Accounting Tools For Business Decision Making Certification Evaluation Exams Set Full Questions And Complete Solution

ACCOUNTING TOOLS FOR BUSINESS
DECISION MAKING CERTIFICATION
EVALUATION EXAMS SET FULL QUESTIONS
AND COMPLETE SOLUTION

●● Pros of a sole proprietorship
Answer: •It is simple to set up
• It gives you control over the business, and
• More favorable tax treatment than corporations


●● Cons of forming a sole proprietorship
Answer: The proprietor is personally liable for all debts and legal
obligations of the business


●● Partnership
Answer: A business owned by two or more persons associated as
partners.


●● Reason for setting up a partnership
Answer: One individual does not have enough economic resources to
initiate or expand the business.

, ●● Pros of forming a partnership
Answer: • Partners sometimes bring unique skills or resources to the
partnership
• More favorable tax treatment than corporations


●● Cons of forming a partnership
Answer: Partners are personally liable for all debts and legal obligations
of the business


●● Corporation
Answer: A business organized as a separate legal entity owned by
stockholders


●● Pros of forming a corporation
Answer: • Shares of stock are easy to sell (transfer ownership)
• Individuals can become stock holders by investing relatively small
amounts of money
• It is easier for corporations to raise funds
• Corporate stockholders have no personal legal liability


●● Cons of forming a corporation
Answer: • Corporate stockholders generally pay higher taxes