University of Business& Technology

Worksheet (Chapter#1)
FINANCIAL MANAGEMENT

Select the correct answer:

1. Which of the following types of firms do not have limited liability?

A) Sole proprietorships
B) limited partnerships
C) Corporations
D) None of the above

2. Which of the following features of a corporation is LEAST accurate?

A) The owners' identity is separate from the corporation.

B) The owners of the corporation have unlimited liability for the corporations
debts.
C) Changes in ownership do not result in the dissolution of the corporation.
D) Earnings from the corporation are taxed only once.

3. What is the process of double taxation for the stockholders in a C

corporation?

A) Their shares are taxed when they are both bought and sold.
B) The corporation is taxed on the profits it makes, and the owners are taxed when
this profit is distributed to them.
C) The owners of a corporation are taxed when they receive dividend payments
and when they make a profit from the sale of shares.
D) The corporation must pay taxes on any profits it makes, and the capital raised
by the sale of shares is also subject to taxation.

4. A sole proprietorship is owned by:

A) One person. B) Two or more persons.

C) Shareholders. D) Bankers.
University of Business& Technology
Worksheet (Chapter#1)
FINANCIAL MANAGEMENT

5. Which of the following is NOT one of the financial statements that must be
produced by a public company?

A) The balance sheet

B) The income statement
C) The statement of cash flows
D) The statement of activities

6. The goal of the firm should be:

A) Maximization of profit per share.

B) Maximization of sales.
C) Maximization of shareholder wealth.
D) Maximization of market share.

7. Assume that you went to Las Vegas and hit the jackpot for $5 million.
Further assume that you were offered a choice to receive the $5 million
today, or receive it in two years. According to one of the principles of
finance, which would you take?

A) The $5 million today because it would be worth more than if you would receive
it in two years.
B) The $5 million in two years because it would be worth more than if you would
receive it today.
C) You would be indifferent as to when you would receive the $5 million.
D) The $5 million in two years because you would be afraid of spending it all right
away.