Quiz Module 2 ?s Flashcards
Which answer is not a characteristic of a sole proprietorship?
The owner must file a separate tax return for the business.
A sole proprietorship does not elect board members.
The owner is personally liable for the business’s debt and obligations.
There is only one owner.
The owner must file a separate tax return for the business.
Which answer is a legal characteristic of a general partnership?
There must be at least two business owners.
The partnership is taxed as a separate entity from its partners.
Partners are not personally liable for the business’s debts and obligations.
All of these answers are correct.
There must be at least two business owners.
Which answer best describes a characteristic of a corporation?
Shareholders are generally not personally liable for the business’s obligations and liabilities.
The corporation is a separate taxable entity from its owners.
The corporation must have an elected board of directors.
All of these answers are correct.
All of these answers are correct.
Which answer is a factor that contributes to the conflict of interest between a company’s bondholders and its shareholders?
Shareholders have a vote in how the company conducts its business; bondholders generally do not.
Shareholders generally want the company to pursue riskier projects; bondholders do not.
All of these answers are correct.
Shareholders are only paid if the company makes a profit, bondholders are paid regardless.
All of these answers are correct.
Which answer is not a true statement regarding the valuation process?
Valuation can be done on assets or on liabilities.
Valuation often relies on fundamental analysis, such as discounted cash flow or net present value.
Valuation is a forward-looking process, so historical data is unimportant.
Valuation is the process of estimating what something is worth.
Valuation is a forward-looking process, so historical data is unimportant.
