Which of the following statements is CORRECT? A. It is generally more expensive

Question

Which of the following statements is CORRECT?

A. It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.

B. Corporations face fewer regulations than sole proprietorships.

C. One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.

D. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

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

A. It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.

B. Corporations face fewer regulations than sole proprietorships.

C. One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.

D. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

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

Explanation / Answer

D. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

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