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 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 difficult to transfer their ownership.
E) Cheers will find it more difficult to raise additional capital.

Question

Quizplus · Accepted Answer

By converting to a regular corporation, the shareholders (ex-partners) will have limited liability, meaning their personal assets are protected in the event the corporation faces legal or financial trouble.