Midterm Week4 Fin515

Grading Summary

These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.

Date Taken: 2/3/2013

Time Spent: 1 h , 18 min , 34 secs

Points Received: 80 / 100 (80%)

Question Type: # Of Questions: # Correct:

Multiple Choice 10 8

Grade Details - All Questions

1. Question :

(TCO A) Which of the following statements is CORRECT?

Student Answer: It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.

Corporations face fewer regulations than sole proprietorships.

One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.

One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business.

Instructor Explanation: Chapter 1

Explanation: Ch 1: d is correct, all others are incorrect

a. False- Corporate formation is more complex and expensive, in general, than are partnerships

b. False- Corporations are regulated at state level and thus are more regulated than sole proprietorships

c: False- sole proprietors are taxed once at owner level

d: true- the corporate form provides owners limited liability

e: False- Under partnership law, each partner is liable for the business debts.

Points Received: 0 of 10

Comments:

2. Question :

(TCO G) Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could explain this performance?

Student Answer: The company’s operating income declined.

The...