TEST BANK FOR
Fundamentals of Financial Management 16th edition by Eugene F. Brigham and Joel F. Houston
Chapter 1-21 with All Appendixes
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
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
Copyright Cengage Learning. Powered by Cognero. Page 1
,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
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
LOCAL STANDARDS: United States - OH - Default City - Students will understand and be - Students will
Copyright Cengage Learning. Powered by Cognero. Page 2
, 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
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
Copyright Cengage Learning. Powered by Cognero. Page 3
, 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
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
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
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Fundamentals of Financial Management 16th edition by Eugene F. Brigham and Joel F. Houston
Chapter 1-21 with All Appendixes
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
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
Copyright Cengage Learning. Powered by Cognero. Page 1
,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
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
LOCAL STANDARDS: United States - OH - Default City - Students will understand and be - Students will
Copyright Cengage Learning. Powered by Cognero. Page 2
, 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
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
Copyright Cengage Learning. Powered by Cognero. Page 3
, 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
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
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
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