Organizational Costs in Business Entities
What is the correct sequence of organizational costs, moving from lowest to highest?
A. Sole proprietorship, general partnership, limited partnership, corporation
B. General partnership, sole proprietorship, limited partnership, corporation
C. Sole proprietorship, general partnership, corporation, limited partnership
D. Corporation, limited partnership, general partnership, sole proprietorship
Answer:
The correct sequence in terms of organizational costs, from lowest to highest, is: Sole proprietorship, general partnership, limited partnership, corporation.
In terms of organizational costs, the correct sequence is:
- Sole proprietorship
- General partnership
- Limited partnership
- Corporation
A sole proprietorship is the simplest and least expensive form of business ownership, as it is owned by a single individual. A general partnership involves two or more people sharing the responsibilities and profits, which can be more costly due to the need for legal agreements. A limited partnership has both general and limited partners, and the costs can increase as the structure becomes more complex. Finally, a corporation is the most expensive to establish and maintain due to legal requirements and potential shareholder dividends.