Deck 13: Understanding Business Finances

Question 1

A sole proprietorship is a popular form of business because

A) it is heavily regulated by the government.
B) it is taxed more than other forms.
C) it is hard to dissolve.
D) the proprietor does not have direct control.
E) it is easy to form.

Answer 1

A

Question 2

All of the following are advantages of a sole proprietorship except

A) ease of formation.
B) secrecy.
C) unlimited liability.
D) control of the business.
E) limited government regulation.

Answer 2

C

Question 3

A method of long-term financing that requires repaying funds with interest is

A) issuing bonds.
B) using retained earnings.
C) issuing stocks.
D) buying insurance.
E) All of the answers are correct.

Answer 3

A

Question 4

As business owners and managers,we need to continually be aware of all the following,EXCEPT:

A) the financial capacity of our business
B) market value of our business
C) the liability exposure
D) the risks being incurred
E) the skill sets necessary for success.

Question 5

How are business organizations' legal structure and financing interrelated?

A) As a business organization moves forward the need for forces them to take a certain legal structure
B) As a business organization grows the need for additional cash resources often acts as a catalyst for the way that its legal structure evolves
C) A business organization's legal structure requires them to obtain additional cash resources
D) As a business organization grows they need additional cash resources have to legally structure a certain way
E) A business organization needs to legally structure a certain way to get additional cash resources

Question 6

All of the following are factors that influences the determination of the type of legal structure to utilize in commencing business operations,EXCEPT:

A) Ease of business set-up and operation
B) The degree of control which an owner(s) desire(s)
C) The magnitude of wealth an individual(s) is/are trying to make
D) The magnitude of risk an individual(s) is/are willing to take on
E) The capacity of an individual(s) to provide the financial needs required

Question 7

Long-Term Credit Facilities are

A) debts that are due in less than six months.
B) debts that will be repaid over a number of years.
C) assets.
D) equity.
E) retained earnings.

Question 8

The type of ownership form which can raise capital most easily is a

A) public corporation.
B) private corporation.
C) sole proprietorship.
D) general partnership.
E) limited partnership.

Question 9

A bond

A) must be repaid over a stipulated period of time at regular intervals.
B) may be defaulted without penalty.
C) is the same as a stock.
D) is a fixed asset.
E) is a current liability.

Question 10

A private corporation is one that

A) is owned by only a few people and not traded on the open market.
B) does not pay taxes on its income.
C) does not hire employees.
D) can be purchased on the Toronto Stock Exchange.
E) all of the answers are correct.

Question 11

A business organization's legal structure requires them to obtain additional cash resources

Question 12

As a business organization moves forward the need for forces them to take a certain legal structure

Question 13

is/are trying to make is a factor that influences the determination of the type of legal structure to utilize in commencing business operations.

Question 14

Public-equity investment opportunities are limited to ______.

A) public corporations.
B) private corporations.
C) sole proprietorships.
D) general partnerships.
E) limited partnerships.

Question 15

As a business organization grows they need additional cash resources have to legally structure a certain way

Question 16

For many individuals,commencing business operations is easiest via the establishment of _______.

A) a Partnership
B) a Private Corporation
C) a Sole Proprietorship
D) a Public Corporation
E) none of the above

Question 17

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called

A) entrepreneurs.
B) corporate raiders.
C) venture capitalists.
D) stockholders.
E) shareholders.

Question 18

What is the key advantage of the Sole Proprietorship,beyond the simplicity of the commencement of the operation?

A) the sole proprietor is 100% personally exposed to the liabilities incurred by the business
B) the sole proprietor has 100% control of the business
C) the skill set of the business is limited to the skills possessed by the sole proprietor
D) no real creation of a separate legal business entity
E) limited to their personal capacity to invest and/or borrow money

Question 19

In general,for-profit organizations have all of the following sources of funds available to them,EXCEPT:

A) Funds derived from operations
B) Funds obtained via credit facilities (debt)
C) Funds obtained via equity financing
D) Funds obtained via stock financing
E) Funds obtained via family and friends financing

Question 20

As a business organization grows the need for additional cash resources often acts as a catalyst for the way that its legal structure evolves

Question 21

The Ease of business set-up and operation is a factor that influences the determination of the type of legal structure to utilize in commencing business operations.

Question 22

A sole proprietorship is a popular form of business because it is taxed more than other forms.

Question 23

A sole proprietorship is a popular form of business because it is hard to dissolve.

