Answer the multiple choice question 1) A firm is considering how to pay for the new investment in software technology to improve the firm's
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Answer the multiple choice question

1) A firm is considering how to pay for the new investment in software technology to improve the firm's operations. This area of finance is known as

A)capital structure.

B)working capital management

C)financial strategy

D)capital budgeting.



2)What is the chief advantage of the sole proprietorship as a form of business organization when compared to the corporate form?

A)Sole proprietorships are subject to double taxation of profits.

B)The ease of formation.

C)Inadequate profit sharing.

D)Owners have unlimited liability.


3)Which of the following is FALSE for partnerships?

A)Only the name of general partners can appear in the name of the firm.

B)One general partner must exist who has unlimited liability.

C)All partners must have a role or function in the operation of the business.

D)Limited partners may sell their interest in the company.



4)In terms of organizational costs, which of the following sequences is generally correct, moving from highest to lowest cost?

A)General partnership, sole proprietorship, corporation

B)Sole proprietorship, general partnership, corporation

C)Corporation, general partnership, sole proprietorship

D)There is no difference in cost



5)Sandy and Henry studied at university and helped Marcus for information to develop his business idea. Marcus sets up the business based on the guidance provided by Sandy and Henry. Based on the information given, what type of business organization is it?

A)Sole proprietorship

B)Limited partnership

C)General partnership

D)Both A and B


6)Lisa started a small proprietorship just a few weeks ago before the covid-19 virus became a global pandemic and caused the business to shut down. Which of the following is the most likely source for additional capital to support her business?A)Business loan from a bank.

B)Issuance of shares.

C)Money from a silent partner.

D)Personal loan from a family member.



7)In a corporation, which of the following are the ultimate owners?

A)the Board of Directors.

B)shareholders.

C)debt holders.

D)investors.


8)Oscar and his four (4) friends agree to set a business partnership. They agree to share profits and losses equally (that is, 25% to each partner) and that Oscar would contribute $100,000 to the business and be a limited partner. Assume the business has a $500,000 debt that it is unable to pay and becomes bankrupt. This means

A)Oscar would be required to $125,000 of the partnership's debts.

B)Oscar would only be responsible for $25,000 of the partnership's debts.

C)Oscar would be responsible for none of the partnership's debts.

D)Oscar would lose his full investment in the partnership but nothing more.


9)Generally, the major sources of financing for corporations are

a)debt and borrowing.

b)partners' contributions.

c)shares and debt.

d)interest and dividends

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