A Local Retail Shop Has Been Operating as a Sole

question 58

Multiple Choice

A local retail shop has been operating as a sole proprietorship.The business is growing and now the owner wants to incorporate.Which of the following is not a reason for this owner to incorporate?

• A)Ability to raise capital for expansion
• B)Desire to limit the owner's personal liability
• C)The prestige of operating as a corporation
• D)The ease in transferring shares of the corporation's stock

---

Definitions:

Straight-line Method

A depreciation method where the value of an asset is reduced evenly over its useful life.

Journal Entries

Records of financial transactions in the accounting system, indicating the accounts and amounts to be debited and credited.

Equipment Cost

The purchase price of machinery and tools required for manufacturing or providing services, excluding ongoing operating expenses.

Salvage Value

The calculated sale amount an asset is deemed to achieve after its useful life concludes.