31. Which one of the following statements concerning a sole proprietorship is correct?A. The life of a sole proprietorship is limited to the life span of the owner. b. A sole proprietor can generally raise large sums of capital quite easily. c. The ownership of a sole proprietorship is easy to transfer to another individual. d.A sole proprietorship must pay taxes separate from the taxes paid by the owner. e. The legal costs to form a sole proprietorship are quite substantial. 32. Which one of the following best describes the primary advantage of being a limited partner rather than a general partner? a. entitlement to a larger portion of the partnership’s income b. ability to manage the day-to-day affairs of the business c. no potential financial loss d.greater management responsibility E. liability for firm debts is limited to the capital invested 33. A general partner: a. has less legal liability than a limited partner. B. has more management responsibility than a limited partner. c. faces double taxation whereas a limited partner does not. d.cannot lose more than the amount he or she invested in the entity. e. is the term applied strictly to corporations which invest in partnerships. 1-11 Chapter 001 Introduction to Corporate Finance 34. A partnership: a. is taxed the same as a corporation. b. agreement defines whether the business income will be taxed like a partnership or a corporation. C. terminates at the death of any general partner. d.has less of an ability to raise capital than a sole proprietorship. e. can consist solely of limited partners. 35. Which of the following are disadvantages of a partnership? I. limited life of the firm II. personal liability for firm debt III. greater ability to raise capital than a sole proprietorship IV. lack of ability to transfer partnership interest a. I and II only b. III and IV only c. II and III only d.D. I II and IV only e. I III and IV only 1-12 Chapter 001 Introduction to Corporate Finance 36. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life a. I and II only b. III and IV only c. I II and III only d.II III and IV onlyE. I III and IV only 37. Which one of the following statements is correct concerning corporations? A. The largest firms are usually corporations. b. The majority of firms are corporations. c. The stockholders are usually the managers of a corporation. d.The ability of a corporation to raise capital is quite limited. e. The income of a corporation is taxed as personal income of the stockholders. 38. Which one of the following statements is correct? a. Both partnerships and corporations incur double taxation. B. Both sole proprietorships and partnerships are taxed in a similar fashion. c. Partnerships are the most complicated type of business to form. d.Both partnerships and corporations have bylaws. e. All types of business formations have limited lives. 1-13 Chapter 001 Introduction to Corporate Finance 39. The articles of incorporation: a. can be used to remove company management. b. are amended annually by the company stockholders. C. set forth the number of shares of stock that can be issued. d.set forth the rules by which a corporation regulates its existence. e. set forth which parties will be general and which will be limited partners. 40. The bylaws: a. establish the name of a corporation. b. are rules which apply only to limited liability companies. c. set forth the purpose of a firm. D. mandate the procedure for electing corporate directors. e. set forth the procedure by which the stockholders elect the senior managers of a firm.
