Finance 2 - 1(Points 1 Which of the following statements is CORRECT a One advantage of forming a corporation is that equity investors are usually

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(Points: 1) Which of the following statements is CORRECT? a. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a partnership. b. Corporations face fewer regulations than sole proprietorships. c. One disadvantage of operating a business as a sole proprietor is that the firm is subject to double taxation, at both the firm level and the owner level. d. It is generally less expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required. e. If a partnership goes bankrupt, each partner is exposed to liabilities only up the amount of his or her investment in the business. Save Answer 2. (Points: 1) Which of the following statements is CORRECT? a. Corporations generally face fewer regulations than sole proprietorships. b. Corporate shareholders are exposed to unlimited liability. c. There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small. d. Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation. e. It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship. Save Answer 3. (Points: 1) Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a corporation. Which of the following statements is CORRECT? a. Cheers will now be subject to fewer regulations. b. Cheers' shareholders (the ex-partners) will now be exposed to less liability. c. Cheers' investors will be exposed to less liability, but they will find it more difficult to transfer their ownership. d. Assuming Cheers is profitable, none of its income will be subject to federal income taxes. e. Cheers will find it more difficult to raise additional capital.
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This note was uploaded on 05/05/2010 for the course ECONMOICS ECON 203 taught by Professor Josephpetry during the Spring '10 term at University of Illinois, Urbana Champaign.

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Finance 2 - 1(Points 1 Which of the following statements is CORRECT a One advantage of forming a corporation is that equity investors are usually

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