Which of the following statements best describes firm organization?
A)One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.
B)It is generally easier to transfer one's ownership interest in a partnership than in a corporation.
C)One of the advantages of the corporate form of organization is that it avoids double taxation.
D)One of the advantages of a corporation from a social standpoint is that every shareholder has equal voting rights, i.e., "one person, one vote."

Question

Quizplus · Accepted Answer

A sole proprietorship exposes the owner to unlimited liability, meaning the owner is personally responsible for all the debts and obligations of the business. This is a key characteristic and disadvantage of this form of business organization. Choices B, C, and D are incorrect because: B) it is generally easier to transfer ownership in a corporation than in a partnership; C) corporations are subject to double taxation (once at the corporate level and again at the shareholder level on dividends); and D) in many corporations, voting rights are based on the number of shares owned, not the "one person, one vote" principle.

Which of the Following Statements Best Describes Firm Organization