TEST BANK
Corporate Finance 13th Edition
By Stephen Ross, Randolph Westerfield,
Chapters 1 - 21, Complete
Version 1 1
,Chapter 1
Student name:_
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Generally, among those who report directlyto the
q are the treasurer and the
q q q q q q q q q q q
controller of a corporation.
q q q
A) board of directors q q
B) chairperson of the board q q q
C) chief executive officer
q q
D) president
E) chief financial officer
q q
2) A typical chain of command in a corporation is described by which one of the following
q q q q q q q q q q q q q q q q
statements?
A) The information systems manager reports to the treasurer.
q q q q q q q
B) The credit manager reports to the treasurer.
q q q q q q
C) The controller reports to the chief executive officer.
q q q q q q q
D) The tax manager reports to the treasurer.
q q q q q q
E) The capital expenditures manager reports to the controller.
q q q q q q q
3) Answering which one of the following questions involves making a capital budgeting
q q q q q q q q q q q q
decision?
Version 1 2
, A) How much debt should the firm borrow from a particular lender?
q q q q q q q q q q
B) Should the firm build a new production facility?
q q q q q q q
C) Should the firm issue new equityto pay for its growth goals?
q q q q q q q q q q q
D) How much inventory should the firm keep on hand?
q q q q q q q q
E) How much credit should the firm extend to a particular customer?
q q q q q q q q q q
4) Which one of the following statements is accurate?
q q q q q q q
A) Net working capital equals current assets plus current liabilities.
q q q q q q q q
B) Current liabilities are debts that must be repaid in 18 months or less.
q q q q q q q q q q q q
C) Current assets are assets with short lives, such as accounts receivable.
q q q q q q q q q q
D) Long-term debt is defined as a residual claim on a firm’s assets. q q q q q q q q q q q
E) Tangible assets are fixed assets such as patents. q q q q q q q
5) Among the typical responsibilities of the corporate controller is:
q q q q q q q q
A) capitalexpenditures management. q q
B) cash management.
q
C) tax reporting.
q
D) financial planning. q
E) credit management. q
6) q is typically the responsibility of the corporate treasurer.
q q q q q q q
A) Financial planning q
B) Cost accounting
q
C) Tax reporting
q
D) Information systems q
E) Financial accounting q
7) A firm’s
q define(s) its capital structure. q q q
Version 1 3
, A) mixture of various types of production equipment
q q q q q q
B) investment selections for its excess cash reserves q q q q q q
C) combination of cash and cash equivalents q q q q q
D) combination of accounts appearing on the left side of its balance sheetq q q q q q q q q q q
E) proportions of financing from debt and equity q q q q q q
8) The focus of short-term finance is on:
q q q q q q
A) the timing of cash flows.
q q q q
B) acquiring and selling fixed assets. q q q q
C) financing long-term projects. q q
D) capital budgeting. q
E) issuing additional shares of common stock.
q q q q q
9) Net working capital includes:
q q q
A) copyrights.
B) manufacturing equipment. q
C) common stock. q
D) long-term debt. q
E) inventory.
10) q is defined as planning and managing a firm’s long-term assets.
q q q q q q q q q
A) Working capital management q q
B) Cash management
q
C) Cost accounting management
q q
D) Capital budgeting q
E) Capital structure management
q q
11) An amount the firms owes, which it must repaywithin twelve months, is called a(n):
q q q q q q q q q q q q q q
Version 1 4
, A) current liability. q
B) long-term debt. q
C) intangible asset. q
D) accounts receivable. q
E) current asset. q
12) The business entitythat is typicallythe least expensive to form is the:
q q q q q q q q q q q q
A) limited liabilitycompany. q q
B) joint stock company. q q
C) general partnership. q
D) limited partnership. q
E) sole proprietorship.
q
13) A is a business owned by a single individual.
q q q q q q q
A) corporation
B) sole proprietorship
q
C) general partnership q
D) limited partnership q
E) limited liability company q q
14) Regarding a sole proprietorship, which one of the following statements is accurate?
q q q q q q q q q q q
A) It is more difficult to form than other forms of business.
q q q q q q q q q q
B) Its business profits are taxed twice at the federal level.
q q q q q q q q q
C) Its business profits are taxed separately from the personal income of the owner.
q q q q q q q q q q q q
D) The owner may be forced to sell his or her personal assets to paythe company's
q q q q q q q q q q q q q q q
debts.
