1) True or False. All distributions are dividends. Explain your answer.

2) Cookie Monster wants to use a corporation as the choice of entity for a new cookie company that he wants to form. Which of the following items is true about a corporation?

1. A corporation will issue partnership interests to the shareholders.
2. A corporation will have only one level of tax at the shareholder level.
3. A corporation will have two levels of tax.
4. None of these answers is correct.

3) Which one of the following statements correctly applies to a sole proprietorship

a. The owner of the business has no personal liability.

b. The ownership can easily be transferred to another individual.

c. The owner enjoys limited liability for the firm's debts.

d. The owner owns all the shares of the corporation.

e. The owner is personally liable for all activities and debts of the business.