Question 1

The form of business organization in the United States that has the greatest amount of capital is ________.
A) the sole proprietorship
B) the partnership
C) the sub-chapter corporation
D) the publicly traded corporation

Accepted Answer

Publicly traded corporations have the ability to raise large amounts of capital through the sale of stocks and bonds to the public, making it the form of business organization with the greatest amount of capital. Sole proprietorships and partnerships are typically smaller in scale and have less access to capital, while sub-chapter corporations are a specific type of corporation with certain tax benefits but do not necessarily have more capital than other types of corporations.

Question 2

The ability to raise capital is an advantage of the corporate form of business organization.

Accepted Answer

The corporate form of business allows for raising capital by selling stocks or issuing bonds, which can be done in large amounts that can fund expansion or investment opportunities.

Question 3

Which of the following is NOT true of a sole proprietorship?
A) Sole proprietorships are the least regulated form of business.
B) Sole proprietorships are the easiest form of business to establish.
C) Sole proprietorships are the most popular form of business organization (more sole proprietorships than other forms of business).
D) All of the above are true.

Accepted Answer

The answer of Which of the following is NOT true...

Question 4

________ is a major disadvantage of the corporate form of business.
A) Double taxation
B) Unlimited liability
C) Lack of ability to raise capital
D) Transfer of ownership

Accepted Answer

Double taxation is a major disadvantage of the corporate form of business. This means that both the corporation's profits and the shareholders' dividends are taxed, which can result in a higher overall tax burden.

Question 5

Why are sole proprietorships so much more popular in terms of the number of firms than corporations? (This answer should identify the significant advantages to the sole proprietorship versus those of other forms of business organization.)

Accepted Answer

The answer of Why are sole proprietorships so much more...

Question 6

A ________ is a business that is owned entirely by an individual.
A) sole proprietorship
B) partnership
C) sub-chapter s corporation
D) corporation

Accepted Answer

A sole proprietorship is a business that is owned and operated by a single individual. This means the owner has complete control and is solely responsible for all aspects of the business, including finances, management, and liabilities.

Question 7

The sum of all the market value of publicly traded corporations in the United States exceeds the combined value of partnerships and sole proprietorships.

Accepted Answer

This is true. According to the National Bureau of Economic Research, in 2018 the market value of publicly traded corporations in the US was approximately $36.6 trillion, whereas the combined value of partnerships and sole proprietorships was approximately $12.8 trillion.

Question 8

The Finance Manager works with the Marketing Manager to set annual sales targets.

Accepted Answer

The Finance Manager and the Marketing Manager collaborate closely to establish annual sales goals that are both realistic and in accordance with the company's financial plan.

Question 9

Of the following which group would be considered EXTERNAL PLAYERS of the firm?
A) The loan officer at the firm's commercial bank
B) The shop foreman
C) The human resources manager
D) All of the above

Accepted Answer

External players are those who are not directly employed by the firm but have a significant impact on the firm's operations and success. The loan officer at the firm's commercial bank is an external player as they are not employed by the firm but have an impact on the firm's finances through lending decisions. The shop foreman and human resources manager are both internal players as they are employed by the firm.

Question 10

In practice,
A) the structure of the corporation separates owners from managers.
B) the corporate board selects the main corporate officers.
C) the corporate board is elected by the shareholders.
D) All of the above are true.

Accepted Answer

All of the given options are true in practice. The structure of the corporation separates owners from managers, the corporate board selects the main corporate officers, and the corporate board is elected by the shareholders.

Question 11

What does the standard organizational chart show? In your answer, point out the functions needed for a successful business.

Accepted Answer

The answer of What does the standard organizational chart show?...

Question 12

The Finance Manager works with the Human Resources Manager to set credit policies for targeted customers.

Accepted Answer

The Finance Manager typically sets credit policies for targeted customers in collaboration with the Sales team or the Credit and Collections team. While the Human Resources Manager may assist in recruiting and training personnel to manage credit and collections, they are not directly involved in setting credit policies.

Question 13

Limited liability is an advantage of the sole proprietorship.

Accepted Answer

Limited liability means that the owner's personal assets are protected in case the business incurs debts or legal problems. However, this advantage is not applicable in a sole proprietorship as the owner is personally liable for all business debts and legal issues.

Question 14

Which of the following is an ADVANTAGE of a sole proprietorship?
A) The owner's unlimited liability
B) The lack of continuity upon death of the owner
C) The ease of start up
D) The ability to raise capital

Accepted Answer

The ease of start up is an advantage of a sole proprietorship since only one person is responsible for making all the decisions and there are no legal formalities to follow in order to establish the business.

