Which of the Following Is a Disadvantage of the Corporate

question 70

Multiple Choice

Which of the following is a disadvantage of the corporate form of business organization?

• A)Difficulty in transferring ownership
• B)Unlimited liability
• C)Mutual agency
• D)Governmental regulation at both the federal and state levels

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Definitions:

Overstatement

The exaggeration of financial performance or values in financial reporting, leading to misleadingly positive presentations.

Trading On The Equity

The practice of borrowing funds at a lower rate of interest to invest in assets that yield a higher rate of return, utilizing the leverage to increase equity returns.

Profitability

Profitability measures the degree to which a business or activity yields profit or financial gain.

Liquidity Ratios

Financial metrics used to determine an entity's ability to pay off its short-term debts obligations.