Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 11

Partnerships, as contrasted with corporations, can be characterized as being relatively

a. easier to form, less risky to be an owner of, and easier to raise large amounts of capital for.

b. easier to form, more risky to be an owner of, and harder to raise large amounts of capital for.

c. harder to form, more risky to be an owner of, and harder to raise large amounts of capital for.

d. harder to form, less risky to be an owner of, and easier to raise large amounts of capital for.

e. None of the above is accurate.

Step 1 of 2

Explanation:

Partnerships are simpler to create, more risky to be a holder, and more difficult to raise large quantities of funds when compared to corporations.

The reason it is harder to raise capital is that there aren’t any shares to sell to stockholders. It is also easier to form because there are no charters or bylaws to be prepared or registered.

The correct letter choice is b.