Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A) A major disadvantage of a regular partnership or a corporation as a form of business is the fact that they do not offer their owners limited liability,whereas proprietorships do.
• B) An advantage of the corporate form for many businesses is the fact that the corporate tax rate always exceeds the personal tax rate,which is the rate at which proprietorships and partnerships are taxed.
• C) There are more partnerships and sole proprietorships than corporations in the U.S. ,but corporations produce more goods and services than do other forms of business.
• D) Because corporations enjoy the benefits of limited liability,easy transferability of ownership interest,unlimited life,and favorable tax status relative to the situation for partnerships and proprietorships,most large businesses choose to incorporate.
• E) Because lawyers have the incorporation process so automated (e.g. ,word processors for drawing up the necessary papers),it is less expensive to form a corporation than to form a proprietorship or partnership.

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Definitions:

Recognises Revenues

The process of recording income in the financial statements when it is earned, according to the criteria set out in accounting standards.

Joint Cost Allocation

The process of distributing the costs of production that are incurred in producing multiple products at the same point of the process across those products.

Joint Costs

Costs that are incurred up to a split-off point in the production process, making them inseparable costs shared by more than one product.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions since they cannot be changed.