Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) One drawback of forming a corporation is that it generally subjects the firm to additional regulations.
• B) One drawback of forming a corporation is that it subjects the firm's investors to increased personal liabilities.
• C) One drawback of forming a corporation is that it makes it more difficult for the firm to raise capital.
• D) One advantage of forming a corporation is that it subjects the firm's investors to fewer taxes.
• E) One disadvantage of forming a corporation is that it is more difficult for the firm's investors to transfer their ownership interests.

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Definitions:

Average Total Assets

The average value of all assets owned by a company over a specific period, useful in assessing company productivity and investment returns.

Net Sales

The total revenue from goods sold or services provided by a company, after deducting returns, allowances for damaged or missing goods, and discounts.

Return on Assets Ratio

A financial ratio that measures how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

Total Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue.