WorksheetsModule 1 - Overview of Financial Management
Total questions: 68
Worksheet time: 34mins
Other term for sole proprietorship
Single Proprietorship
One-Owner Proprietorship
No other term
Individual Proprietorship
What is the simplest form of business organization?
Partnership
Corporation
Sole Proprietorship
Cooperative
Which legal form of business ensures the greatest protection of owners' personal assets?
Partnership
Corporation
Sole Proprietorship
Cooperative
They share ownership and profits as well as responsibilities and losses, depending on the agreement, i.e. of general partners, limited partners.
Partnership
Corporation
Sole Proprietorship
Cooperative
Typically owned by one person – the one who established the business.
Partnership
Corporation
Sole Proprietorship
Cooperative
Good for those people or entrepreneurs who are beginning their business.
Partnership
Corporation
Sole Proprietorship
Cooperative
A business entity that has no juridical personality
Partnership
Corporation
Sole Proprietorship
Cooperative
In a sole proprietorship, who is responsible for the liabilities and debts of the business?
government
owner
consumers
suppliers
One of the major disadvantages of a sole proprietorship
High start-up costs
Difficulty in making decisions
Limited capital resources
Shared liabilities
When a sole proprietor seeks additional capital and partners with another person, the business can transition into a ____________ ?
Cooperative
Corporation
General Partnership
Limited Liability Partnership
In a general partnership, all partners are what?
Are only responsible for their own investment
Have unlimited liability
Are protected from all business debts
Cannot participate in management
Which type of partnership involves at least one partner who does not participate in management and has liability limited to their investment?
General Partnership
Limited Partnership
Industrial Partnership
Limited Liability Partnership
In sole proprietorship, the business and the owner are not distinct.
TRUE
FALSE
A sole proprietorship has its own juridical personality separate from the owner.
TRUE
FALSE
A general partnership provides limited liability protection to all partners.
TRUE
FALSE
In a limited partnership, a limited partner is responsible for the business’s debts beyond their investment.
TRUE
FALSE
A corporation has perpetual existence, meaning it continues even if an owner dies.
TRUE
FALSE
Which of the following is a key advantage of a sole proprietorship?
Shared decision-making with partners
Full control by the owner
Complex business structure
High start-up costs
In a limited liability partnership (LLP), the partners' personal assets are at risk for business debts.
TRUE
FALSE
Stock corporations are always required to share their profits with employees.
TRUE
FALSE
A C Corporation is taxed at both the corporate and shareholder levels.
TRUE
FALSE
A non-stock corporation can be taxed depending on its classification.
TRUE
FALSE
A corporation can own property, sue, and be sued in its own name.
TRUE
FALSE
A limited liability partnership (LLP) functions similarly to a corporation in terms of liability protection.
TRUE
FALSE
A sole proprietorship business has relatively lower credit ratings.
TRUE
FALSE
In a sole proprietorship, the business is dissolved upon the death of the owner.
TRUE
FALSE
SOLE PROPRIETORSHIP A Business Permit is needed to be registered again if the business will have its another successor since, the BIR has to register a new name and tax number.
TRUE
FALSE
Why can a sole proprietor make quick decisions?
Because they must consult a board of directors.
Because they have limited decision-making authority.
Because they do not need anyone else's concurrence.
Because they must get government approval before making changes.
One of the financial benefits of a sole proprietorship is:
The business is taxed twice
The owner enjoys all the profits
The profits are shared with employees
The profits must be reinvested into the business
What makes a sole proprietorship a flexible business structure?
The owner can easily shift to another legal form if needed
The owner is required to get government approval before making any changes
The business structure is complex and difficult to change
The owner must dissolve the business before transitioning to another form
Why is a sole proprietorship considered a low-cost business structure?
Because it requires multiple investors
Because the owner must seek funding from banks
Because it has low start-up investment requirements
Because it requires a legal team for business registration
What happens to a general partnership when a partner dies or withdraws?
The partnership continues as usual
The business automatically converts into a corporation
The partnership dissolves
The partner’s shares are given to the government
In a limited liability partnership (LLP), what happens to the personal assets of the partners in case of business debt?
Creditors can seize personal assets
Creditors can only go after business assets
Partners must use personal funds to cover losses
Personal assets are automatically frozen by the government
Which type of corporation is profit-oriented?
Non-stock corporation
Cooperative
Stock corporation
Religious corporation
A corporation has a distinct legal personality, meaning:
It is an extension of the owner’s personal identity
It is legally separate from its owners
It cannot own property
It cannot be sued
Who governs a stock corporation?
