Question

Which of the following statements is CORRECT? a. Corporate shareholders are exposed to unlimited liability. b....

Which of the following statements is CORRECT?

a. Corporate shareholders are exposed to unlimited liability.
b. Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation.
c. It is usually easier to transfer ownership in a corporation than in a partnership.
d. Corporations generally face fewer regulations than proprietorships.
e. There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small.

Homework Answers

Answer #1

Option C is correct!!.

A. Incorrect, Shareholders whether equity or preference shares limited liability to the extent of the capital they have invested in the company.

B. Incorrect, No Unlimited liability for shareholders.

C. Correct, Yes usually it is easy to transfer ownership in a corporation than partnerships as public corporations trade on stock exchange but partherships don't. Therefore one can easily buy/sell security of public company.

D. Incorrect, Usually corporations face more regulations because of the large public money invested in them.

E. Incorrect, This statement is nto mentioning in which context the tax disadvantage is measured.

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