Question

Which of the following statements is CORRECT?

a. One disadvantage of operating a business as a proprietor is that the firm is subject to double taxation, because taxes are levied at both the firm level and the owner level.
b. If a partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business.
c. Corporations face fewer regulations than proprietorships.
d. It is generally less expensive to form a corporation than a proprietorship because, with a proprietorship, extensive legal documents are required.
e. One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership.

Answer 1

Answer:

e. One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership.

Explanation:

The investor of a corporation have limited liability. This measn their responsability is capped at their contribution. On parthership, this does not ocurs.

(c)(d) Corporation face more regulation and are harder to create than a parthership.

(b) parthenrship has unlimited liability.