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.

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Definitions:

Sarbanes-Oxley

U.S. legislation enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws.

Chief Executives

are the highest-ranking corporate officers or administrators in charge of managing an organization or corporation.

Certify Accuracy

To officially confirm or verify that information, document, or process is true, correct, and meets specified standards.