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16 December, 10:00

What are the main advantages and disadvantages of organizing a firm as a corporation? (Select all the choices that apply.) A. Disadvantages: Double taxation, separation of ownership and control. B. Advantages: Limited liability, liquidity, separation of ownership and control. C. Disadvantages: Double taxation, infinite life. D. Advantages: Limited liability, liquidity, infinite life.

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  1. 16 December, 10:29
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    A. Disadvantages: Double taxation, separation of ownership and control.

    B. Advantages: Limited liability, liquidity, separation of ownership and control.

    Explanation:

    The corporation has various advantages and disadvantages. Double taxation is a disadvantage of a corporation. The Company pays income tax on its earnings and then shareholders are taxed when the earnings after tax are distributed to then as dividends. The advantage includes that a company has limited liability. The shareholders can only claim the amount they invested in an occasion of bankruptcy or default of a company. The corporations do not have infinite life.
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