Which Statement Is FALSE Considering Both Advantages and Disadvantages of Corporations

question 14

Multiple Choice

Which statement is FALSE considering both advantages and disadvantages of corporations as a legal business organization?

• A) Perhaps the greatest advantage of corporations is that their owners (the shareholders) enjoy limited liability-limited to the value of their shares.
• B) Legally the corporation continues to exist even if one or more owners cease to be owners.
• C) Corporations usually are not as well positioned as proprietorships and partnerships to raise large sums of financial capital.
• D) Separation of ownership and control is a disadvantage of the corporate structure; owners and managers may have different incentives.

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Definitions:

Sales

Revenue generated from goods or services sold by a company.

Direct Method

A cost allocation method that assigns service department costs directly to production departments without considering services provided between service departments.

Accounts Receivable

represents the money owed to a company by its customers for goods or services delivered but not yet paid for.

Prepaid Expenses

Payments made for goods or services before receiving them, recorded as assets in the balance sheet until they are utilized or consumed.