Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A)Most businesses (by number and total dollar sales) are organized as proprietorships or partnerships because it is easier to set up and operate in one of these forms rather than as a corporation.However, if the business gets very large, it becomes advantageous to convert to a corporation, primarily because corporations have important tax advantages over proprietorships and partnerships.
• B)Due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of U.S.businesses (in terms of number of businesses) are organized as corporations.
• C)Due to legal considerations related to ownership transfers and limited liability, most business (measured by dollar sales) is conducted by corporations in spite of large corporations' often less favorable tax treatment.
• D)Large corporations are taxed more favorably than sole proprietorships.
• E)Corporate stockholders are exposed to unlimited liability.

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Definitions:

Dividends Declared

The announcement by a company's board of directors of the intention to pay a dividend to shareholders, indicating the amount and payment date.

Financial Position

A snapshot of a company's assets, liabilities, and equity at a specific point in time, illustrating its economic standing.

Statement of Income

A financial document outlining a company's revenues, expenses, and net income over a specific period.

Changes in Equity

Adjustments in the value of a company's shareholders' equity over a period due to investments, distributions, and earnings.