Which of the following could explain why a business might choose to operate as a corporation rather than as a proprietorship or a partnership?
A) Corporations generally face fewer regulations.
B) Less of a corporation's income is generally subject to federal taxes.
C) Corporate shareholders are exposed to unlimited liability,but this factor is offset by the tax advantages of incorporation.
D) Corporate investors are exposed to unlimited liability.
E) Corporations generally find it easier to raise large amounts of capital.

Question

Quizplus · Accepted Answer

Outsiders thinking about investing in a business are generally not willing to be subjected to unlimited liability,and they also want to be able to sell their shares should they choose to do so.Corporations provide these advantages;hence,firms that need large amounts of capital that must be raised in capital markets generally choose to incorporate.

Which of the Following Could Explain Why a Business Might