,is designed to protect the personal assets of the owner.
may earn profits that are subject to double taxation.
requires the owner to be personally responsible for all of the company's debts.
is the least represented type of firm in the U.S. today.
provides the same benefits to owners that a limited liability company does. - correct answer ✔✔requires
the owner to be personally responsible for all of the company's debts.
A sole proprietorship:
Multiple Choice
has a limited life.
can generally raise large sums of capital quite easily.
can transfer ownership of the firm more easily than a corporation can.
is taxed the same as a C corporation.
is the most regulated form of organization. - correct answer ✔✔has a limited life
A general partner:
Multiple Choice
, is personally responsible for 100 percent of the debts of the partnership.
is responsible for 80 percent of the firm's debts if he or she owns 80 percent of the partnership.
faces double taxation whereas a limited partner does not.
has a maximum loss equal to his or her equity investment.
receives a salary in lieu of a portion of the profits. - correct answer ✔✔is personally responsible for 100
percent of the debts of the partnership.
Which one of the following statements regarding corporations is correct?
Multiple Choice
The majority of firms in the U.S. are structured as corporations.
Undistributed corporate profits are taxable income to the shareholders.
Corporations can have an unlimited life.
Shareholders are protected from all potential losses.
Shareholders directly elect the chief financial officer. - correct answer ✔✔Corporations can have an
unlimited life.
Marissa and Raj are equal general partners in a business. They are content with their current
management and tax situation but are uncomfortable with the idea of unlimited liability. If they wish to
remain as the only two owners of the business, which form of business entity should they consider to
replace their current arrangement?
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