Finance 3001 (2025) Actual Exam
Questions and Answers A+ Graded
sole .proprietorship .- .CORRECT .ANSWER--a .business .owned .and .run .by .one
.person
-usually .very .small .with .few, .if .any, .employees
-most .common .type .of .firm .in .the .world
Key .features .of .sole .proprietorship .- .CORRECT .ANSWER--1) .advantage .of
.being .straightforward .to .set .up, .many .new .businesses .use .this .org .form
-2) .principle .limitation .is .that .there .is .no .separation .between .the .firm .and .the
.owner- .the .firm .can .only .have .one .owner .who .runs .the .business
-3) .owner .has .unlimited .personal .liability .for .the .firm's .debts. .That .is, .if .the .firm
.defaults .on .any .debt .payment, .the .lender .can .(and .will) .require .the .owner .to
.repay .the .loan .from .personal .assets. .Owner .who .can't .afford .to .repay .a .loan
.for .which .they .are .personally .responsible .must .declare .personal .bankruptcy
-4) .life .is .limited .to .the .life .of .the .owner. .It .is .also .difficult .to .transfer .ownership
.of .a .sole .proprietorship
partnership .- .CORRECT .ANSWER--a .business .owned .and .run .by .more .than .one
.another
key .features .of .partnership: .- .CORRECT .ANSWER--1) .all .partners .are .liable .for
.the .firms .debt. .Lender .can .require .any .partner .to .repay .all .the .firm's
.outstanding .debts
-2) .partnership .ends .in .the .event .of .the .death .or .with .drawl .of .any .single
.partner
-3) .partners .can .avoid .liquidation .if .the .partnership .agreement .provides .for
.alternatives .such .as .a .buyout .of .a .decreased .or .withdrawn .partner
limited .partnership .- .CORRECT .ANSWER--a .partnership .with .2 .kinds .of .owners:
.general .partners .and .limited .partners
-general .partners .have .same .rights .and .privileges .as .partners .in .any .general
.partnership- .they .are .personally .liable .for .the .firm's .debt .obligations
limited .liability .- .CORRECT .ANSWER--when .an .investor's .liability .is .limited .to
.her .investment
-their .private .property .cannot .be .seized .to .pay .off .the .firm's .outstanding .debt.
.Furthermore, .the .death .or .with .drawl .of .a .limited .partner .does .not .dissolve .the
, .partnership ., .and .a .limited .partner's .interest .is .transferable. .Limited .partner
.has .no .management .authority .and .cannot .legally .be .involved .in .the .managerial
.decision .making .for .the .business
limited .liability .company .(llc) .- .CORRECT .ANSWER--a .limited .partnership
.without .a .general .partner
-all .the .owners .)or .members) .have .limited .liability, .but .unlike .limited .partners,
.they .can .also .run .the .business .(or .managing .members)
corporation .- .CORRECT .ANSWER--a .legally .defined, .artificial .being, .separate
.from .its .owners
-it .can .enter .into .contracts, .acquire .assets, .and .incur .obligations, .and .it .enjoys
.protection .under .the .US .constitution .against .seizure .of .its .property. .
-solely .responsible .for .its .own .obligations
-not .liable .for .any .personal .obligations .of .its .owners
-must .be .legally .formed, .which .means .that .the .state .in .which .it .is .incorporated
.must .formally .give .its .consent .to .the .incorporation .by .chartering .it. .For
.jurisdictional .purposes, .a .corporation .is .a .citizen .of .the .state .in .which .it .is
.incorporated
stock .- .CORRECT .ANSWER--the .ownership .or .equity .of .a .corporation .devided
.into .shares
equity .- .CORRECT .ANSWER--the .collection .of .all .the .outstanding .shares .of .a
.corporation
-shareholders .- .CORRECT .ANSWER--an .owner .of .a .share .of .stock .or .equity .in
.a .corporation
divided .payments .- .CORRECT .ANSWER--payments .made .at .the .discretion .of
.the .corporation .to .its .equity .holders
S .Corporation .- .CORRECT .ANSWER--those .corporations .that .elect .subchapter
.S .tax .treatment .and .are .exempted .by .the .US .Internal .Revenue .Service's .tax
.code .from .double .taxation
-allocated .directly .to .shareholders .based .on .their .ownership .share.
