Test Bank for Corporate Finance, 5th Edition by Jonathan Berk, Chapters 1-31

TestjBankjforjCorporatejFinance,j5thjEditionjbyjJonathanjBerk,jDeMarzo



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TEST BANK FOR
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CorporatejFinance,jCanadianjEdition,j5thjeditionjBerkjCha
pterj1-31

,Chapterj1j j ThejCorporation

1.1 ThejThreejTypesjofjFirms

1) Ajsolejproprietorshipjisjownedjby:
A) onejperson
B) twojorjmorejpeople
C) shareholders
D) bankersj
Answer:j A
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

2) InjCanada,jwhichjofjthejfollowingjorganizationjformsjaccountsjforjthejgreatestjnumberjofjfirm
s?
A) LimitedjLiabilityjPartnership
B) LimitedjPartnership
C) SolejProprietorship
D) PubliclyjTradedjCorporationj
Answer:j C
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

3) Whichjofjthejfollowingjorganizationjformsjearnsjthejmostjrevenue?
A) PrivatelyjOwnedjCorporation
B) LimitedjPartnership
C) PubliclyjOwnedjCorporation
D) LimitedjLiabilityjCompanyj
Answer:j C
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

4) WhichjofjthejfollowingjisjNOTjanjadvantagejofjajsolejproprietorship?
A) Singlejtaxation
B) Easejofjsetup
C) Limitedjliability
D) NojseparationjofjownershipjandjcontroljA
nswer:j C
Diff:j2 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

,5) WhichjofjthejfollowingjstatementsjregardingjlimitedjpartnershipsjisjTRUE?
A) Therejisjnojlimitjonjajlimitedjpartner'sjliability.
B) Ajlimitedjpartner'sjliabilityjisjlimitedjbyjthejamountjofjhisjinvestment.
C) Ajlimitedjpartnerjisjnotjliablejuntiljalljofjthejassetsjofjthejgeneraljpartnersjhavejbeenjexha
usted.
D) Ajgeneraljpartner'sjliabilityjisjlimitedjbyjthejamountjofjhisjinvestment.jAn
swer:j B
Diff:j2 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

6) Whichjofjthejfollowingjis/arejanjadvantage(s)jofjincorporation?
A) Accessjtojcapitaljmarkets
B) Limitedjliability
C) Unlimitedjlife
D) Alljofjthejabovej
Answer:j D
Diff:j2 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

7) InjCanada,jajlimitedjliabilityjpartnership,jLLP,jisjessentially:
A) ajlimitedjpartnershipjwithoutjlimitedjpartners
B) ajlimitedjpartnershipjwithoutjajgeneraljpartner
C) justjanotherjnamejforjajlimitedjpartnership
D) justjanotherjnamejforjajcorporationjA
nswer:j B
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

8) InjCanada,jwhichjofjthejfollowingjbusinessjorganizationjformsjcannotjavoidjdoublejtaxation?
A) LimitedjPartnership
B) PubliclyjTradedjCorporation
C) PrivatelyjOwnedjCorporation
D) LimitedjLiabilityjCompanyj
Answer:j B
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

9) InjCanada,jthejdividendjtaxjcreditjgivesjsomejreliefjby:
A) effectivelyjgivingjajlowerjtaxjratejonjdividendjincomejthanjonjotherjsourcesjofjincome
B) effectivelyjgivingjajhigherjtaxjratejonjdividendjincomejthanjonjotherjsourcesjofjincome
C) effectivelyjgivingjthejsamejtaxjratejonjdividendjincomejasjonjotherjsourcesjofjincome
D) effectivelyjgivingjajtaxjratejofjzerojonjdividendjincomejcomparedjtojotherjsourcesjofjincomejAns
wer:j A
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

, 10) Whichjofjthejfollowingjstatementsjisjmostjcorrect?
A) Anjadvantagejtojincorporationjisjthatjitjallowsjforjlessjregulationjofjthejbusiness.
B) Anjadvantagejofjajcorporationjisjthatjitjisjsubjectjtojdoublejtaxation.
C) Unlikejajpartnership,jajdisadvantagejofjajcorporationjisjthatjitjhasjlimitedjliability.
D) Corporationsjfacejmorejregulationsjwhenjcomparedjtojpartnerships.jA
nswer:j D
Diff:j2 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

11) InjCanada,jthejdistinguishingjfeaturejofjajcorporationjisjthat:
A) therejisjnojlegaljdifferencejbetweenjthejcorporationjandjitsjowners
B) itjisjajlegallyjdefined,jartificialjbeing,jseparatejfromjitsjowners
C) itjspreadsjliabilityjforjitsjcorporatejobligationsjtojalljshareholders
D) itjprovidesjlimitedjliabilityjonlyjtojsmalljshareholdersjA
nswer:j B
Diff:j2 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

12) Whichjofjthejfollowingjis/arejsubjectjtojdoublejtaxationjinjCanada?
A) Corporation
B) Partnership
C) Solejproprietorship
D) BothjAjandjBj
Answer:j A
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms

13) CanadajRevenuejAgency,jCRA,jallowsjanjexemptionjfromjdoublejtaxationjforjcertainjflowjthro
ughjentitiesjwherejalljincomejproducedjbyjthejbusinessjflowsjtojthejinvestorsjandjvirtuallyjnojearnin
gsjarejretainedjwithinjthejbusiness.jThesejentitiesjarejcalled:
A) CanadianjFederaljCrownjCorporations
B) CanadianjControlledjCorporations
C) IncomejTrustjCorporations
D) ForeignjControlledjCorporationsj
Answer:j C
Diff:j1 Type:jMC
Topic:j 1.1j ThejThreejTypesjofjFirms