True/False Page 1
, CHAPTER 1
AN OVERVIEW OF FINANCIAL MANAGEMENT
(Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard)
Test Bank for Fundamentals of Financial Management, 13 Edition by Brigham
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. See the preface for information on the AACSB letter indicators (F, M,
etc.) on the subject lines.
Multiple Choice: True/False
(1-1) Role of finance FM Answer: a EASY
i. In most corporations, the CFO ranks under the CEO.
a. True
b. False
(1-1) Role of finance FM Answer: b EASY
ii. The Chairman of the Board must also be the CEO.
a. True
b. False
(1-1) Role of finance FM Answer: a EASY
iii. 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
True/False Page 1
, 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
(1-3) Forms of organization FM Answer: a EASY
iv. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
(1-3) Forms of organization FM Answer: b EASY
v. 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
True/False Page 2
, (1-3) Forms of organization FM Answer: b EASY
vi. An advantage of the corporate form of organization is that corporations are generally less highly
regulated than proprietorships and partnerships.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
vii. Some partners in a partnership may have different rights, privileges, and responsibilities than
other partners.
a. True
b. False
(1-3) Forms of organization FM Answer: b EASY
viii. One advantage of the corporate form of organization is that it avoids double taxation.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
ix. It is generally harder to transfer one’s ownership interest in a partnership than in a corporation.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
True/False Page 3
, CHAPTER 1
AN OVERVIEW OF FINANCIAL MANAGEMENT
(Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard)
Test Bank for Fundamentals of Financial Management, 13 Edition by Brigham
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. See the preface for information on the AACSB letter indicators (F, M,
etc.) on the subject lines.
Multiple Choice: True/False
(1-1) Role of finance FM Answer: a EASY
i. In most corporations, the CFO ranks under the CEO.
a. True
b. False
(1-1) Role of finance FM Answer: b EASY
ii. The Chairman of the Board must also be the CEO.
a. True
b. False
(1-1) Role of finance FM Answer: a EASY
iii. 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
True/False Page 1
, 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
(1-3) Forms of organization FM Answer: a EASY
iv. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
(1-3) Forms of organization FM Answer: b EASY
v. 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
True/False Page 2
, (1-3) Forms of organization FM Answer: b EASY
vi. An advantage of the corporate form of organization is that corporations are generally less highly
regulated than proprietorships and partnerships.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
vii. Some partners in a partnership may have different rights, privileges, and responsibilities than
other partners.
a. True
b. False
(1-3) Forms of organization FM Answer: b EASY
viii. One advantage of the corporate form of organization is that it avoids double taxation.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
ix. It is generally harder to transfer one’s ownership interest in a partnership than in a corporation.
a. True
b. False
(1-3) Forms of organization FM Answer: a EASY
True/False Page 3
