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 MGT LL
- Differentiate the SCE (Statement of Changes in Equity) of a sole proprietorship, a partnership and a corporation.arrow_forwardWhat 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_forwardQ: Compare the characteristics of organizational and legal forms of enterprises: Criteria The organizational and legal form Individual entrepreneur Economic partnership (LLC) Economic society (JSC) Simplicity of the creation Control over the activities Liability of the owners Investment Liquidity* Period of existencearrow_forward
- Which sentence is not true? Select one: a. In Partnership, the ownership divided into shares of stock. b. Profit or loss has an effect on the owner's equity. c. Companies usually prepare 4 financial statements. d. Assets are resources for providing future services or benefits.arrow_forwardQuestion Content Area Which of the following is true regarding a limited liability company? a.combines the attributes of a partnership and a corporation b.provides tax and liability advantages to the owners c.makes up 10% of business organizations in the United States d.All of these choicesarrow_forward⦁ Explain common forms of business ownership—sole proprietorship, partnership, and corporation—and demonstrate how they differ in terms of their presentation in the statement of financial position.⦁ How do dividends affect owners’ equity? Are they treated as a business expense? Explainarrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning