Which of the Following Statements Is Correct

question 29

Multiple Choice

Which of the following statements is correct?

• A) Due to limited liability,unlimited lives,and ease of ownership transfer,the vast majority of U.S.businesses (in terms of number of businesses)are organized as corporations.
• B) Most businesses (by number and total dollar sales)are organized as proprietorships or partnerships because it is easier to set up and operate in one of these forms rather than as a corporation.However,if the business gets very large,it becomes advantageous to convert to a corporation,primarily because corporations have important tax advantages over proprietorships and partnerships.
• C) For a large company (taxable income over $1 million),the tax situation would,generally,favor organization as a partnership or proprietorship,or possibly as an S corporation,rather than as a regular corporation.However,legal considerations related to ownership transfers and liability offset the tax situation,with the result that most business (measured by dollar sales)is conducted by corporations.
• D) In the typical situation,a taxpayer's average tax rate is below his or her marginal rate.However,there is an income range within which the average rate exceeds the marginal rate.
• E) Statements c and d are both correct.

---

Definitions:

Muscle Cells

Specialized cells that contract and relax to produce movement in the body.

Autonomic Nervous System

Part of the peripheral nervous system that controls bodily functions not consciously directed, such as breathing, the heartbeat, and digestive processes.

Involuntary Muscles

Muscles that operate without conscious control, responsible for movements in the heart, digestive system, and other bodily functions.

Myelin Sheath

A layer of fatty tissue encasing the fibers of many neurons, which enhances the speed and efficiency of electrical signals traveling along the nerve cells.