Which of the following statements is CORRECT? a. A major disadvantage of all partnerships compared to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself. b. A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company. c. Attracting large amounts of capital is more difficult for partnerships than for corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests. d. In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business. e. The limited partners in a limited partnership have voting control, while the general partner has operating control over the business. Also, the limited partners are individually responsible, on a pro rata basis, for the firm's debts in the event of bankruptcy.
Which of the following statements is CORRECT? a. A major disadvantage of all partnerships compared to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself. b. A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company. c. Attracting large amounts of capital is more difficult for partnerships than for corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests. d. In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business. e. The limited partners in a limited partnership have voting control, while the general partner has operating control over the business. Also, the limited partners are individually responsible, on a pro rata basis, for the firm's debts in the event of bankruptcy.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following statements is CORRECT?
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