Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) Most businesses (by number and total dollar sales)are organized as proprietorships or partnerships because it is easier to set up and operate 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.
• C) Due to legal considerations related to ownership transfers and limited liability,which affect the ability to attract capital,most business (measured by dollar sales)is conducted by corporations in spite of large corporations' less favorable tax treatment.
• D) Large corporations are taxed more favorably than proprietorships.
• E) Corporate stockholders are exposed to unlimited liability.

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Definitions:

Equity Modes

Different methods a company can use to enter and operate in foreign markets, typically involving significant ownership and long-term commitment, such as joint ventures or subsidiaries.

Large Investment

Substantial financial commitment in assets or projects expecting future returns.

Equity Modes

Various methods or approaches for a company to raise capital through the sale of shares in the business to investors.

Joint Ventures

Business arrangements where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, project, or business activity.