Which of the Following Statements Is Correct

question 82

Multiple Choice

Which of the following statements is correct?

• A) Other things held constant,it generally is safer to invest money in a proprietorship than in a partnership or a corporation.
• B) According to the text,law firms and accounting firms must be organized as proprietorships or partnerships;these businesses do not have the option of incorporating.
• C) If you are planning to start a business,which you will run as the sole employee,and if you expect the business to earn $1,000,000 per year before taxes,you can minimize federal income taxes by setting up the business as a corporation.
• D) According to the text,"agency problems" tend to increase as the percentage of a corporation's stock owned by its managers increases.
• E) Maximizing the income statement item "net income" is not the best goal for a corporation whose managers are interested in maximizing the economic welfare of the firm's stockholders.

---

Definitions:

Direct Approach

A straightforward method of communication or action where the main point is presented at the beginning.

Conclusions

Final statements or judgments derived from the analysis or consideration of information or evidence.

Recommendations

Advice or suggestions aimed at aiding decision-making processes.

Proposal

A plan or suggestion, especially in a formal or professional context, put forward for consideration or discussion by others.