E) It has an unlimited life span.
q q q q q
15) Regarding a sole proprietorship, which one of the following statements is accurate?
q q q q q q q q q q q
Version 1 5
, A) The ability to raise capital is limited bythe owner’s personal wealth.
q q q q q q q q q q q
B) It pays taxes at the corporatetax rate.
q q q q q q q
C) Ownership of the firm is easy to transfer to another individual. q q q q q q q q q q
D) It must pay income taxes separately from the taxes paid bythe owner.
q q q q q q q q q q q q
E) The legal costs to form it are usually substantial.
q q q q q q q q
16) The primary advantage of being a limited partner rather than a general partner is:
q q q q q q q q q q q q q
A) being entitled to a larger portion of the partnership’s income.
q q q q q q q q q
B) having responsibility for day-to-day management of the business.
q q q q q q q
C) earning profits that are free from income taxation. q q q q q q q
D) the ability to have overall control of the partnership.
q q q q q q q q
E) one’s personal financial liability is limited to the amount of capital invested.
q q q q q q q q q q q
17) A general partner:
q q
A) has less legal liability than a limited partner.
q q q q q q q
B) can end the partnership by withdrawing.
q q q q q
C) faces double taxation of profits whereas a limited partner does not.
q q q q q q q q q q
D) cannot lose more than the amount of his or her equity investment.
q q q q q q q q q q q
E) is the term applied onlyto corporations that invest in partnerships.
q q q q q q q q q q
18) A partnership:
q
A) is taxed in the same fashion that a corporation is taxed.
q q q q q q q q q q
B) terminates upon the death of any limited partner. q q q q q q q
C) creates for all general partners an unlimited liability for the partnership's debts.
q q q q q q q q q q q
D) has the same ability as a corporation to raise capital.
q q q q q q q q q
E) allows for easytransfer of ownership from one general partner to another.
q q q q q q q q q q q
19) One advantage of a partnership is the:
q q q q q q
Version 1 6
Corporate Finance 13th Edition
By Stephen Ross, Randolph Westerfield,
Chapters 1 - 21, Complete
Version 1 1
,Chapter 1
Student name:_
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Generally, among those who report directlyto the
q are the treasurer and the
q q q q q q q q q q q
controller of a corporation.
q q q
A) board of directors q q
B) chairperson of the board q q q
C) chief executive officer
q q
D) president
E) chief financial officer
q q
2) A typical chain of command in a corporation is described by which one of the following
q q q q q q q q q q q q q q q q
statements?
A) The information systems manager reports to the treasurer.
q q q q q q q
B) The credit manager reports to the treasurer.
q q q q q q
C) The controller reports to the chief executive officer.
q q q q q q q
D) The tax manager reports to the treasurer.
q q q q q q
E) The capital expenditures manager reports to the controller.
q q q q q q q
3) Answering which one of the following questions involves making a capital budgeting
q q q q q q q q q q q q
decision?
Version 1 2
, A) How much debt should the firm borrow from a particular lender?
q q q q q q q q q q
B) Should the firm build a new production facility?
q q q q q q q
C) Should the firm issue new equityto pay for its growth goals?
q q q q q q q q q q q
D) How much inventory should the firm keep on hand?
q q q q q q q q
E) How much credit should the firm extend to a particular customer?
q q q q q q q q q q
4) Which one of the following statements is accurate?
q q q q q q q
A) Net working capital equals current assets plus current liabilities.
q q q q q q q q
B) Current liabilities are debts that must be repaid in 18 months or less.
q q q q q q q q q q q q
C) Current assets are assets with short lives, such as accounts receivable.
q q q q q q q q q q
D) Long-term debt is defined as a residual claim on a firm’s assets. q q q q q q q q q q q
E) Tangible assets are fixed assets such as patents. q q q q q q q
5) Among the typical responsibilities of the corporate controller is:
q q q q q q q q
A) capitalexpenditures management. q q
B) cash management.
q
C) tax reporting.
q
D) financial planning. q
E) credit management. q
6) q is typically the responsibility of the corporate treasurer.
