Which of the Following Entity Characteristics Are Generally Key Drivers

question 44

Multiple Choice

Which of the following entity characteristics are generally key drivers for small business owners in deciding which entity to choose?

• A) Double taxation.
• B) Required accounting period.
• C) Liability protection.
• D) Double taxation and required accounting period.
• E) Double taxation and liability protection.

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Definitions:

Equity

Fairness; everyone gets his or her fair share. Since people can disagree about what is “fair,” equity is not as well defined a concept as efficiency.

Rational Decision

The choice made by logically considering all available information, potential costs, and benefits to achieve the optimal outcome.

Bounded Rationality

A concept suggesting that decision-making is limited by the information available, cognitive limitations of the mind, and the finite amount of time available to make a decision.

Opportunity Costs

The potential benefits or profits lost when choosing one alternative over another, representing the cost of forgone opportunities.