Homework Assignment (week 1)
Problems 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, and 1.7 The Four Types of Firms (p. 19), 2-8 The Balance Sheet, 2-11 The Income Statement and 2-24 The Statement of Cash Flows

Problem 1.1
The most important difference between a corporation and all other organizational forms are corporation is considered by law to be a unique legal entity, separate and apart from its owners, they are responsible for their own liability and business debts, and therefore shareholders’ liability is normally always limited to the amount of money they paid for their shares. A corporation can be taxed; it can be sued; it can enter into contractual agreements. A corporation also pays its own taxes at the corporate income tax rate and files its own corporate tax forms each year. Moreover, Corporations cannot deduct dividends from business income.
Problem 1.2
Limited liability mean their liability is limited to their investment and limited liability companies means a limited partnership without a general partner.
Problem 1.3
Corporations and limited liability companies give owners limited liability. Limited partnerships provide limited liability for the limited partners, but not for the general partners
Problem 1.4
Advantages:
* Limited liability and perpetual life * Stockholders, directors, officers are typically not liable for the company’s debts and obligations * In the US, corporations are generally taxed at lower rate

Disadvantages: * High cost * Must follow complex rules and regulations than others * Have to pay double tax
Problem 1.5
The difference between an C and S corporation, C Corporation is the standard type of corporation with which people are most familiar. C corporations must pay corporate income taxes; S corporations do not pay corporate taxes, but must pass through the income to shareholders to whom it is taxable. S