ch01
Student: ___________________________________________________________________________
1.
Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge
of:
A. capital structure management.
B. asset allocation.
C. risk management.
D. capital budgeting.
E. working capital management.
2.
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is
referred to as the firm's:
A. capital structure.
B. capital budget.
C. asset allocation.
D. working capital.
E. risk structure.
3.
Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities. These values as referred
to as the firm's:
A. capital structure.
B. cash equivalents.
C. working capital.
D. net assets.
E. fixed accounts.
4.
Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type
of business entity does Margie own if she is personally liable for all the store's debts?
A. Sole proprietorship
B. Limited partnership
C. Corporation
D. Joint stock company
E. General partnership
5.
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a
business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will
equally share in the decision making and in the profits or losses. Which type of business did they create if
they both have full personal liability for the firm's debts?
A. Sole proprietorship
B. Limited partnership
C. Corporation
D. Joint stock company
E. General partnership
6.
Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 5050 basis. Which type of entity did they create if they have no personal liability for the firm's debts?
A. Limited partnership
B. Corporation
C. Sole proprietorship
D. General partnership
E. Public company
7.
The potential...