Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) Corporations face few regulations and more favorable tax treatment than do sole proprietorships and partnerships.
• B) Managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value compared to managers who do not face the threat of hostile takeovers.
• C) Bond covenants are an effective way to resolve conflicts between shareholders and managers.
• D) Because of their simplified organization, it is easier for sole proprietors and partnerships to raise large amounts of outside capital than it is for corporations.
• E) One advantage to forming a corporation is that the owners of the firm have limited liability.

---

Definitions:

Physical Substance

A characteristic of certain assets that possess material existence and can be seen, touched, or quantified.

Ownership

The legal right or state of having control and possession over something, such as property or a company.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales from its assets.

Net Sales

The revenue from goods or services sold after deducting returns, allowances for damaged or missing goods, and discounts.