Question

Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.
a. Ownership and management are separated.
b. Entity has continuous life.
c. Transfer of ownership is easy.
d. Stockholders’ liability is limited.
e. Exposure to double taxation is evident.
f. Entity can raise more money than a partnership or sole proprietorship.
g. Government regulation is expensive.

Answer 1

Answer:

a - Advantage

b - Advantage

c - Advantage

d - Advantage

e - Disadvantage

f - Advantage

g - Advantage

Explanation:

To begin with, most of the statements are advantages of the corporate form of business due to the fact that they describe and show how that type on entity has better ways to run business when it comes to comparing with other forms. Therefore that the fact of having ownership and management separated allows the business to have a better organization when it comes to the decision making process. Also the fact that stockholders' liability is limited so they do not are in danger beyond their participation in the company and so on with the other statements. The only statement that show a disadvantage is the one that states that the corporate form is exposure to double taxation so that implicates to pay more taxes and that generate money issues for the company.