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MBA 601 EXAM 1 LATEST 2025/ 2026 ACTUAL EXAM
WITH COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (100% VERIFIED ANSWERS)
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A share of stock entitles you to: - Answer-A percentage of
the earnings of the company
The cost of providing goods and services to customers is called - Answer-Expenses
Benefits (i.e. money) that a company receives from its customers is called - Answer-Revenue
Revenue - Expenses = - Answer-Earnings, Profit, Net Income
A company must pay out the profits that it earns to the stockholders. (true/false) - Answer-FALSE
An ordinary dividend is - Answer-A distribution of earnings to the shareholders 1 / 4
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Companies that are growing quickly usually issue dividends (true/false) - Answer-FALSE
You can make money investing in stocks by - Answer-- Collecting Dividends -Stock Price Appreciation
The advantage of a sole proprietorship is - Answer- Complete control
The primary reason for starting a corporation is - Answer- to raise a lot of capital
A corporation is its own separate legal entity. (True/False)
- Answer-True
In a corporation, the owner is also the manager.(True/False) - Answer-False
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If you are an investor in a corporation, limited liability means - Answer-You are only liable for your investment in the company
What are the disadvantages of a corporate entity - Answer--Double taxation -Increased regulation -Less control
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners, how much tax would the federal government collect? Assume a 20% federal income tax rate and a 15% dividend tax rate. - Answer-
12,800
Pre-tax Earnings=40,000 Federal Tax 20%= 8000 [20%CORPORATE LEVEL] Net Income=32,000 Dividend=32,000 Dividend Tax 15%=4800 [15%OWNER LEVEL]' Net Income= 27,200
Total Tax = 12800 3 / 4
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If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners, how much tax would the corporate entity pay the federal government? Assume a 20% federal income tax rate and a 15% dividend tax rate. - Answer-8,000
Pre-tax Earnings=40,000 Federal Tax 20%=8000
[20% CORPORATE LEVEL]
Net Income= 32,000
The primary advantages of investing in stock are - Answer--unlimited upside -voting rights
The primary advantages of investing in bonds are - Answer--Easier to value than stock -Known payment amount -Know when you are going to get paid -Less risk than investing in stock
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