form of business structure(s), accounting homework help

Question 3 (8 marks)

Which of the following actions are not an agency costs and explain why?

I.fore-going an investment opportunity which would add to the market value of the owner’s equity.

II.paying a dividend to each of the existing shareholders.

III.purchasing new equipment which increases the value of each share of stock.

IV.hiring outside auditors to verify the accuracy of the company financial statements.

Question 4 (4 marks)

Which form of business structure(s) can potentially face agency problems and which faces the greatest agency problems and explain why including example where applicable?

I.sole proprietorship

II.general partnership

III.limited partnership

IV.corporation

Question 5 (8 marks)

There are 4 main markets that facilitate efficient movement of money between those in a deficit cash position and those in a surplus cash position. What are these markets and who are the participants?

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