Which of the following statements about the corporate form of business organization is TRUE?
A)The corporate form has the disadvantage of double taxation relative to a sole proprietorship.
B)The corporate form is preferred over the sole proprietorship because a corporation is easier to form and faces less regulation.
C)Sole proprietorship is the most common form of business organization because liability is limited to the amount invested in the business by the sole proprietor.
D)The corporate form has the advantage of unlimited liability.

Question

Quizplus · Accepted Answer

The corporate form of business organization is subject to double taxation, meaning that profits are taxed at the corporate level and then again at the individual level when distributed to shareholders as dividends. This is a disadvantage compared to a sole proprietorship or partnership, where profits are taxed only once as personal income of the owner(s).

Which of the Following Statements About the Corporate Form of Business