One Reason Many Companies Do Not Organize Themselves as an S

question 277

Multiple Choice

One reason many companies do not organize themselves as an S corporation is that this form of business:

• A)Is subject to a higher tax rate than a general partnership.
• B)Does not provide owners with limited liability.
• C)Has a special eligibility restriction,which many businesses are unable to meet.
• D)Is much more difficult to set up than C corporations.

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Definitions:

Depreciated

Refers to the reduced value of an asset after accounting for depreciation expenses over time due to use, wear and tear, or obsolescence.

Accounting Periods

Specific spans of time for which financial reports are prepared, usually quarterly or annually.

Prepaid Expense

Expenses paid in advance and recorded as assets before they are used or consumed.

Consumed

Consumed refers to the portion of resources, goods, or services that have been used up in the process of generating revenue.