1|Page
MBA 601 Exam 1 includes accurate and verified
questions covering foundational business
concepts such as managerial economics,
organizational behavior, marketing principles,
financial analysis, and strategic decision-
making. Designed for graduate-level
A share of stock entitles you to: - .....ANSWER ...✔✔
A percentage of the earnings of the company
The cost of providing goods and services to customers is
called - .....ANSWER ...✔✔ Expenses
Benefits (i.e. money) that a company receives from its
customers is called - .....ANSWER ...✔✔ Revenue
Revenue - Expenses = - .....ANSWER ...✔✔ Earnings,
Profit, Net Income
A company must pay out the profits that it earns to the
stockholders. (true/false) - .....ANSWER ...✔✔ FALSE
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An ordinary dividend is - .....ANSWER ...✔✔ A
distribution of earnings to the shareholders
Companies that are growing quickly usually issue
dividends (true/false) - .....ANSWER ...✔✔ FALSE
You can make money investing in stocks by -
.....ANSWER ...✔✔ -Collecting Dividends
-Stock Price Appreciation
The advantage of a sole proprietorship is - .....ANSWER
...✔✔ Complete control
The primary reason for starting a corporation is -
.....ANSWER ...✔✔ to raise a lot of capital
A corporation is its own separate legal entity.
(True/False) - .....ANSWER ...✔✔ True
In a corporation, the owner is also the manager.
(True/False) - .....ANSWER ...✔✔ False
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If you are an investor in a corporation, limited liability
means - .....ANSWER ...✔✔ You are only liable for
your investment in the company
What are the disadvantages of a corporate entity -
.....ANSWER ...✔✔ -Double taxation
-Increased regulation
-Less control
If a corporation had earnings of $40,000 and paid all
of this out as a dividend to the owners, how much tax
would the federal government collect? Assume a 20%
federal income tax rate and a 15% dividend tax rate. -
.....ANSWER ...✔✔ 12,800
Pre-tax Earnings=40,000
Federal Tax 20%= 8000 [20%CORPORATE LEVEL]
Net Income=32,000 Dividend=32,000
Dividend Tax 15%=4800 [15%OWNER LEVEL]'
Net Income= 27,200
Total Tax = 12800
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If a corporation had earnings of $40,000 and paid all
of this out as a dividend to the owners, how much tax
would the corporate entity pay the federal government?
Assume a 20% federal income tax rate and a 15%
dividend tax rate. - .....ANSWER ...✔✔ 8,000
Pre-tax Earnings=40,000
Federal Tax 20%=8000
[20% CORPORATE LEVEL]
Net Income= 32,000
The primary advantages of investing in stock are -
.....ANSWER ...✔✔ -unlimited upside
-voting rights
The primary advantages of investing in bonds are -
.....ANSWER ...✔✔ -Easier to value than stock
-Known payment amount
-Know when you are going to get paid
-Less risk than investing in stock
-Priority over stockholders in bankruptcy
MBA 601 Exam 1 includes accurate and verified
questions covering foundational business
concepts such as managerial economics,
organizational behavior, marketing principles,
financial analysis, and strategic decision-
making. Designed for graduate-level
A share of stock entitles you to: - .....ANSWER ...✔✔
A percentage of the earnings of the company
The cost of providing goods and services to customers is
called - .....ANSWER ...✔✔ Expenses
Benefits (i.e. money) that a company receives from its
customers is called - .....ANSWER ...✔✔ Revenue
Revenue - Expenses = - .....ANSWER ...✔✔ Earnings,
Profit, Net Income
A company must pay out the profits that it earns to the
stockholders. (true/false) - .....ANSWER ...✔✔ FALSE
,2|Page
An ordinary dividend is - .....ANSWER ...✔✔ A
distribution of earnings to the shareholders
Companies that are growing quickly usually issue
dividends (true/false) - .....ANSWER ...✔✔ FALSE
You can make money investing in stocks by -
.....ANSWER ...✔✔ -Collecting Dividends
-Stock Price Appreciation
The advantage of a sole proprietorship is - .....ANSWER
...✔✔ Complete control
The primary reason for starting a corporation is -
.....ANSWER ...✔✔ to raise a lot of capital
A corporation is its own separate legal entity.
(True/False) - .....ANSWER ...✔✔ True
In a corporation, the owner is also the manager.
(True/False) - .....ANSWER ...✔✔ False
,3|Page
If you are an investor in a corporation, limited liability
means - .....ANSWER ...✔✔ You are only liable for
your investment in the company
What are the disadvantages of a corporate entity -
.....ANSWER ...✔✔ -Double taxation
-Increased regulation
-Less control
If a corporation had earnings of $40,000 and paid all
of this out as a dividend to the owners, how much tax
would the federal government collect? Assume a 20%
federal income tax rate and a 15% dividend tax rate. -
.....ANSWER ...✔✔ 12,800
Pre-tax Earnings=40,000
Federal Tax 20%= 8000 [20%CORPORATE LEVEL]
Net Income=32,000 Dividend=32,000
Dividend Tax 15%=4800 [15%OWNER LEVEL]'
Net Income= 27,200
Total Tax = 12800
, 4|Page
If a corporation had earnings of $40,000 and paid all
of this out as a dividend to the owners, how much tax
would the corporate entity pay the federal government?
Assume a 20% federal income tax rate and a 15%
dividend tax rate. - .....ANSWER ...✔✔ 8,000
Pre-tax Earnings=40,000
Federal Tax 20%=8000
[20% CORPORATE LEVEL]
Net Income= 32,000
The primary advantages of investing in stock are -
.....ANSWER ...✔✔ -unlimited upside
-voting rights
The primary advantages of investing in bonds are -
.....ANSWER ...✔✔ -Easier to value than stock
-Known payment amount
-Know when you are going to get paid
-Less risk than investing in stock
-Priority over stockholders in bankruptcy
