Question

What are the main advantages and disadvantages of organizing a firm as a​ corporation? ​(Select all...

What are the main advantages and disadvantages of organizing a firm as a​ corporation? ​(Select all the choices that​ apply.)

A. ​Advantages: Limited​ liability, liquidity, infinite life.

B. ​Disadvantages: Double​ taxation, infinite life.

C. ​Advantages: Limited​ liability, liquidity, separation of ownership and control.

D. ​Disadvantages: Double​ taxation, separation of ownership and control.

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Answer #1

Advantages of corporations are limited liabilities of its members, and liquidity will also be higher because there would be a higher amount of cash available, and there is a perpetual succession, so corporations have an infinite life.

Disadvantages related with the corporations are double taxation and separation of ownership and control so that there would not be adequate control by the shareholders and management so they can decide upon their own and their can indulge into unfair practices.

So the correct answer would be-

(A)Advantages: Limited​ liability, liquidity, infinite life.

AND

(B)Disadvantages: Double​ taxation, separation of ownership and control

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