Financial Management Test Bank 17th Edition | Brigham & Ehrhardt Chapters 1-26

TEST BANK for Financial Management: Theory & Practice
17th Edition Eugene F. Brigham & Michael C. Ehrhardt

,1. The form of organization for a business is not an important issue, as this decision has very little effect
on the income and wealth of the firm's owners.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty:
Easy QUESTION TYPE: True
/ False HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1- 3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of
finance, and
: analysis of public information
LOCAL STANDARDS United States - OH - Default City - TBA
:
TOPICS: Firm organization
KEYWORDS: Bloom’s:
Knowledge DATE CREATED: 8/26/2015
10:43 AM DATE MODIFIED: 8/26/2015
10:43 AM
QUESTION ID: JFND - GO4G- EO5U- ECKG
QUESTION G GCID - E7BW - 1TBP- 8YHU- NC3Z - GC5D - GCTT- 8BUN - 43JT - CFO1- 43JT - GR4N - 43UD- GY3N- 4ATT-
LOBAL ID: GO3D- EA3O - CJDI - GWN8- EPRW - EMJW - CRHU - C3B3 - CO4S - RCBA - CWSU - N3JI - CRSU -
N3B3 - GOSU - NA5D - CCSU - OATA- GBTG- ECDF - E7JI - YT4D- JFNN - 4OTI- GO4W- NQNBEE

2. The major advantage of a regular partnership or a corporation as a form of business organization is
the fact that both offer their owners limited liability, whereas proprietorships do not.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty:
Easy QUESTION TYPE: True
/ False HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1- 3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of
finance, and
: analysis of public information
LOCAL STANDARDS United States - OH - Default City - TBA
:
TOPICS: Firm organization
KEYWORDS: Bloom’s:

,Knowledge DATE CREATED: 8/26/2015
10:43 AM

, DATE MODIFIED: 8/26/2015 10:43 AM
QUESTION ID: JFND - GO4G- EO5U- ECKF
QUESTION G GCID - E7BW - 1TBP- 8YHU- NC3Z - GC5D - GCTT- 8BUN - 43JT - CFO1- 43JT - GR4N - 43UD- GY3N- 4ATT-
LOBAL ID: GO3D- EA3O - CJDI - GWN8- EPRW - EMMG- GOHG- EPMF - GJOU - GA3T- GASS - EP3U - 8RSS - RPTT -
GOSU - GATT- GRSS - RC3O - CR3U - KPMF - E7JI - YT4D- JFNN - 4OTI- GO4W- NQNBEE

3. There are three primary disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of
the organization, and (3) difficulty of transferring ownership. These combine to make it difficult for
partnerships to attract large amounts of capital and thus to grow to a very large size.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty:
Easy QUESTION TYPE: True
/ False HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1- 3
IVES:
NATIONAL STANDA United States - BUSPROG: Reflective Thinking
RDS:
STATE STANDARDS United States - AK - DISC: Goals of the firm, role of - DISC: Goals of the firm, role of
finance, and
: analysis of public information
LOCAL STANDARDS United States - OH - Default City - TBA
:
TOPICS: Partnership
KEYWORDS: Bloom’s:
Knowledge DATE CREATED: 8/26/2015
10:43 AM DATE MODIFIED: 8/26/2015
10:43 AM
QUESTION ID: JFND - GO4G- EO5U- ECKR
QUESTION G GCID - E7BW - 1TBP- 8YHU- NC3Z - GC5D - GCTT- 8BUN - 43JT - CFO1- 43JT - GR4N - 43UD- GY3N- 4ATT-
LOBAL ID: GO3D- EA3O - CJDI - GWN8- EPRW - EMJI - GFOS - K3TI- GYAG- EPUG - COSS - KPJS - CESU - CPT3 -
GOSS - R3UR - CESU - YPMB- GC4S - GQJW- E7JI - YT4D- JFNN - 4OTI- GO4W- NQNBEE

4. Two disadvantages of a proprietorship are (1) the relative difficulty of raising new capital and (2) the
owner's unlimited personal liability for the business' debts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty:
Easy QUESTION TYPE: True
/ False HAS VARIABLES: False
LEARNING OBJECT FMTP.EHRH.17.01.03 - LO: 1- 3
IVES: