Emily Wants to Open a Chain of Sandwich Shops and Hopes

question 98

Essay

Emily wants to open a chain of sandwich shops and hopes to attract investors to help finance growth.She considered forming a C corporation but wants to have more flexibility about how the new business will be taxed.She also wants to offer investors limited liability.What form of ownership will best meet Emily's objectives?

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Definitions:

Accrued Expense

An expense that has been incurred but not yet paid for.

Adjusting Entry

A journal entry made at the end of an accounting period to account for unrecorded transactions or to adjust incorrect entries.

Insurance

A contractual agreement that provides financial protection or reimbursement against losses to an individual or entity, in exchange for premiums paid.

Depreciation

The method of allocating the cost of a tangible or physical asset over its expected useful life to account for the decrease in its value over time.