Answer: A Diff: 1 Type: MC AACSB Objective: Application of Knowledge 23) Which of the following is NOT an advantage of a sole trader? A) limited liability B) single taxation C) no separation of ownership and control D) ease of setup Answer: A Diff: 2 Type: MC AACSB Objective: Application of Knowledge 24) In a limited partnership, limited partners may A) make managerial decisions for the firm. B) have private property seized to pay off the firm's outstanding debts. C) trigger a dissolution of the firm if they withdraw their participation. D) none of the above Answer: D Diff: 1 Type: MC AACSB Objective: Application of Knowledge 25) A 'public' company A) is never a 'reporting entity.' B) is essentially the same as a 'private' company. C) must appoint an auditor. D) must have its shares traded on a stock exchange. Answer: C Diff: 1 Type: MC AACSB Objective: Application of Knowledge SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 26) What are the main differences between a partnership and sole trader? Answer: While a sole trader has the same identity as its single owner, a partnership of general partners has the same identity as its partners. Each general partner is responsible for the decisions taken by that partner as well as any other general partner. Diff: 1 Type: SA AACSB Objective: Application of Knowledge 27) How is a corporation different from most of the other forms of business organisations? Answer: A corporation has a separate legal identity from those of its owners. This separation gives the owners limited liability for the actions of the corporation. In Australia, the 'imputation system' of taxation may relieve double taxation, which is the main disadvantage of a corporation under a 'classical' tax system. Diff: 2 Type: SA AACSB Objective: Application of Knowledge TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1.3 The Financial Manager 28) The principal goal of the financial manager is to maximise the wealth of the shareholders. Answer: True Diff: 1 Type: TF
Answer: A Diff: 1 Type: MC AACSB Objective: Application of Knowledge 23) Which of the following is NOT an advantage of a sole trader? A) limited liability B) single taxation C) no separation of ownership and control D) ease of setup Answer: A Diff: 2 Type: MC AACSB Objective: Application of Knowledge 24) In a limited partnership, limited partners may A) make managerial decisions for the firm. B) have private property seized to pay off the firm's outstanding debts. C) trigger a dissolution of the firm if they withdraw their participation. D) none of the above Answer: D Diff: 1 Type: MC AACSB Objective: Application of Knowledge 25) A 'public' company A) is never a 'reporting entity.' B) is essentially the same as a 'private' company. C) must appoint an auditor. D) must have its shares traded on a stock exchange. Answer: C Diff: 1 Type: MC AACSB Objective: Application of Knowledge SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 26) What are the main differences between a partnership and sole trader? Answer: While a sole trader has the same identity as its single owner, a partnership of general partners has the same identity as its partners. Each general partner is responsible for the decisions taken by that partner as well as any other general partner. Diff: 1 Type: SA AACSB Objective: Application of Knowledge 27) How is a corporation different from most of the other forms of business organisations? Answer: A corporation has a separate legal identity from those of its owners. This separation gives the owners limited liability for the actions of the corporation. In Australia, the 'imputation system' of taxation may relieve double taxation, which is the main disadvantage of a corporation under a 'classical' tax system. Diff: 2 Type: SA AACSB Objective: Application of Knowledge TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1.3 The Financial Manager 28) The principal goal of the financial manager is to maximise the wealth of the shareholders. Answer: True Diff: 1 Type: TF
Test-Bank-for-Fundamentals-of-Corporate-Finance-2nd-Australian-Edition-by-Berk.docx