A general partnership has which of the following?
1. Each owner has unlimited liability for all firm debts.
2. It is expensive to form.
3. It is difficult to transfer ownership.
4. Large amounts of cash can be raised easily. - Answer-1 & 3
Someone other than an owner or a creditor who potent...
FIN 301 Exam 1 Questions and Answers
A general partnership has which of the following?
1. Each owner has unlimited liability for all firm debts.
2. It is expensive to form.
3. It is difficult to transfer ownership.
4. Large amounts of cash can be raised easily. - Answer-1 & 3
Someone other than an owner or a creditor who potentially has a claim of the cash
flows of a firm - Answer-Stakeholder
A corporation is a distinct ______ entity. It can have a name and take advantage of the
legal powers of natural persons. - Answer-legal
The liability of a shareholder in a corporation is limited to.... - Answer-the amount the
shareholder invested in the corporation
From stockholders' perspective, what is the primary purpose of awarding stock options
to managers? - Answer-to increase shareholders' wealth
In a limited partnership, a limited partner's liability for business debts is _____________
- Answer-limited to their cash contribution to the partnership
What is important when considering a partnership?
1. Fund raising limitations
2. Personal liability for firm debts
3. Future dividend policy
4. Taxation of partnership income - Answer-1, 2, & 3
Life of a corporation is ______________ - Answer-not limited as the ownership can be
readily transferred
Who generally reports to the CFO? - Answer-treasurer and controller
What is the main goal of financial management? - Answer-to maximize current value
per share of existing stock
Which of the following are included in a firm's capital structure?
1. current assets
2. net sales
3. equity
4. long-term debt - Answer-3 & 4
The articles of incorporation: - Answer-describe the purpose of the firm and set forth the
number of shares of stock that can be issued
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