relaxant inc. operates as a partnership. now the partners have decided to convert the business into a…

relaxant inc. operates as a partnership. now the partners have decided to convert the business into a corporate. which of the following statements is correct?\n\nthe firms investors will be exposed to less liability, but they will find it more difficult to transfer their ownership.\n\nthe company will probably be subject to fewer regulations and required disclosures.\n\nthe firm will find it more difficult to raise additional capital to support its growth.\n\nassuming the firm is profitable, none of its income will be subject to federal income taxes.\n\nrelaxants shareholders (the ex - partners) will now be exposed to less liability.

relaxant inc. operates as a partnership. now the partners have decided to convert the business into a corporate. which of the following statements is correct?\n\nthe firms investors will be exposed to less liability, but they will find it more difficult to transfer their ownership.\n\nthe company will probably be subject to fewer regulations and required disclosures.\n\nthe firm will find it more difficult to raise additional capital to support its growth.\n\nassuming the firm is profitable, none of its income will be subject to federal income taxes.\n\nrelaxants shareholders (the ex - partners) will now be exposed to less liability.

Answer

Brief Explanations:

In a partnership, partners have unlimited liability. When converting to a corporation, shareholders' liability is limited to their investment. Corporations generally have easier ownership transfer (through stock sales), are subject to more regulations and disclosures, and can raise capital more easily through stock and bond issuances. Also, corporate income is taxed.

Answer:

Relaxant's shareholders (the ex - partners) will now be exposed to less liability.