Which of the following statements is correct One disadvantage of forming a corporation?

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1.) Sole proprietorship and partnership generally have a tax advantage over corporations.

Answer: True

2.) Which of the following is correct?

A) One of the advantages of the corporate form of organization is that it avoids double taxation,

B) It is easier to transfer one's ownership interest in a partnership than in a corporation.

C) One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

D) One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights "one person

one vote"

Answer: C) One of the disadvantages of a proprietor is exposed to unlimited liability.

3.) Which of the following is correct?

A) One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a

partnership.

B) Corporations face fewer regulations than sole proprietorship's.

C) One disadvantage of operating a business as a sole proprietor is that the firm is subject to double taxation, because taxes

are levied at both the firm level and the owner level.

D) It is generally less expensive to form a corporation than a proprietorship because, with a proprietorship, extensive legal

documents are required.

E) If a partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the

business.

Answer: A) One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would

be in a partnership.

4.) It is usually easier to transfer ownership in a corporation than in a partnership.

A) True

B) FAalse

Answer: A) True

5.) Which of the following could explain why a business might choose to operate as a corporation rather than as a sole

proprietorship or a partnership?

A) Corporations generally face fewer regulations.

B) Less of a corporation's income is generally subject to federal taxes.

C) Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantage of incorporation.

D) Corporate investors are exposed to unlimited liability.

E) Corporations generally find it easier to raise large amounts of capital.

Answer: E) Corporations generally find it easier to raise large amounts of capital.

6.) The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to?

A) Maximize its expected total corporate income.

B) Maximize its expected EPS

C) Minimize the chance of losses

D) Maximize the stock price per share over the long run, which is the stock's intrinsic value.

E) Maximize the stock price on a specific target date.

Answer: D) Maximize the stock price per share over the long run, which is the stock's intrinsic value.

7.) Which of the following statements are correct?

A) If a corporation elects to be taxed as a s corporation, then both it and its stockholders can avoid taxes. This provision was

put into the federal Tax Code in order to encourage the formation of a small business.

B) The more capital a firm is likely to require, the smaller the probability that it will be organized as a corporation.

C) It is generally easier to transfer one's ownership interest in a partnership than in a corporation.

D) One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt. This

problem would be avoided if you formed a corporation to operate the business.

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Which of the following statements is correct One advantage of forming a corporation?