1. A corporation possesses the following legal and economic advantages EXCEPT ____.

a.limited liability.

b.avoiding double taxation problem.

c.easy transfer of ownership

.d.easy to raise a large amount of capital

2. Which one of the followings has unlimited liability?

a.General partner in a partnership

b.Limited partner in a partnership

c.Shareholder in a corporation

d.Member in a limited liability company

3. ABC Corporation receives $10,000 dividend income from its equity investment in DEF Corporation. ABC is in the 34% marginal tax bracket. The tax on dividend income wouldamount to:

a.$900

b.$3,000

c.$1,020

d.$3,400

4. ABC Corporations revenue from sales is $250,000; its COGS is $100,000; its SG&A is $50,000; its interest expense is $20,000; it pays $20,000 as cash dividends. How much is the firms income taxes? (Corporate marginal tax rate is $0-50,000: 15%; $50,000-75,000: 25%; $75,000-100,000: 34%; $100,000-335,000: 39%)

a.$15,450

b.$10,000

c.$27,200

d.$15,000

5. Net working capital decreases when:

a. fixed assets are purchased for cash

b. inventory is sold at cost

c. a credit customer pays for his or her purchase

d. inventory is sold at a loss