Which of the following statements is CORRECTσ
A) most businesses (by number and total dollar sales) are organized as partnerships or proprietorships because it is easier to set up and operate in one of these forms rather than as a corporation. however, if the business gets very large, it becomes advantageous to convert to a corporation, mainly because corporations have important tax advantages over proprietorships and partnerships.
B) due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of u.s. businesses (in terms of number of businesses) are organized as corporations.
C) most business (measured by dollar sales) is conducted by corporations in spite of large corporations' often less favorable tax treatment, due to legal considerations related to ownership transfers and limited liability.
D) large corporations are taxed more favorably than sole proprietorships.
E) corporate stockholders are exposed to unlimited liability.

Question

Quizplus · Accepted Answer

This statement correctly states that most business transactions are conducted by corporations, despite the fact that they may have less favorable tax treatment compared to partnerships and proprietorships. This is because corporations offer advantages such as limited liability and ease of ownership transfer, which are important factors for large businesses. Option A is incorrect as it implies that it is easier to operate a business as a proprietorship or partnership, which is not necessarily true, and that tax benefits are the primary reason businesses convert to corporations. Option B is incorrect as it suggests that most U.S. businesses are organized as corporations due to limited liability and ease of ownership transfer, which is not accurate. Option D is incorrect as large corporations are actually taxed more heavily compared to sole proprietorships. Option E is incorrect as stockholders in a corporation have limited liability and are not personally liable for the debts of the corporation.

Which of the Following Statements Is CORRECTσ