Which One of the Following Statements Is True

question 52

Multiple Choice

Which one of the following statements is true?

• A) Limited partnerships are no more costly to form than sole proprietorships.
• B) Like a corporation, an LLC provides limited liability for the people who make the business decisions in the firm while enabling all investors to retain the tax advantages of a limited partnership.
• C) The lives of partnerships and LLCs are not flexible.
• D) Limited partners and LLCs are more constrained than general partnerships because they can raise money only from limited partners or "members."

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Definitions:

Accounting Depreciation

The systematic allocation of the cost of a tangible asset over its useful life for financial reporting purposes.

Replacement Cost

Cost to replace a firm’s assets. Also called reproduction cost.

Economic Income

The sum of a company's net cash flow and the change in present value of a company's cash flows in a given period.

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets.