Kate is the owner of Kate's Sun Wear, which is a sole proprietorship. Kate unexpectedly suffered a fatal heart attack. Which one of the following statements is correct given this situation? (Points : 3)
The proprietorship ended when Kate passed away.
Kate's Sun Wear will continue on with Kate's beneficiary automatically replacing Kate as the sole proprietor.
The proprietorship ends when Kate passed on, and all income to that date will be tax-free.
The proprietorship ends when Kate passed on, and all income to that date will be taxed as a separate legal entity.
The proprietorship ends when Kate passed on, and all income earned to that date will be taxed as Kate's personal income.
2. (TCO 1) Which one of the following is classified as a current asset? (Points : 3)
3. (TCO 1) Can you provide some examples of situations in which business ethics play a role in the financial management process? (Points : 8)
4. (TCO 3) How can we apply the concept of time value of money in evaluating a mortgage? Present at least two scenarios. Briefly explain your rationale. (Points : 8)
5. (TCO 8) Why do firms use protective covenants? Provide two or three examples of protective covenants, and explain how these covenants increase or decrease risk. (Points : 8)
6. (TCO 6) What are some of the benefits of issuing bonds with call and put provisions? Explain your rationale. (Points : 10)
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