Question

When considering a sole proprietorship, which of the following statements is correct?

Select one:

a. One of the benefits of a sole proprietorship is to protect the owner’s personal data

b. The sole proprietor is subject to double taxation

c. All company debt is the responsibility of the owner

d. The sole proprietorship is becoming an extinct business structure

e. A sole proprietorship and a limited liability company has the same structure

When making capital structure decision, which of the following is considered?

Select one:

a. If given two projects, deciding which option to choose

b. When faced with two projects, deciding how to allocate investment funds

c. Determining the amount of funds needed to finance customer purchases of a new product

d. When funding a new project, deciding how much debt should be used

e. Determining how much inventory will be needed to support a project

The goal of the financial manager is to

Select one:

a. Maximize the company’s dividend per share

b. Maximize value per share

c. Avoid financial distress and increase cash flow

d. Maximize firm efficiency and minimize operational costs

e. Increasing profits while maintaining growth

Answer 1

1)

c. All company debt is the responsibility of the owner

The primary downside to operating your business as a sole proprietorship is that a sole proprietor is personally liable for all of the debts of the business

2)

a. If given two projects, deciding which option to choose

If two projects are mutually exclusive, we need to decide on one.

3)

b. Maximize value per share