Q16E_6 - Horngren'S Financial And Managerial Accounting

Question

Identifying advantages and disadvantages of a corporation

Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.

f. Entity can raise more money than a partnership or sole proprietorship

Step-by-Step Solution

Answer

Entity can raise more money than a partnership or sole proprietorship is an advantage of a corporate.

Step 1: Basic Introduction

A sole proprietorship is the simplest legal form of an unincorporated entity that is owned by only one individual. Partnership is created when 2 or more individuals agrees to share profit.

Step 2: Identification of quality

Partnership and sole proprietorship do not have the facility to issue shares in the recognized stock exchange to raise capital and thus corporation can raise more money or capital than a partnership or sole proprietorship.