Intermediate Financial Management 12th Edition by Eugene F. Brigham – Test Bank

Exam Manual for 12th Edition of Financial Management at an Intermediate Level by Eugene F. Brigham

1. ISBN-10

   1305720105
2. ISBN-13

   978-1305720107

3. At page number 1, you will find the TEST BANK for 12th Edition of Financial Management at an Intermediate Level authored by Brigham Daves. In CHAPTER 1—AN OUTLINE OF FINANCIAL MANAGEMENT AND THE FINANCIAL SCENARIO, Cengage Learning Testing, Empowered by Cognero, you will see that the type of organization for a business is not a crucial matter, as this choice has minimal impact on the earnings and wealth of the company’s stakeholders. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Organizational structure KEYWORDS: Bloom’s: Information 2. A significant benefit of a traditional partnership or a corporation as a form of organizational structure is the fact that both offer their owners limited liability, while sole proprietorships do not. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Organizational structure KEYWORDS: Bloom’s: Information 3. Three main disadvantages of a traditional partnership are: (1) unlimited liability, (2) limited lifespan of the organization, and (3) difficulty of transferring ownership. These factors combine to hinder partnerships from attracting large amounts of capital and thus expanding to a significant scale. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Partnership CHAPTER 1—AN OUTLINE OF FINANCIAL MANAGEMENT AND THE FINANCIAL SCENARIO, Cengage Learning Testing, Empowered by Cognero, Page 2 KEYWORDS: Bloom’s: Information 4. Two drawbacks of a sole proprietorship are (1) the relative difficulty of raising new capital and (2) the owner’s unlimited personal liability for the business’s debts. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Sole proprietorship KEYWORDS: Bloom’s: Information 5. One significant benefit of limited liability is that it reduces owners’ risks, thereby enhancing a company’s value. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Limited liability KEYWORDS: Bloom’s: Information 6. If a company’s aim is to maximize its earnings per share, that is the optimal way to maximize the value of the common stock and thus shareholders’ wealth. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.2 – LO: 1-3 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Value maximization CHAPTER 1—AN OUTLINE OF FINANCIAL MANAGEMENT AND THE FINANCIAL SCENARIO, Cengage Learning Testing, Empowered by Cognero, Page 3 KEYWORDS: Bloom’s: Information 7. If Company A’s business is to collect savings from individuals and then invest them in financial instruments issued by other companies or individuals, Company A is functioning as a financial intermediary. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.3 – LO: 1-4 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Financial intermediaries KEYWORDS: Bloom’s: Information 8. The disadvantages associated with a sole proprietorship are similar to those under a partnership. One exception relates to the more formal nature of the partnership agreement and the commitment of all partners’ personal assets. Consequently, partnerships have no difficulty raising substantial amounts of capital. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Scenario: Reasonable LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Partnership KEYWORDS: Bloom’s: Comprehension 9. The fact that a sole proprietorship, as a business entity, pays no corporate income tax, and that it is simple and cost-effective to establish, are two key advantages of that type of business. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Scenario: Reasonable LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Reflective Thinking STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public information CHAPTER 1—AN OUTLINE OF FINANCIAL MANAGEMENT AND THE FINANCIAL SCENARIO, Cengage Learning Testing, Empowered by Cognero, Page 4 LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Sole proprietorship KEYWORDS: Bloom’s: Comprehension 10. Which of the following statements is ACCURATE? a. One of the downsides of incorporating a business is that the owners then become liable in case the company goes bankrupt. b. Sole proprietorships are subject to more regulations than corporations. c. In any form of partnership, each partner has identical rights, privileges, and liability exposure as every other partner. d. Sole proprietorships and partnerships typically have a tax advantage over many corporations, especially large ones. e. All types of corporations are subject to the corporate income tax. ANSWER: d RATIONALE: Sole proprietorships and partnerships pay personal income tax, but they escape the corporate income tax. Small businesses that meet certain criteria can opt to be classified as S Corporations, and then the business is taxed as a partnership. POINTS: 1 DIFFICULTY: Scenario: Basic LEARNING OBJECTIVES: INTE.GENE.16.1 – LO: 1-2 NATIONAL STANDARDS: United States – BUSPROG: Analytic STATE STANDARDS: United States – AK – DISC: Objectives of the company, position of – DISC: Objectives of the company, position of finance, and evaluation of public records LOCAL STANDARDS: United States – OH – Default City – TBA TOPICS: Organizational structure KEYWORDS: Bloom’s: Comprehension OTHER: TYPE: Multiple Choice: Conceptual 11. Which of the following statements is ACCURATE? a. One of the disadvantages of a sole proprietorship is that the owner is exposed to unlimited liability. b. It is generally simpler to transfer one’s ownership stake in a partnership than in a corporation. c. One of the benefits of the corporate organizational structure is that it avoids double taxation. d. One of the social benefits of a corporation is that each shareholder has equal voting rights, i.e.,