1) A sole proprietorship is owned by:
dd dd dd dd dd

A) one person dd

B) two or more people
dd dd dd

C) shareholders
D) bankers
Answer:
dd

A
Diff: 1 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

2) In Canada, which of the following organization forms accounts for the greatest
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number of firms?
dd dd dd

A) Limited Liability Partnership dd dd

B) Limited Partnership dd

C) Sole Proprietorship
dd

D) PubliclyTraded Corporation d dd

Answer: C
dd d d

Diff: 1 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

3) Which of the following organization forms earns the most revenue?
dd dd dd dd dd dd dd dd dd

A) Privately Owned Corporation dd dd

B) Limited Partnership dd

C) Publicly Owned Corporation dd dd

D) Limited LiabilityCompany bb d

Answer: C
dd d d

Diff: 1 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

4) Which of the following is NOT an advantage of a sole proprietorship?
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A) Single taxation dd

B) Ease of setup dd dd

C) Limited liability dd

D) No separation of ownership and control
dd dd dd dd dd

Answer: C
dd d d

Diff: 2 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

2
© 2022 Pearson Canada
dd dd dd

Inc.

,5) 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 his investment.
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C) A limited partner is not liable until all of the assets of the general partners
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have been exhausted.
dd dd dd

D) A general partner's liability is limited by the amount of
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his investment. Answer: B
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Diff: 2 Type: MC dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

6) Which of the following is/are an advantage(s) of incorporation?
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A) Access to capital markets dd dd dd

B) Limited liability dd

C) Unlimited life dd

D) All of the above dd dd dd

Answer: D
dd d d

Diff: 2 Type: MC dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

7) In Canada, a limited liability partnership, LLP, is essentially:
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A) a limited partnership without limited partners
dd dd dd dd dd

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
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Answer: B
dd d d

Diff: 1 Type: MC dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

8) In Canada, which of the following business organization forms cannot avoid double
dd dd dd dd dd dd dd dd dd dd dd

taxation?
dd

A) Limited Partnership dd

B) Publicly Traded Corporation dd d d

C) Privately Owned Corporation dd dd

D) Limited LiabilityCompany bb d

Answer: B
dd d d

Diff: 1 Type: MC dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

9) In Canada, the dividend tax credit gives some relief by:
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A) effectively giving a lower tax rate on dividend income than on other sources of income
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B) effectively giving a higher tax rate on dividend income than on other sources of income
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C) effectively giving the same tax rate on dividend income as on other sources of income
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D) effectively giving a tax rate of zero on dividend income compared to other sources
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of income Answer: A
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Diff: 1 Type: MC dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

3
© 2022 Pearson Canada
dd dd dd

Inc.

, 10) 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.
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B) An advantage of a corporation is that it is subject to double taxation.
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C) Unlike a partnership, a disadvantage of a corporation is that it has limited liability.
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D) Corporations face more regulations when compared to partnerships. dd dd dd dd dd dd dd

Answer: D
dd d d

Diff: 2 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

11) In Canada, the distinguishing feature of a corporation is that:
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A) there 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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D) it provides limited liability only to small shareholders
dd dd dd dd dd dd dd

Answer: B
dd d d

Diff: 2 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

12) Which of the following is/are subject to double taxation in Canada?
dd dd dd dd dd dd dd dd dd dd

A) Corporation
B) Partnership
C) Sole proprietorship
dd

D) Both A and B dd dd dd

Answer: A
dd d d

Diff: 1 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

13) Canada Revenue Agency, CRA, allows an exemption from double taxation for certain
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d flow through entities where all income produced by the business flows to the investors
d dd dd dd dd dd dd dd dd dd dd dd dd dd

and virtually no earnings are retained within the business. These entities are called:
dd dd dd dd dd dd dd dd dd dd dd dd dd

A) Canadian Federal Crown Corporations dd dd dd

B) Canadian Controlled Corporations dd dd

C) Income Trust Corporations dd dd

D) Foreign Controlled Corporations dd dd

Answer: C
dd d d

Diff: 1 Type: MC
dd dd

Topic: 1.1 The Three Types of Firms dd dd dd dd

4
© 2022 Pearson Canada
dd dd dd

Inc.

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TEST BANK For Corporate Finance 6th edition by Berk & DeMarzo, Verified Chapters 1 - 31, Complete Newest Version

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