Question 24

is/are willing to take on is a factor that influences the determination of the type of legal structure to utilize in commencing business operations.

Question 25

For many individuals,commencing business operations is easiest via the establishment of a Public Corporation.

Question 26

A sole proprietorship is a popular form of business because it is heavily regulated by the government.

Question 27

The fact that the skill set of the business is limited to the skills possessed by the sole proprietor the key advantage of the Sole Proprietorship,beyond the simplicity of the commencement of the operation.

Question 28

Secrecy is an advantage of a sole proprietorship.

Question 29

Control of the business is an advantage of a sole proprietorship.

Question 30

The fact that the sole proprietor has 100% control of the business is the key advantage of the Sole Proprietorship,beyond the simplicity of the commencement of the operation.

Question 31

The fact that the sole proprietor is 100% personally exposed to the liabilities incurred by the business is the key advantage of the Sole Proprietorship,beyond the simplicity of the commencement of the operation.

Question 32

For many individuals,commencing business operations is easiest via the establishment of a Private Corporation.

Question 33

is a factor that influences the determination of the type of legal structure to utilize in commencing business operations.

Question 34

For many individuals,commencing business operations is easiest via the establishment of a Partnership.

Question 35

A sole proprietorship is a popular form of business because it is easy to form.

Question 36

Limited government regulation is an advantage of a sole proprietorship.

Question 37

The fact that the sole proprietor is limited to their personal capacity to invest and/or borrow money is the key advantage of the Sole Proprietorship,beyond the simplicity of the commencement of the operation.

Question 38

Ease of formation is an advantage of a sole proprietorship.

Question 39

Unlimited liability is an advantage of a sole proprietorship.

Question 40

For many individuals,commencing business operations is easiest via the establishment of a Sole Proprietorship.

Question 41

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called stockholders.

Question 42

As business owners and managers,we need to continually be aware of the risks being incurred.

Question 43

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called venture capitalists.

Question 44

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called corporate raiders.

Question 45

A private corporation is one that does not pay taxes on its income.

Question 46

A private corporation is one that does not hire employees.

Question 47

As business owners and managers,we need to continually be aware of the liability exposure.

Question 48

As business owners and managers,we need to continually be aware of the financial capacity of our business.

Question 49

A method of long-term financing that requires repaying funds with interest is issuing bonds.

Question 50

A private corporation is one that is owned by only a few people and not traded on the open market.

Question 51

As business owners and managers,we need to continually be aware of the market value of our business.

Question 52

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called entrepreneurs.

Question 53

The type of ownership form which can raise capital most easily is a private corporation.

Question 54

In general,for-profit organizations have funds derived from operations.

Question 55

In general,for-profit organizations have funds available via family and friends financing.

Question 56

The type of ownership form which can raise capital most easily is a sole proprietorship.

Question 57

A private corporation is one that is owned by only a few people and not traded on the open market.

Question 58

In general,for-profit organizations have funds obtained via equity financing.

Question 59

The type of ownership form which can raise capital most easily is a public corporation.

Question 60

The type of ownership form which can raise capital most easily is a private corporation.

Question 61

Public-equity investment opportunities are limited to sole proprietorships.

Question 62

Long-Term Credit Facilities are debts that will be repaid over a number of years.

Question 63

Public-equity investment opportunities are limited to public corporations.

Question 64

Public-equity investment opportunities are limited to limited partnerships.

Question 65

A method of long-term financing that requires repaying funds with interest is buying insurance.

Question 66

An essential part of our strategic plan is where and how to use and obtain capital.

Question 67

An essential part of our strategic plan is where and how to use and obtain debt.

Question 68

A bond is the same as a stock.

Question 69

A bond is a current liability.

Question 70

A method of long-term financing that requires repaying funds with interest is issuing stocks.

Question 71

An essential part of our strategic plan is where and how to use and obtain money.

Question 72

A method of long-term financing that requires repaying funds with interest is retained earnings.

Question 73

An essential part of our strategic plan is where and how to use and obtain equity.

Question 74

A bond may be defaulted without penalty.

Question 75

Long-Term Credit Facilities are debts that are due in less than six months.

Question 76

For most organizations,managers will have a tendency to look first towards internal funds to compensate owners and to finance new investments.

Question 77

A bond must be repaid over a stipulated period of time at regular intervals.

Question 78

Long-Term Credit Facilities are debts that will be repaid over a number of years.

Question 79

Long-Term Credit Facilities are assets.

Question 80

Public-equity investment opportunities are limited to private corporations.