Annabelle Operates a Maid Service as a Sole Proprietorship, but She's

question 37

Multiple Choice

Annabelle operates a maid service as a sole proprietorship, but she's thinking about incorporating under the Canada Business Corporations Act.She would remain the sole shareholder.From her clients' perspective, which of the following is most likely to be TRUE?

• A)They should be excited because Annabelle will be able to provide better service.
• B)They should be worried that the company's name might change if it fails the name search.
• C)They should be worried that they will no longer be able to talk to Annabelle personally about problems with the maid service.
• D)They should be worried that if Annabelle's business causes them to suffer, they may not be able to recover full damages.
• E)They should be excited because it is less likely that the service will go out of business.

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Definitions:

Bonds Payable

Bonds payable are long-term liabilities represented by bonds that a company issues to investors, promising to repay the principal along with interest at specified dates.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically with predetermined dividend payments but usually without voting rights.

Financing Activities

Transactions that involve changes in the size and composition of the equity capital or borrowings of a company.

Indirect Method

A technique for preparing the cash flow statement, where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.