Which of the Following Could Explain Why a Business Might

question 45

Multiple Choice

Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?

• A) Less of a corporation's income is generally subjected to taxes than would be true if the firm were a partnership.
• B) Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.
• C) Corporate investors are exposed to limited growth potential.
• D) Corporations generally face relatively few regulations.

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Definitions:

Prior Restraint

A legal measure in which the government prohibits certain expressions or information from being made public, often challenged as unconstitutional.

Unconstitutional

Actions or laws that are deemed to violate the Constitution or constitutional principles.

Freedom of Assembly

The right to hold public meetings and form associations without interference by the government, protected under the First Amendment of the U.S. Constitution.

Strict Scrutiny

A form of judicial review that courts use to determine the constitutionality of certain laws, requiring the law to be necessary to achieve a compelling government interest and to be narrowly tailored to achieve that interest.