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Chapter 01: An Overview of Financial Management
True / False
Note that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in
multiple-choice questions.
Multiple Choice: True/False
1. In most corporations, the CFO ranks under the CEO.
a. True
b. False
N
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
elitest
e
U
QUESTION TYPE: True / False
l
PREFACE NAME: T/F
i
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
t
R
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
e
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
s
TOPICS: Role of finance
SE
t
KEYWORDS: Bloom's Knowledge
u
u
DATE CREATED: 6/23/2015 3:23 PM
elitestudydocs
DATE MODIFIED: 6/23/2015 3:23 PM
d
d
2. The Chairman of the Board must also be the CEO.
y
y
a. True
D
d
d
b. False
ANSWER: False
o
o
DIFFICULTY: EASY
O
c
c
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
s
s
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
C
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Role of finance
S
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
3. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking
individual. The CEO generally works under the board and its chairman, and the board generally has the authority to
remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to
have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously
serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in
the same person.
a. True
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, elitestudydocs
b. False
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 8/5/2015 1:34 PM
N
4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
elitest
e
U
b. False
l
ANSWER: True
i t
DIFFICULTY: EASY
R
e
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
s
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
SE
t
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
u
u
STATE STANDARDS:
TOPICS:
elitestudydocs
United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
Forms of organization
d
d
KEYWORDS: Bloom's: Knowledge
y
y
DATE CREATED: 6/23/2015 3:23 PM
D
d
d
DATE MODIFIED: 6/23/2015 3:23 PM
o
o
5. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
O
c
c
a. True
b. False
s
s
ANSWER: False
C
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
S
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
Cengage Learning Testing, Powered by Cognero Page 2
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, elitestudydocs
a. True
b. False
ANSWER: False
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
N
DATE MODIFIED: 6/23/2015 3:23 PM
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
elitest
e
U
a. True
l
b. False
i t
ANSWER: True
R
e
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
s
QUESTION TYPE: True / False
SE
t
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
u
u
STATE STANDARDS:
elitestudydocs
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
d
d
TOPICS: Forms of organization
y
y
KEYWORDS: Bloom's: Knowledge
D
d
d
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
o
o
8. One advantage of the corporate form of organization is that it avoids double taxation.
O
c
c
a. True
s
s
b. False
ANSWER: False
C
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
S
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
9. It is generally harder to transfer one's ownership interest in a partnership than in a corporation.
Cengage Learning Testing, Powered by Cognero Page 3
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, elitestudydocs
a. True
b. False
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
N
DATE MODIFIED: 6/23/2015 3:23 PM
10. One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt.
elitest
e
U
This problem would be avoided if you formed a corporation to operate the business.
l
a. True
i
b. False
t
R
e
ANSWER: True
DIFFICULTY: EASY
s
REFERENCES: 1-3 Forms of Business Organization
SE
t
QUESTION TYPE: True / False
u
u
elitestudydocs
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
d
d
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
y
y
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
D
d
d
DATE CREATED: 6/23/2015 3:23 PM
o
o
DATE MODIFIED: 6/23/2015 3:23 PM
O
c
c
11. If a corporation elects to be taxed as an S corporation, then it can avoid the corporate tax. However, its stockholders
will have to pay personal taxes on the firm's net income.
s
s
a. True
C
b. False
ANSWER: True
DIFFICULTY: EASY
S
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
Cengage Learning Testing, Powered by Cognero Page 4
elitestudydocs
Chapter 01: An Overview of Financial Management
True / False
Note that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in
multiple-choice questions.
Multiple Choice: True/False
1. In most corporations, the CFO ranks under the CEO.
a. True
b. False
N
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
elitest
e
U
QUESTION TYPE: True / False
l
PREFACE NAME: T/F
i
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
t
R
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
e
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
s
TOPICS: Role of finance
SE
t
KEYWORDS: Bloom's Knowledge
u
u
DATE CREATED: 6/23/2015 3:23 PM
elitestudydocs
DATE MODIFIED: 6/23/2015 3:23 PM
d
d
2. The Chairman of the Board must also be the CEO.
y
y
a. True
D
d
d
b. False
ANSWER: False
o
o
DIFFICULTY: EASY
O
c
c
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
s
s
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
C
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Role of finance
S
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
3. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking
individual. The CEO generally works under the board and its chairman, and the board generally has the authority to
remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to
have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously
serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in
the same person.
a. True
Cengage Learning Testing, Powered by Cognero Page 1
elitestudydocs
, elitestudydocs
b. False
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 8/5/2015 1:34 PM
N
4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
elitest
e
U
b. False
l
ANSWER: True
i t
DIFFICULTY: EASY
R
e
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
s
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
SE
t
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
u
u
STATE STANDARDS:
TOPICS:
elitestudydocs
United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
Forms of organization
d
d
KEYWORDS: Bloom's: Knowledge
y
y
DATE CREATED: 6/23/2015 3:23 PM
D
d
d
DATE MODIFIED: 6/23/2015 3:23 PM
o
o
5. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
O
c
c
a. True
b. False
s
s
ANSWER: False
C
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
S
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
Cengage Learning Testing, Powered by Cognero Page 2
elitestudydocs
, elitestudydocs
a. True
b. False
ANSWER: False
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
N
DATE MODIFIED: 6/23/2015 3:23 PM
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
elitest
e
U
a. True
l
b. False
i t
ANSWER: True
R
e
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
s
QUESTION TYPE: True / False
SE
t
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
u
u
STATE STANDARDS:
elitestudydocs
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
d
d
TOPICS: Forms of organization
y
y
KEYWORDS: Bloom's: Knowledge
D
d
d
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
o
o
8. One advantage of the corporate form of organization is that it avoids double taxation.
O
c
c
a. True
s
s
b. False
ANSWER: False
C
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
S
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
9. It is generally harder to transfer one's ownership interest in a partnership than in a corporation.
Cengage Learning Testing, Powered by Cognero Page 3
elitestudydocs
, elitestudydocs
a. True
b. False
ANSWER: True
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
N
DATE MODIFIED: 6/23/2015 3:23 PM
10. One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt.
elitest
e
U
This problem would be avoided if you formed a corporation to operate the business.
l
a. True
i
b. False
t
R
e
ANSWER: True
DIFFICULTY: EASY
s
REFERENCES: 1-3 Forms of Business Organization
SE
t
QUESTION TYPE: True / False
u
u
elitestudydocs
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
d
d
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
y
y
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
D
d
d
DATE CREATED: 6/23/2015 3:23 PM
o
o
DATE MODIFIED: 6/23/2015 3:23 PM
O
c
c
11. If a corporation elects to be taxed as an S corporation, then it can avoid the corporate tax. However, its stockholders
will have to pay personal taxes on the firm's net income.
s
s
a. True
C
b. False
ANSWER: True
DIFFICULTY: EASY
S
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
LEARNING OBJECTIVES: FOFM.BRIG.17.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.17.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.17.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
DATE CREATED: 6/23/2015 3:23 PM
DATE MODIFIED: 6/23/2015 3:23 PM
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