One Drawback of Switching from a Partnership to the Corporate

question 20

Multiple Choice

One drawback of switching from a partnership to the corporate form of organization is the following:

• A) it subjects the firm to additional regulations.
• B) it cannot affect the amount of the firm's operating income that goes to taxes.
• C) it makes it more difficult for the firm to raise additional capital.
• D) it makes the firm's investors subject to greater potential personal liabilities.
• E) it makes it more difficult for the firm's investors to transfer their ownership interests.

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Definitions:

Cynicism

An attitude characterized by a general distrust of others' motives believing that humans are primarily motivated by self-interest.

Auditor

A professional who examines and evaluates the accuracy and completeness of financial records and statements.

Store Detective

A person employed by a retail business to prevent theft, often working in plain clothes.

Courtesy

Polite behavior that shows respect for other people.