C214 OA FINANCIAL MANAGEMENT
ACTUAL REVIEW PAPER 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
⩥ Easily and inexpensively formed, few government regulations, not
subject to corporate taxation.
Answer: Advantages of a proprietorship
⩥ Difficult to obtain capital, unlimited personal liability, limited to life
of its founder.
Answer: Limitations of a proprietorship
⩥ Partnership.
Answer: Exists whenever two or more persons or entities associate to
conduct a noncorporate business for profit
⩥ Limited Partnership.
Answer: wherein certain partners are designated general partners and
other limited partners
⩥ Limited Partners.
Answer: In a limited partnership, can lose only the amount of their
investment in the partnership, but typically have no control
,⩥ General Partners.
Answer: In a limited partnership, have unlimited liability and typically
control rests solely with
⩥ Limited Liability Partnership (or limited liability company).
Answer: All partners enjoy limited liability with regard to the business's
liabilities, and their potential losses are limited to their investments in
the business
⩥ Corporation.
Answer: A legal entity created under state laws, and it is separate and
distinct from its owners and managers.
⩥ Advantages of a corporation.
Answer: Unlimited life, easy transferability of ownership interest,
limited liability
⩥ Disadvantages of a corporation.
Answer: Double taxation (earnings, and earnings paid out as dividends)
complex to set up.
⩥ Charter.
, Answer: Includes information such as the name of the proposed
corporation, types of activities it will pursue, amount of capital stock,
number of directors, and names and addresses of directors. Filed with
Secretary of State. Once started, must file annual/quarterly
employment/financial/tax reports w/ state and Fed.
⩥ Bylaws.
Answer: A set of rules drawn up by the founders of the corporation.
Election of directors, if existing stockholders have first right to new
shares, procedures for changing by-laws.
⩥ Professional Corporation (or professional association).
Answer: Has most of the benefits of incorporation but the participants
are not relieved of professional (malpractice) liability
⩥ S Corporations.
Answer: A small corporation that, under Subchapter S of the Internal
Revenue Code, elects to be taxed as a proprietorship or a partnership yet
retains limited liability and other benefits of the corporate form of
organization
⩥ Initial Public Offering.
Answer: Occurs when a closely held corporation or its principal
stockholders sell stock to the public at large
ACTUAL REVIEW PAPER 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
⩥ Easily and inexpensively formed, few government regulations, not
subject to corporate taxation.
Answer: Advantages of a proprietorship
⩥ Difficult to obtain capital, unlimited personal liability, limited to life
of its founder.
Answer: Limitations of a proprietorship
⩥ Partnership.
Answer: Exists whenever two or more persons or entities associate to
conduct a noncorporate business for profit
⩥ Limited Partnership.
Answer: wherein certain partners are designated general partners and
other limited partners
⩥ Limited Partners.
Answer: In a limited partnership, can lose only the amount of their
investment in the partnership, but typically have no control
,⩥ General Partners.
Answer: In a limited partnership, have unlimited liability and typically
control rests solely with
⩥ Limited Liability Partnership (or limited liability company).
Answer: All partners enjoy limited liability with regard to the business's
liabilities, and their potential losses are limited to their investments in
the business
⩥ Corporation.
Answer: A legal entity created under state laws, and it is separate and
distinct from its owners and managers.
⩥ Advantages of a corporation.
Answer: Unlimited life, easy transferability of ownership interest,
limited liability
⩥ Disadvantages of a corporation.
Answer: Double taxation (earnings, and earnings paid out as dividends)
complex to set up.
⩥ Charter.
, Answer: Includes information such as the name of the proposed
corporation, types of activities it will pursue, amount of capital stock,
number of directors, and names and addresses of directors. Filed with
Secretary of State. Once started, must file annual/quarterly
employment/financial/tax reports w/ state and Fed.
⩥ Bylaws.
Answer: A set of rules drawn up by the founders of the corporation.
Election of directors, if existing stockholders have first right to new
shares, procedures for changing by-laws.
⩥ Professional Corporation (or professional association).
Answer: Has most of the benefits of incorporation but the participants
are not relieved of professional (malpractice) liability
⩥ S Corporations.
Answer: A small corporation that, under Subchapter S of the Internal
Revenue Code, elects to be taxed as a proprietorship or a partnership yet
retains limited liability and other benefits of the corporate form of
organization
⩥ Initial Public Offering.
Answer: Occurs when a closely held corporation or its principal
stockholders sell stock to the public at large
