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A key advantage of organising a business as a corporation rather than a sole proprietorship is:
Ano requirement to keep accounting records
Bexemption from filing any paperwork
Climited liability for the owners
Dunlimited personal liability for debts
Answer & Solution
Correct answer: C. limited liability for the owners
1. A corporation is a separate legal entity from its owners.
2. It offers limited liability, meaning owners can only lose what they invested.
3. Forming a corporation requires filing articles of incorporation, so option B is wrong.
4. Accounting records are still required (C), and unlimited liability (D) describes a sole proprietorship.
5. Therefore the advantage is limited liability.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.5.3 "Stockholders' Equity", p.36_
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