Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
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
Test Bank Page 2
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
Test Bank Page 3
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
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
Test Bank Page 4
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
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
Test Bank Page 5
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
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
Test Bank Page 2
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
Test Bank Page 3
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
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
Test Bank Page 4
, Financial Management Theory & Practice 16th Edition Eugene F. Brigham & Michael C. Ehrhardt.
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
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
Test Bank Page 5
