Type:
Test Bank
Resource:
Fundamentals of Corporate Finance
Edition:
3rd Edition
Author(s):
Jonathan Berk Peter DeMarzo Jarrad Harford
Fundamentals of Corporate Finance 3e
Test Bank
Chapter 1: The Financial Manager and the Firm Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: FSA AICPA: Resource Management 1. The financial manager is responsible for making decisions that are in the best interests of the firm's owners. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 2. A patent is a productive asset for a technology-based firm. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 3. Intangible assets generate most of a manufacturing firm's cash flows. A) True B) False Ans: B
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Fundamentals of Corporate Finance 3e
Test Bank
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: FSA AICPA: Resource Management 4. The most fundamental way that a business can grow in size is the reinvestment of cash flows or earnings. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 5. When a firm goes bankrupt, it will always be liquidated. A) True B) False Ans: B
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 6. Capital assets are generally short term in nature. A) True B) False Ans: B
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Fundamentals of Corporate Finance 3e
Test Bank
Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 7. A good capital budgeting or investment decision is one in which the benefits are worth more to the firm than the cost of the asset. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Investment Decisions AICPA: Strategic/Critical Thinking 8. Financing decisions determine how firms raise cash to pay for their investments. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 9. The dollar difference between a firm’s total current assets and total liabilities is called its net working capital. A) True B) False Ans: B
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Fundamentals of Corporate Finance 3e
Test Bank
Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 10. A sole proprietorship is an owner's only business. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Global Perspective 11. Corporations hold the majority of all business assets and generate the majority of business revenues and profits in the United States. A) True B) False Ans: A
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 12. Unlimited liability means that the owner of a firm is responsible for paying all the bills of the firm. A) True B) False Ans: A
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Fundamentals of Corporate Finance 3e
Test Bank
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 13. The process of transferring ownership of a sole proprietorship is relatively easy compared to a public corporation. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 14. General partners in a business have limited liability with regard to their firm's obligations. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 15. C-Corporations do not have their income subject to double taxation. A) True B) False Ans: B
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Fundamentals of Corporate Finance 3e
Test Bank
Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 16. Privately held corporations are allowed to have stockholders. A) True B) False Ans: A
Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 17. The treasurer of a corporation usually reports to the CFO of the firm. A) True B) False Ans: A
Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Reporting AICPA: Reporting 18. The external auditors of the firm report their findings directly to the CFO of the firm. A) True B) False Ans: B
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