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Fundamentals of Financial Management 14th Edition by Eugene F. Brigham - Test Bank
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,CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENTNote 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?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge
2. The Chairman of the Board must also be the CEO.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge
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
REFERENCES: 1-1 What Is Finance?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
Cengage Learning Testing, Powered by Cognero Page 1
,CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge
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
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
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
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
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
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
Cengage Learning Testing, Powered by Cognero Page 2
, CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
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
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
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
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge
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
Cengage Learning Testing, Powered by Cognero Page 3
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