Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Compared to a sole proprietorship, which of the following is a primary advantage of forming a corporation?

Direct control by the owner over all business decisions

Fewer government regulations

Simpler tax filing requirements

Limited liability for owners

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Verified step by step guidance

Understand the concept of 'limited liability': In a corporation, owners (shareholders) are not personally liable for the company's debts or legal obligations beyond their investment in the company. This is a key advantage compared to a sole proprietorship, where the owner is personally responsible for all liabilities.

Compare the characteristics of a sole proprietorship and a corporation: A sole proprietorship offers direct control by the owner, fewer government regulations, and simpler tax filing requirements. However, it does not provide limited liability, which is a significant disadvantage.

Recognize the primary advantage of forming a corporation: The limited liability feature protects the personal assets of the owners, making it a safer option for individuals who want to invest in a business without risking their personal wealth.

Eliminate incorrect options: Direct control by the owner, fewer government regulations, and simpler tax filing requirements are not advantages of a corporation. These are characteristics of a sole proprietorship.

Conclude that the correct answer is 'Limited liability for owners,' as this is the defining advantage of forming a corporation compared to a sole proprietorship.