news reports are filled with stories of product recalls that damage a company’s reputation and can significantly harm the company’s future sales. furthermore, consumers have harnessed the power of social media and online rating sites to "spread the word" to millions of potential customers about any unsatisfying experiences they have had with products or services. as a result, a company’s reputation for either good or poor quality can increase at an exponential rate. to capture the extent of a reputation for poor quality, external failure costs should include an estimate of how much profit the company is losing due to having a reputation for poor quality.

Which of the following statements is correct? large corporations are taxed more favorably than sole proprietorships. corporate stockholders are exposed to unlimited liability. due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of u.s. businesses (in terms of number of businesses) are organized as corporations. most businesses (by number and total dollar sales) are organized as partnerships or proprietorships because it is easier to set up and operate in one of these forms rather than as a corporation. however, if the business gets very large, it becomes advantageous to convert to a corporation, mainly because corporations have important tax advantages over proprietorships and partnerships. most business (measured by dollar sales) is conducted by corporations in spite of large corporations’ often less favorable tax treatment, due to legal considerations related to ownership transfers and limited liability.

Which of the following differentiates cost accounting and financial accounting? a. the primary users of cost accounting are the investors, whereas the primary users of financial accounting are the managers. b. cost accounting measures only the financial information related to the costs of acquiring fixed assets in an organization, whereas financial accounting measures financial and nonfinancial information of a company's business transactions. c. cost accounting measures information related to the costs of acquiring or using resources in an organization, whereas financial accounting measures a financial position of a company to investors, banks, and external parties. d. cost accounting deals with product design, production, and marketing strategies, whereas financial accounting deals mainly with pricing of the products.

What is the state tax rate for a resident of arizona whose annual taxable income is $18,000?