Which of the following statements is CORRECT?
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

Most business, when measured by dollar sales, is indeed conducted by corporations. This is largely because corporations offer benefits such as limited liability for their owners and ease of transferring ownership, which are particularly valuable for large-scale operations. Despite sometimes facing less favorable tax treatment compared to sole proprietorships and partnerships, the legal advantages of corporations, such as their ability to continue indefinitely and the limited liability they offer to their shareholders, make them the preferred structure for large businesses.

Which of the Following Statements Is CORRECT