Which of the Following Statements About the Corporate Form of Business

question 127

Multiple Choice

Which of the following statements about the corporate form of business organization is true?

• A) The corporate form has the disadvantage of double taxation relative to a sole proprietorship.
• B) The corporate form is preferred over the sole proprietorship because a corporation is easier to form and faces less regulation.
• C) Sole proprietorships are the most common form of business organization because liability is limited to the amount invested in the business by the sole proprietor.
• D) The corporate form has the advantage of unlimited liability.

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Definitions:

Book Depreciation

The method of allocating the cost of a tangible asset over its useful life for accounting and tax purposes.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and other factors.

Current Tax Expense

The amount of income taxes a company is expected to pay in the current year, reflecting its taxable earnings.

Pre-Tax Book Income

The income of a company before taxes are applied, calculated according to accounting standards.