A sole owner
The Securities and Exchange Commission (SEC)
A Board of Directors
Employees
What is the main characteristic of a non-stock corporation?
It operates for profit
It distributes dividends to its owners
It is mainly formed for educational, charitable, or religious purposes
It is owned by shareholders
Which classification of corporations is subject to double taxation?
S Corporation
C Corporation
Non-stock Corporation
Limited Partnership
A religious organization is typically categorized as what type of corporation?
S Corporation
Non-stock Corporation
General Corporation
Corporation Sole
If a foreign company establishes a branch in the Philippines, it is classified as a:
Foreign corporation
Non-stock Corporation
Domestic corporation
Corporation Sole
What is an industrial partner's role in a partnership?
Provides financial capital
Is only responsible for legal matters
Contributes expertise and management without financial investment
Acts as a silent investor
What is one key advantage of a corporation?
Easy to dissolve when the owner dies
Lower tax responsibilities
Access to greater capital and investment opportunities
No need for legal registration
Which of the following can transition from a sole proprietorship to a corporation?
A business that remains small and local
A business with growing capital needs and multiple investors
A non-profit organization
A business that does not generate revenue
System that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities.
Finance
Financial Management
Financing
Corporate Finance
Deals with the capital structure of a corporation, including its funding and the actions that the management takes to increase the value of the company that includes the tools and analysis utilized to prioritize and distribute financial resources.
Finance
Financial Management
Financing
Corporate Finance
A level of finance where management of assets and liabilities of an entity/company in such a way that the general aim of putting up a company is to increase the wealth and value of assets which could only be happening through the time when financial performance is good and earns.
Micro
Macro
Medium
Corporate
A level of finance where it includes different financial services, like banking services, investment, equity, bonds, capital markets, PSE.
Micro
Macro
Medium
Corporate
Financial Institutions that are into investments, providing settlement solutions, such as companies that are into remittances.
Micro
Macro
Medium
Corporate
Bangko Sentral ng Pilipinas (BSP)
Micro
Macro
Medium
Corporate
An organization who is concerned of monetary policy, control of money circulation, contracted in times of inflation.
Bangko Sentral ng Pilipinas (BSP)
Securities and Exchange Commission
Philippine Stock Exchange
Department of Finance
What is the primary goal of corporate finance?
Maximizing the company’s stock price
Reducing employee salaries
Minimizing the company’s debt
Avoiding investment risks
What is the ideal capital structure ratio according to corporate finance principles?
50% debt, 50% equity
80% debt, 20% equity
70% debt, 30% equity
30% debt, 70% equity
What is the primary purpose of financial management?
Day-to-day optimization of cash flow
Increasing employee wages
Eliminating all forms of company debt
Expanding the physical location of a company
The payback period is used to determine:
How long it takes to recover an initial investment
The percentage of debt financing in a company
The liquidity of a company’s assets
The legal compliance of a corporation
Which financial statement shows a company’s assets, liabilities, and equity?
Income Statement
Balance Sheet
Statement of Cash Flows
Retained Earnings Statement
What does Internal Rate of Return (IRR) measure?
The company’s profitability over the next 10 years
The rate at which an investment breaks even in present value terms
The company’s debt ratio
The amount of dividends paid to shareholders
Capital investment decisions involve:
Hiring new employees
Choosing projects or acquisitions to invest in
Reducing the number of shareholders
Cutting operational expenses
Which of the following is an example of an investment in the money market?
Purchasing stocks
Buying government bonds
Placing funds in high-yield savings accounts
Acquiring company equipment
The purpose of dividends is to:
Reduce the company's operating expenses
Provide returns to shareholders
Increase the debt ratio of a company
Fund short-term liabilities
Financial management primarily focuses on long-term investment decisions.
TRUE
FALSE
A higher return on investment (ROI) always means lower financial risk.
TRUE
FALSE
The balance sheet equation states that Assets = Liabilities + Equity.
TRUE
FALSE
The payback period alone is enough to determine whether an investment is profitable.
TRUE
FALSE
Financial systems at the macro level include institutions such as banks and capital markets.
TRUE
FALSE
Capital structure refers to the mix of debt and equity a company uses for financing.
TRUE
FALSE
If a company has an interest coverage ratio below 1, it means the company is earning more than its interest expenses.
TRUE
FALSE
Dividend payments are mandatory for all corporations.
TRUE
FALSE
Capital budgeting helps businesses decide which projects are financially viable.
TRUE
FALSE
