Question

. Which of the following statements is CORRECT? a. It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required. b. Corporations face fewer regulations than sole proprietorships. c. One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level. d. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

Answer 1

Answer:

The correct answer is the option D: One advantage of forming a corporation is that equity investors are usually exposed to less liability than in regular partnership.

Explanation:

On the one hand, a sole propietorship is a type of enterprise that characterizes itself because of the fact of having the condition to consider both the legal entity and the owner of it as a same person, meaning that there is no distinction between them and therefore that the owner of the business has unlimited liability.

On the other hand, a corporation is another type of enterprise in which there is a distinction between the people who own the company and the organization itself as a legal entity and therefore that one advantage of this type of business is that the owners have limited liability when it comes to terms of facing the debts of the company.