Which of the Following Is a Disadvantage of a Corporation

question 21

Multiple Choice

Which of the following is a disadvantage of a corporation compared to a sole proprietorship?

• A)Limited liability
• B)Difficulty raising start-up money
• C)Lack of profitability
• D)Double taxation of corporate income
• E)Vulnerability in the case of the death of an owner

Understand the concept of cost pools and how they are used in overhead allocation.

Understand the concept of faithful representation in accounting.

Recognize the difference between accounting rules for financial reporting and taxation in the United States.

Identify the bodies responsible for setting generally accepted accounting principles (GAAP) and their role.

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Definitions:

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to deflate or adjust the nominal GDP to real GDP.

Intermediate Good

A product used as an input in the production of a final good or service.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country's borders in a specific time period.

Real GDP

Gross Domestic Product adjusted for inflation, which measures the value of goods and services produced by a country in a year in real terms.