a)
To determine: The definition of proprietorship,
a)
Explanation of Solution
A company owned by one individual is a proprietorship or sole proprietorship. When more than two persons are associated to organize the business, a partnership exists. Corporation, on the other hand, is a state-created legal entity. The organization is independent of its owners and managers.
b)
To determine: The definition of limited partnership, limited liability partnership, professional corporation.
b)
Explanation of Solution
Under a limited partnership, the liabilities, control of limited partners and investment returns are limited, while the liability and control of general partners are unrestricted. A limited liability partnership, also referred to as a limited liability company, blends a corporation's limited liability advantage with a partnership's tax benefits. A private company known as a professional association in some countries, have more of incorporation privileges, nevertheless members are not exempted from professional liability (malpractice).
c)
To determine: The definition of stockholder wealth maximization.
c)
Explanation of Solution
Maximizing Stockholder wealth is the right objective for management choices. To maximize the price of the common stock of the firm, the timing and risk related with cash flow and EPS are considered.
d)
To determine: The definition of production opportunities, time preferences for consumption.
d)
Explanation of Solution
Opportunities for production are the
e)
To determine: The definition of foreign
e)
Explanation of Solution
When individuals and businesses in Country U experience a foreign trade deficit. S. Import more goods than they are exported from foreign countries. Trade deficits need to be funded, and debt is the main source of funding. Therefore, debt financing increases as the trade deficit rises, uplifts the rate of interest.
Interest rates of Country U must be consistent with the foreign interest rates when the Federal Reserve tries to fix the interest rates beneath the foreign rates, the investors will sell the Country U bonds, which leads to higher Country U
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Chapter 1 Solutions
Intermediate Financial Management (MindTap Course List)
- Which forms of business organization, ownership is readily transferable? a. Corporation b. Sole Proprietorship c. Limited Liability Company d. Partnershiparrow_forwardFinancial Accounting and Reporting Topic: Partnership Dissolution – Change in Ownershiparrow_forwardCapital Contribution Ratio in Partnership Operationsarrow_forward
- What are the benefits of the corporation in comparison with the partnership and proprietorship structures? How is equity treated and reported differently in this structure?arrow_forwardBusiness income allocations from an S corporation to its shareholders are self-employment income to the shareholders.a. Trueb. Falsearrow_forwardExplain common forms of business ownership—soleproprietorship, partnership, and corporation—and demonstrate how they differ in terms of their pre-sentation in the statement of financial position.arrow_forward
- 7. Setting accounting standards by the private sector isSelect one:a. Independent discipline approachb. Microeconomic approachc. Common law accountingd. Code law accountingarrow_forwardHighlight differences between partnership and limited company?arrow_forwardWhich form of business structure typically has the greatest potential for agency problems? Limited partnership General partnership Sole proprietorship Limited liability company Corporationarrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning