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Wgu D362 Corporate Finance section1 SNCOA TEST 2) QUESTIONS WITH COMPLETE ANSWERS!!_.pdf
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8/21/24, 2:58 AMWgu D362 Corporate Finance section1
Jeremiah
Practice questions for this set
Learn 1 /7 Study with Learn
Correct:
The risk manager is responsible for monitoring and managing the firm's risk exposure in
financial and commodity markets and the firm's relationships with insurance providers.
Choose matching term
What are two key characteristics of a C-corporation? Choose two answers.
Inexpensive formation
1 Access to capital
Unlimited liability of owners
Double taxation
What is the primary role of the audit committee according to the Sarbanes-Oxley Act?
To ensure greater board independence.
2 To establish an ethics program in the company.
To receive and review the reports of the external and internal auditors.
To establish internal controls for the company.
Who is responsible for managing a company's insurance portfolio?
The controller
3 The treasurer
The internal auditor
The risk manager
Wgu D3 62 Corporate Finance section1
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, 8/21/24, 2:58 AM
What is a key difference between C-corporations and S-corporations?
C-corporations can be owned by other types of companies and are easily acquired, while S-
corporations cannot be acquired.
Owners of S-corporations have limited liability, while owners of C-corporations have unlimited
4
liability.
An S-corporation is the default corporation when articles of incorporation are filed in a state, but C-
corporations require an additional forms.
S-corporations must pay taxes on the income they earn; all profits earned by C-corporations pass
directly to the stockholders.
Don't know?
Terms in this set (32)
Last year, a company filed an income tax A major disadvantage of a C-corporation is that it must pay taxes on the income it
return and paid taxes on its net income. earns. If the corporation pays a cash dividend, the stockholders must also pay taxes on
From this net income, the company paid the dividends they receive. Thus, the owners of C-corporations are subject to double
cash dividends to its shareholders, who were taxation—first at the corporate level and then at the personal level when they receive
required to pay taxes on the dividends they dividends.
received.
Which type of business organization is this
company?
S-corporation
Partnership
C-corporation
Limited liability company (LLC)
"Costlier to establish than a sole proprietorship or a partnership" is correct. Starting a
What are two key characteristics of an S-
corporation is costlier than starting a sole proprietorship. For example, it requires
corporation? Choose two answers.
writing articles of incorporation and by-laws that conform to the laws of the state of
Costlier to establish than a sole
incorporation.
proprietorship or a partnership
"Limited liability of owners" is correct. A major advantage of a corporation is that
Unlimited number of stockholders
stockholders have limited liability for debts and other obligations. Owners of
Limited liability of owners
corporations have limited liability because corporations are legal persons that take
Double taxation
actions in their own names, not in the names of individual owners.
"Access to capital" is correct. Shares in a corporation can be sold to raise capital from
What are two key characteristics of a C- investors who are not involved in the business. This can greatly increase the amount of
corporation? Choose two answers. capital that can be raised to fund the business.
Inexpensive formation "Double taxation" is correct. A major disadvantage of a C-corporation is that it must pay
Access to capital taxes on the income it earns. If the corporation pays a cash dividend, the stockholders
Unlimited liability of owners must also pay taxes on the dividends they receive. Thus, the owners of C-corporations
Double taxation are subject to double taxation—first at the corporate level and then at the personal
level when they receive dividends.
A new corporation is being formed, and Correct:The board of directors is elected by the shareholders and is responsible to
reporting standards are being considered. them, not to management.
Who reports directly to the owners in this
business structure?
Board of directors
Chief financial officer (CFO)
Audit committee
Chief executive officer (CEO)
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