Which of the following statements best describes firm organization?
A)One of the disadvantages of incorporating a business is that the owners have personal liabilities when 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 corporations, especially large ones.

Question

Quizplus · Accepted Answer

Sole proprietorships and partnerships are taxed as pass-through entities, which means that the profits and losses are reported on the owner's personal tax return. This can result in a lower tax rate compared to corporations, especially large ones, which are subject to double taxation.

Which of the Following Statements Best Describes Firm Organization