Which one of the following statements is correct?
A)The majority of firms in the U.S. are structured as corporations.
B)Corporate profits are taxable income to the shareholders when earned.
C)Corporations can raise large amounts of capital generally easier than partnerships can.
D)Stockholders face no potential losses related to their corporate investment.
E)Corporate shareholders elect the corporate president.

Question

Quizplus · Accepted Answer

Corporations can issue stocks and bonds to raise capital from large numbers of investors, whereas partnerships are typically limited to financing from a smaller number of partners. This makes it generally easier for corporations to raise large amounts of capital. Options A, B, D, and E are incorrect. The majority of firms in the US are structured as sole proprietorships and partnerships, not corporations (option A). Corporate profits are taxable income to the corporation, and then taxed again when distributed as dividends to shareholders (option B). Stockholders can face potential losses if the value of their shares decreases (option D). Corporate shareholders elect the board of directors, who then elect the corporate president (option E).

Which One of the Following Statements Is Correct