Financial Course Unit 5 Homework- Gb 550

FINANCE 410:

|1. Which of the following statements is CORRECT? |

|a. |One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes|

| |bankrupt. |

|b. |Sole proprietorships are subject to more regulations than corporations. |

|c. |In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. |

|d. |Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones. |

|e. |Corporations of all types are subject to the corporate income tax. |

| | | | | | | | | |

|2. Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regular corporation. Which of the |

|following statements is CORRECT? |

|a. |Assuming Cheers is profitable, less of its income will be subject to federal income taxes. |

|b. |Cheers will now be subject to fewer regulations. |

|c. |Cheers’ shareholders (the ex-partners) will now be exposed to less liability. |

|d. |Cheers’ investors will be exposed to less liability, but they will find it more...