.Shareholders .must .include .these .profits .as .income .on .their .individual .tax
.returns. .After .the .shareholder .have .paid .income .taxes .on .these .profits, .no
.further .tax .is .due
C .Corporation .- .CORRECT .ANSWER--corporations .that .have .no .restrictions .on
.who .owns .their .shares .or .the .number .of .shareholders; .they .cannpt .qualify .for
.subchapter .S .tax .treatment .and .are .subject .to .direct .taxation
Within .the .corporation, .financial .manger .has .3 .main .tasks: .- .CORRECT
.ANSWER--1) .make .investment .decisions
-2) .make .financing .decisions
-3) .manage .short .term .cash .needs
Questions and Answers A+ Graded
sole .proprietorship .- .CORRECT .ANSWER--a .business .owned .and .run .by .one
.person
-usually .very .small .with .few, .if .any, .employees
-most .common .type .of .firm .in .the .world
Key .features .of .sole .proprietorship .- .CORRECT .ANSWER--1) .advantage .of
.being .straightforward .to .set .up, .many .new .businesses .use .this .org .form
-2) .principle .limitation .is .that .there .is .no .separation .between .the .firm .and .the
.owner- .the .firm .can .only .have .one .owner .who .runs .the .business
-3) .owner .has .unlimited .personal .liability .for .the .firm's .debts. .That .is, .if .the .firm
.defaults .on .any .debt .payment, .the .lender .can .(and .will) .require .the .owner .to
.repay .the .loan .from .personal .assets. .Owner .who .can't .afford .to .repay .a .loan
.for .which .they .are .personally .responsible .must .declare .personal .bankruptcy
-4) .life .is .limited .to .the .life .of .the .owner. .It .is .also .difficult .to .transfer .ownership
.of .a .sole .proprietorship
partnership .- .CORRECT .ANSWER--a .business .owned .and .run .by .more .than .one
.another
key .features .of .partnership: .- .CORRECT .ANSWER--1) .all .partners .are .liable .for
.the .firms .debt. .Lender .can .require .any .partner .to .repay .all .the .firm's
.outstanding .debts
-2) .partnership .ends .in .the .event .of .the .death .or .with .drawl .of .any .single
.partner
-3) .partners .can .avoid .liquidation .if .the .partnership .agreement .provides .for
.alternatives .such .as .a .buyout .of .a .decreased .or .withdrawn .partner
limited .partnership .- .CORRECT .ANSWER--a .partnership .with .2 .kinds .of .owners:
.general .partners .and .limited .partners
-general .partners .have .same .rights .and .privileges .as .partners .in .any .general
.partnership- .they .are .personally .liable .for .the .firm's .debt .obligations
limited .liability .- .CORRECT .ANSWER--when .an .investor's .liability .is .limited .to
.her .investment
-their .private .property .cannot .be .seized .to .pay .off .the .firm's .outstanding .debt.
.Furthermore, .the .death .or .with .drawl .of .a .limited .partner .does .not .dissolve .the
, .partnership ., .and .a .limited .partner's .interest .is .transferable. .Limited .partner
.has .no .management .authority .and .cannot .legally .be .involved .in .the .managerial
.decision .making .for .the .business
limited .liability .company .(llc) .- .CORRECT .ANSWER--a .limited .partnership
.without .a .general .partner
-all .the .owners .)or .members) .have .limited .liability, .but .unlike .limited .partners,
.they .can .also .run .the .business .(or .managing .members)
corporation .- .CORRECT .ANSWER--a .legally .defined, .artificial .being, .separate
.from .its .owners
-it .can .enter .into .contracts, .acquire .assets, .and .incur .obligations, .and .it .enjoys
.protection .under .the .US .constitution .against .seizure .of .its .property. .
-solely .responsible .for .its .own .obligations
-not .liable .for .any .personal .obligations .of .its .owners
-must .be .legally .formed, .which .means .that .the .state .in .which .it .is .incorporated
.must .formally .give .its .consent .to .the .incorporation .by .chartering .it. .For
.jurisdictional .purposes, .a .corporation .is .a .citizen .of .the .state .in .which .it .is
.incorporated
stock .- .CORRECT .ANSWER--the .ownership .or .equity .of .a .corporation .devided
.into .shares
equity .- .CORRECT .ANSWER--the .collection .of .all .the .outstanding .shares .of .a
.corporation
-shareholders .- .CORRECT .ANSWER--an .owner .of .a .share .of .stock .or .equity .in
.a .corporation
divided .payments .- .CORRECT .ANSWER--payments .made .at .the .discretion .of
.the .corporation .to .its .equity .holders
S .Corporation .- .CORRECT .ANSWER--those .corporations .that .elect .subchapter
.S .tax .treatment .and .are .exempted .by .the .US .Internal .Revenue .Service's .tax
.code .from .double .taxation
-allocated .directly .to .shareholders .based .on .their .ownership .share.
.Shareholders .must .include .these .profits .as .income .on .their .individual .tax
.returns. .After .the .shareholder .have .paid .income .taxes .on .these .profits, .no
.further .tax .is .due
C .Corporation .- .CORRECT .ANSWER--corporations .that .have .no .restrictions .on
.who .owns .their .shares .or .the .number .of .shareholders; .they .cannpt .qualify .for
.subchapter .S .tax .treatment .and .are .subject .to .direct .taxation
Within .the .corporation, .financial .manger .has .3 .main .tasks: .- .CORRECT
.ANSWER--1) .make .investment .decisions
-2) .make .financing .decisions
-3) .manage .short .term .cash .needs
