FIN_331_2010_Spring_Test_1_A

FIN_331_2010_Spring_Test_1_A - Towson University Principles...

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Towson University Principles of Financial Management (Fin331) Professor M. Rhee Spring 2010 Exam I Name_____________________________ ID#_________________ 1. Which of the following statements is CORRECT? a. One of the disadvantages of incorporating your business is that you could become subject to the firm's liabilities in the event of bankruptcy. b. Sole proprietorships are subject to more regulations than corporations. c. In any partnership, every partner has the same rights, privileges, and liability exposure as every other partner. d. Corporations of all types are subject to the corporate income tax. e. Sole proprietorships and partnerships generally have a tax advantage over corporations. Answer: e Some corporations (S corporations) are able to avoid the corporate income tax. Sole proprietorships and partnerships pay personal income tax, but they avoid the corporate income tax. 2. What is the sequential approach? 3. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to 4. Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers?
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