TEST BANK
FUNDAMENTALS OF FINANCIAL MANAGEMENT
Page 1 of 2241
, Chapter 01: An Overview Of Financial Management
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
Answer: True
Points: 1
Difficulty: Easy
References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: False
Preface Name: T/F
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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
2. The Chairman Of The Board Must Also Be The Ceo.
a. True
b. False
Page 2 of 2241
,Answer: False
Points: 1
Difficulty: Easy
References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 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
b. False
Answer: True
Points: 1
Difficulty: Easy
Page 3 of 2241
,References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
4. Partnerships And Proprietorships Generally Have A Tax Advantage Over Corporations.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Page 4 of 2241
,Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
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.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
Page 5 of 2241
,6. An Advantage Of The Corporate Form Of Organization Is That Corporations Are Generally
Less Highly Regulated Than Proprietorships And Partnerships.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of
Organization Keywords: Bloom's:
Knowledge
Date Created: 9/21/2017 3:15 Pm
Date Modified: 9/21/2017 3:15 Pm
7. Some Partners In A Partnership May Have Different Rights, Privileges, And Responsibilities Than
Other Partners.
a. True
b. False
Answer: True
Points: 1
Page 6 of 2241
,Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
8. One Advantage Of The Corporate Form Of Organization Is That It Avoids Double Taxation.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Page 7 of 2241
,Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
9. It Is Generally Harder To Transfer One's Ownership Interest In A Partnership Than In A Corporation.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
Page 8 of 2241
,10. One Danger Of Starting A Proprietorship Is That You May Be Exposed To Personal Liability If The
Business Goes Bankrupt. This Problem Would Be Avoided If You Formed A Corporation To Operate
The Business.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
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.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
Page 9 of 2241
, References: 1-3 Forms Of Business Organization
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
12. If A Corporation Elects To Be Taxed As An S Corporation, Then Both It And Its Stockholders Can
Avoid All Federal Taxes. This Provision Was Put Into The Federal Tax Code In Order To Encourage
The Formation Of Small Businesses.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: False
Learning Objectives: Fofm.Brig.17.01.03 - Forms Of Business Organization National
Standards: United States - Busprog.Fofm.Brig.17.06 - Reflective Thinking
Page 10 of 2241
FUNDAMENTALS OF FINANCIAL MANAGEMENT
Page 1 of 2241
, Chapter 01: An Overview Of Financial Management
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
Answer: True
Points: 1
Difficulty: Easy
References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: False
Preface Name: T/F
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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
2. The Chairman Of The Board Must Also Be The Ceo.
a. True
b. False
Page 2 of 2241
,Answer: False
Points: 1
Difficulty: Easy
References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 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
b. False
Answer: True
Points: 1
Difficulty: Easy
Page 3 of 2241
,References: 1-1 What Is Finance?
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Role Of Finance
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
4. Partnerships And Proprietorships Generally Have A Tax Advantage Over Corporations.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Page 4 of 2241
,Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
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.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
Page 5 of 2241
,6. An Advantage Of The Corporate Form Of Organization Is That Corporations Are Generally
Less Highly Regulated Than Proprietorships And Partnerships.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of
Organization Keywords: Bloom's:
Knowledge
Date Created: 9/21/2017 3:15 Pm
Date Modified: 9/21/2017 3:15 Pm
7. Some Partners In A Partnership May Have Different Rights, Privileges, And Responsibilities Than
Other Partners.
a. True
b. False
Answer: True
Points: 1
Page 6 of 2241
,Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
8. One Advantage Of The Corporate Form Of Organization Is That It Avoids Double Taxation.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Page 7 of 2241
,Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
9. It Is Generally Harder To Transfer One's Ownership Interest In A Partnership Than In A Corporation.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
Page 8 of 2241
,10. One Danger Of Starting A Proprietorship Is That You May Be Exposed To Personal Liability If The
Business Goes Bankrupt. This Problem Would Be Avoided If You Formed A Corporation To Operate
The Business.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
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.
a. True
b. False
Answer: True
Points: 1
Difficulty: Easy
Page 9 of 2241
, References: 1-3 Forms Of Business Organization
Question Type: True / False
Has Variables: 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
Local Standards: United States - Oh - Default City - Students Will Understand And Be -
Students Will Understand And Be Able To Articulate The Goals Of The Firm, The Role Of The Finance
Function In The Enterprise's Organization, And As An Analyst Using Public Information.
Topics: Forms Of Organization
Keywords: Bloom's: Knowledge Date
Created: 9/21/2017 3:15 Pm Date
Modified: 9/21/2017 3:15 Pm
12. If A Corporation Elects To Be Taxed As An S Corporation, Then Both It And Its Stockholders Can
Avoid All Federal Taxes. This Provision Was Put Into The Federal Tax Code In Order To Encourage
The Formation Of Small Businesses.
a. True
b. False
Answer: False
Points: 1
Difficulty: Easy
References: 1-3 Forms Of Business
Organization Question Type: True / False
Has Variables: False
Learning Objectives: Fofm.Brig.17.01.03 - Forms Of Business Organization National
Standards: United States - Busprog.Fofm.Brig.17.06 - Reflective Thinking
Page 10 of 2241