q q q q q q q
A) Financial planning q
B) Cost accounting
q
C) Tax reporting
q
D) Information systems q
E) Financial accounting q
7) A firm’s
q define(s) its capital structure. q q q
Version 1 3
, A) mixture of various types of production equipment
q q q q q q
B) investment selections for its excess cash reserves q q q q q q
C) combination of cash and cash equivalents q q q q q
D) combination of accounts appearing on the left side of its balance sheetq q q q q q q q q q q
E) proportions of financing from debt and equity q q q q q q
8) The focus of short-term finance is on:
q q q q q q
A) the timing of cash flows.
q q q q
B) acquiring and selling fixed assets. q q q q
C) financing long-term projects. q q
D) capital budgeting. q
E) issuing additional shares of common stock.
q q q q q
9) Net working capital includes:
q q q
A) copyrights.
B) manufacturing equipment. q
C) common stock. q
D) long-term debt. q
E) inventory.
10) q is defined as planning and managing a firm’s long-term assets.
q q q q q q q q q
A) Working capital management q q
B) Cash management
q
C) Cost accounting management
q q
D) Capital budgeting q
E) Capital structure management
q q
11) An amount the firms owes, which it must repaywithin twelve months, is called a(n):
q q q q q q q q q q q q q q
Version 1 4
, A) current liability. q
B) long-term debt. q
C) intangible asset. q
D) accounts receivable. q
E) current asset. q
12) The business entitythat is typicallythe least expensive to form is the:
q q q q q q q q q q q q
A) limited liabilitycompany. q q
B) joint stock company. q q
C) general partnership. q
D) limited partnership. q
E) sole proprietorship.
q
13) A is a business owned by a single individual.
q q q q q q q
A) corporation
B) sole proprietorship
q
C) general partnership q
D) limited partnership q
E) limited liability company q q
14) Regarding a sole proprietorship, which one of the following statements is accurate?
q q q q q q q q q q q
A) It is more difficult to form than other forms of business.
q q q q q q q q q q
B) Its business profits are taxed twice at the federal level.
q q q q q q q q q
C) Its business profits are taxed separately from the personal income of the owner.
q q q q q q q q q q q q
D) The owner may be forced to sell his or her personal assets to paythe company's
q q q q q q q q q q q q q q q
debts.
E) It has an unlimited life span.
q q q q q
15) Regarding a sole proprietorship, which one of the following statements is accurate?
q q q q q q q q q q q
Version 1 5
, A) The ability to raise capital is limited bythe owner’s personal wealth.
q q q q q q q q q q q
B) It pays taxes at the corporatetax rate.
q q q q q q q
C) Ownership of the firm is easy to transfer to another individual. q q q q q q q q q q
D) It must pay income taxes separately from the taxes paid bythe owner.
q q q q q q q q q q q q
E) The legal costs to form it are usually substantial.
q q q q q q q q
16) The primary advantage of being a limited partner rather than a general partner is:
q q q q q q q q q q q q q
A) being entitled to a larger portion of the partnership’s income.
q q q q q q q q q
B) having responsibility for day-to-day management of the business.
q q q q q q q
C) earning profits that are free from income taxation. q q q q q q q
D) the ability to have overall control of the partnership.
q q q q q q q q
E) one’s personal financial liability is limited to the amount of capital invested.
q q q q q q q q q q q
17) A general partner:
q q
A) has less legal liability than a limited partner.
q q q q q q q
B) can end the partnership by withdrawing.
q q q q q
C) faces double taxation of profits whereas a limited partner does not.
q q q q q q q q q q
D) cannot lose more than the amount of his or her equity investment.
q q q q q q q q q q q
E) is the term applied onlyto corporations that invest in partnerships.
q q q q q q q q q q
18) A partnership:
q
A) is taxed in the same fashion that a corporation is taxed.
q q q q q q q q q q
B) terminates upon the death of any limited partner. q q q q q q q
C) creates for all general partners an unlimited liability for the partnership's debts.
q q q q q q q q q q q
D) has the same ability as a corporation to raise capital.
q q q q q q q q q
E) allows for easytransfer of ownership from one general partner to another.
q q q q q q q q q q q
19) One advantage of a partnership is the:
q q q q q q
Version 1 6
