Karen and Yanique are opening a jewellery store with no competition in the area from whichthey intend to operate their business. Their fundamental decision is how to organize the business.They anticipate super profits the first year, with the ability to sell franchises in the future.Although they have enough to start the business now as a partnership, cash flow will be an issueas they grow and as such, they feel the corporate form of operation will be best for the long term.They seek your advice.1. State three (3) of the main advantage they gain by selecting a corporate form of business now.2. Would you recommend they initially issue preferred or common stock? Why?

Corporation form of business: A corporation is a form of business that declares the business as a…

Answered: 1. State three (3) of the main…

1. State three (3) of the main advantage they gain by selecting a corporate form of business now. 2. Would you recommend they initially issue preferred or common stock? Why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Karen and Yanique are opening a jewellery store with no competition in the area from which
they intend to operate their business. Their fundamental decision is how to organize the business.
They anticipate super profits the first year, with the ability to sell franchises in the future.
Although they have enough to start the business now as a partnership, cash flow will be an issue
as they grow and as such, they feel the corporate form of operation will be best for the long term.
They seek your advice.
1. State three (3) of the main advantage they gain by selecting a corporate form of business now.
2. Would you recommend they initially issue preferred or common stock? Why?

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