Updated 2024 WGU D362 Corporate
Finance section 1 Exam Review Questions
with Answers and Rationales 100% Pass |
Graded A+
David Mungai [Date] [Course title]
, Updated 2024 WGU D362 Corporate
Finance section 1 Exam Review
Questions with Answers and Rationales
100% Pass | Graded A+
Last year, a company filed an income tax return and paid taxes on
its net income. From this net income, the company paid cash
dividends to its shareholders, who were required to pay taxes on
the dividends they received.
Which type of business organization is this company?
S-corporation
Partnership
C-corporation
Limited liability company (LLC) - Answer>> A major
disadvantage of a C-corporation is that it must pay taxes on the
income it earns. If the corporation pays a cash dividend, the
stockholders must also pay taxes on the dividends they receive.
Thus, the owners of C-corporations are subject to double taxation
—first at the corporate level and then at the personal level when
they receive dividends.
What are two key characteristics of an S-corporation? Choose
two answers.
Costlier to establish than a sole proprietorship or a partnership
Unlimited number of stockholders
Limited liability of owners
Double taxation - Answer>> "Costlier to establish than a sole
proprietorship or a partnership" is correct. Starting a corporation is
costlier than starting a sole proprietorship. For example, it
requires writing articles of incorporation and by-laws that conform
to the laws of the state of incorporation.
"Limited liability of owners" is correct. A major advantage of a
corporation is that stockholders have limited liability for debts and
other obligations. Owners of corporations have limited liability
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