Question 15

Double taxation refers to which of the following scenarios?
A) Both bondholders AND shareholders of a corporation must pay taxes on proceeds received.
B) The corporation pays taxes on its earnings, and creditors pay taxes on interest received.
C) The corporation pays taxes on its earnings, and shareholders pay taxes on dividends received.
D) All of the above

Accepted Answer

Double taxation occurs when the corporation pays taxes on its earnings (first taxation) and then shareholders pay taxes on the dividends they receive (second taxation). Option A is incorrect because bondholders only pay taxes on the interest received, not the principal amount. Option B is incorrect because creditors (or bondholders) pay taxes only on the interest received, while the corporation pays taxes on its earnings.

Question 16

A ________ has limited liability, is a legal entity, and has the greatest potential to raise capital.
A) sole proprietorship
B) general partnership
C) limited partnership
D) corporation

Accepted Answer

A corporation has limited liability, is a legal entity, and has the ability to issue stocks and raise significant amounts of capital through investors. Sole proprietorships and general partnerships do not have limited liability or the ability to issue stocks, and while limited partnerships do have limited liability, they have more restrictions on ownership and management control.

Question 17

Which of the following is NOT an ADVANTAGE of a sole proprietorship?
A) The owner receiving all the after-tax profit
B) Limited liability
C) Quick decision making
D) All are advantages of a sole proprietorship.

Accepted Answer

Sole proprietorships do not have limited liability, meaning the owner's personal assets can be at risk for business debts and obligations. The other options are all advantages of a sole proprietorship.

Question 18

A ________ is a business that is jointly owned by two or more individuals.
A) partnership
B) sole proprietorship
C) sub-chapter s corporation
D) corporation

Accepted Answer

As per the given statement, a business owned jointly by two or more individuals is known as a partnership. Sole proprietorship refers to a business owned by a single individual, a sub-chapter s corporation is a specific type of corporation with certain tax benefits, and a corporation is a legal entity that is separate from its owners. None of these options accurately reflects a business jointly owned by multiple individuals except for a partnership.

Question 19

Which of the following is NOT an ADVANTAGE of a partnership?
A) A potential increase in available capital over a sole proprietorship
B) The commingling with the general partner's personal assets
C) The potential for more talent and skills in the business
D) All are advantages of a partnership.

Accepted Answer

Commingling personal assets with business assets can create legal and financial problems for the partners. It is not an advantage, but rather a potential disadvantage of a partnership.

Question 20

Which of the following is NOT a DISADVANTAGE of a partnership?
A) Unlimited liability to at least some of the owners
B) The limited life of the business
C) The potential difficulty in transferring ownership
D) All are disadvantages of a partnership.

Accepted Answer

All the options listed (A, B, and C) are indeed disadvantages of a partnership, making D the correct answer. In a partnership, at least some of the owners (general partners) have unlimited liability, the business might have a limited life due to its dependence on the partnership agreement or the life of the partners, and transferring ownership can be difficult without the consent of the other partners.

Quiz 1: Financial Management

The form of business organization in the United States that has the greatest amount of capital is ________.

The ability to raise capital is an advantage of the corporate form of business organization.

Which of the following is NOT true of a sole proprietorship?

________ is a major disadvantage of the corporate form of business.

Why are sole proprietorships so much more popular in terms of the number of firms than corporations? (This answer should identify the significant advantages to the sole proprietorship versus those of other forms of business organization.)

A ________ is a business that is owned entirely by an individual.

The sum of all the market value of publicly traded corporations in the United States exceeds the combined value of partnerships and sole proprietorships.

The Finance Manager works with the Marketing Manager to set annual sales targets.

Of the following which group would be considered EXTERNAL PLAYERS of the firm?

In practice,

What does the standard organizational chart show? In your answer, point out the functions needed for a successful business.

The Finance Manager works with the Human Resources Manager to set credit policies for targeted customers.

Limited liability is an advantage of the sole proprietorship.

Which of the following is an ADVANTAGE of a sole proprietorship?

Double taxation refers to which of the following scenarios?

A ________ has limited liability, is a legal entity, and has the greatest potential to raise capital.

Which of the following is NOT an ADVANTAGE of a sole proprietorship?

A ________ is a business that is jointly owned by two or more individuals.

Which of the following is NOT an ADVANTAGE of a partnership?

Which of the following is NOT a DISADVANTAGE of a partnership?