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Chapter 11 Solutions

Chapter 11 Solutions - 11-20 a A bottled water company...

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11-20 a) A bottled water company would most likely be a corporation. The corporation structure would allow the company to obtain a secure source of financing to help in any expansion. b) A small dental practice is likely to be a partnership. The earnings of the organization will depend on the individual client base of each of the dentist. They would therefore probably prefer to receive earnings in relation to their efforts. A partnership works best for this. As this partnership grows, the partnership might consider limited liability partnership to limit the legal exposure of the individual dentists. c) This operation is likely to be a corporation. As tree cutting is a business with some risk, the company would give the shareholders the liability protection that would not be afforded in a partnership or a proprietorship. d) A dog kennel operation would likely be a proprietorship. It would be easily managed by one person and the set up of the proprietorship would be the simpliest for this type of business e) A national chain of building supply stores would use a corporation as the legal for of organization. The company would need access to capital and they would need to issue shares to many shareholders to raise the capital that an operation of this size would need f) A picture framing business in one location would be a proprietorship. This would be the simpliest type of organization for this small business and easiest for the owner to set up.
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11-22 a) Operating as a sole proprietorship does not require
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