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:

Float Motive

The reason businesses hold onto cash for transactional purposes, allowing them to meet short-term obligations without liquidating investments.

Cash Concentration

The process of consolidating cash from multiple accounts into a single account, aiming to improve the efficiency of cash management and reduce transaction costs.

Centralized Bank Account

A single bank account used by a company to manage and control all payments and receipts, simplifying cash management.

Adjustment Costs

Expenses incurred from making changes to a business, such as restructuring operations or relocating facilities.