Question

Which of the following statements is CORRECT?
a. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.
b. It is generally easier to transfer one's ownership interest in a partnership than in a corporation.
c. One of the advantages of the corporate form of organization is that it avoids double taxation.
d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote."
e. Corporations of all types are subject to the corporate income tax.

Answer 1

Answer:

a. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

Explanation:

• As the sole proprietor has to handle each and every aspect of the business pin the company himself as he is in charge of all the assets and the liabilities hence has top bear all the costs associated with it.

• The duties of the sole proprietor are of control of autonomous exercise like a taxi driver is solely responsible for the delivery of the products to his destination in a timely manner.

• They can be small business units and hence seek there funding from the debt-equity ratio of the enterprise.