CliffsNotes study guides are written by real teachers and professors, so no matter what you're studying, CliffsNotes can ease your homework headaches and help you score high on exams. (3) Intermingling of funds; There are two types of securities: debt and equity, Equity securities consist of common stock and preferred stock, 1) Common stock assumes the greatest risk of the success or failure of the corporate and has the greatest expected return. Is South Africa registered as corporation? 4) A code of ethics that applies to all officers, board members, and employees should be adopted and monitored for adherence by the board B) Instead, they need to set up Political Action Committees (PAC) & raise revenues separately and can support that way Don't blame taxes for this issue. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Tip. B) With contract creditors, plaintiffs will have had every opportunity to get personal guarantees in the contracts, or to protect themselves in the event that funds were not available; whereas, with a tort, it kind of just happens and you can't prepare for it Confident : I am not afraid to ask questions. acts, thinks, and feels in a way that matches some commonly accepted ?good? The liability of stockholders is limited to the amount each has invested in the corporation. The following independent situations require professional judgment for determining when to recognize revenue from the transactions. c) If you or a family member are affiliation in any way with some outside auditor of the company, i) *Audit Committee* Being a person with good character means you act with honesty, respect, responsibility, caring, and other ?good? Corporations have certain characteristics that are unique to this form of organization. Amazon was founded in 1994 and is a world leader in e-commerce. Ownership of a corporation is held in shares of capital stock, which are transferable units. Example #7 ? B) Special Meetings Can be called pursuant to articles that are set forth in the bylaws, needs to give notice & some general information about what the meeting will be about Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. v) Dissolved by withdrawal of a general partner, i) Legal entity separate from shareholders What theory is involved in the modern corporation? Examine these ideal beliefs and significance weights, and then create a verbal description (i.e., concept) of a new brand for these items that would satisfy this student's needs. c) Informed and rational basis = duty of care B) Business Judgment Rule Here are 15 professional characteristics that can help you earn the respect of others and position you for promotions: 1. You can begin building your success by developing these 11 must-have traits of a powerful and successful leader. The limited liability and ease of transferring ownership rights makes it easier for a corporation to acquire capital by selling stock, and the size of the corporation allows it to issue bonds based on its name. 5) Was made by a director or directors who otherwise were not independent C) The purpose of the doctrine of piercing the corporate veil is to prevent an independent corporation from being used to defeat the ends of justice to perpetuate fraud, to accomplish a crime, or otherwise to evade the law, Piercing the Corporate Veil -- Tort Creditors vs. Contract Creditors, A) Courts make the distinction between contract creditors and tort creditors Certain industries, such as banks, financial institutions, and gaming, are also subject to regulations from other governmental agencies. Positive character traits can be developed in ourselves. C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance E) Knowing where the institution stands and staying abreast of its financial health The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered Published on 22 Oct 2018. Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. C) Last in, last out Method visualizes inventory as being added to and sold from the top of the stack, Accounting & Financial Reporting - Fixed Assets , Sometimes referred to as long-term assets or as property plant and equipment, are assets a firm uses to conduct its operations Early in your career, you might exercise authority by being the go-to person on a certain subject within your . 4) Vote on major transactions They are honest in relationships. CHARACTERISTICS OF A CORPORATION 1. Stock Terminology. a) Presentation of the corporations financial statements fairly and accurately reflects the financial position of the company Descriptions Characteristic 1. 3 What are the three major sections on a statement of cash flows, and what type of cash inflows and outflows should be included in each section? a) Partnership is not a taxpaying entity. Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except A. If you already know that you need a logo for your business, you can use our logo maker to help you create a strong one. ii) Duty of care requires a director to act in the corporations best interest and to exercise reasonable care in overseeing the corporations affairs and in making business decisions Professionals should always strive for a professional appearance, including appropriate attire and proper hygiene and grooming. 1) If they find no irregularities they offer a "clean" opinion that it represents fairly in all material aspects ii) Debt Securities generally are the least risky and have the lowest expected return. c) Keeping detailed minutes of the meeting, AgencyAction Binding the Corporation Parties to the legal agency relationship, i) Corporation = Principal Apple. 7 Which is characteristic of a limited liability company ( LLC )? " [Leadership] is all about influencing people," said Kirstin Lynde, founder of leadership development firm Catalyze Associates, in a Facebook Live interview. iv) Limited partners are passive investors and have no personal liability A corporation is owned by stockholders C. All shares of a corporation must be held by a single individual D. Each stockholder has the authority to commit the corporation to a binding contract through his actions. a market where stocks and bonds are traded. a) It is an action in equity brought by a shareholder on behalf of the corporation b) Typically, preferred stockholders will receive a fixed dividend payment although the declaration of a preferred stock dividend is also at the discretion of the board of directors d) Disinterested and independent (has two methods of analysis = duty of loyalty b) Action is brought against the corporation for failure to bring an action in law against some third party, most often an alleged careless or unfaithful manager, who is also a defendant in the suit All corporations are owned by groups of investors. 15 Simple Traits Of A Truly Good Person Ability to Influence Others. What Are The Main Characteristics Of Partnership Quizlet? Domino?s Pizza. Some of the main characteristics of small businesses are: They can be further categorized. Things you have to give up when you make a particular choice. OutputTCMC25,000$100,000$0.5050,000150,0001.0075,000187,5002.50100,000275,5003.00\begin{array}{rrr} In some states, stockholders are called shareholders. An opportunity cost is next best choice you could have taken.). i) Court's won't usually impose this strict approach on contract creditors, but they may do it for financial institutions or lenders, Piercing the Corporate Veil -- Equitable Ownership of the Corporation, A) An individual who exercised sufficient control over the corporation may be deemed to be an "equitable owner," notwithstanding the fact that the individual is not a shareholder of the corporation Par. Organization costs, including legal fees, underwriters' fees for stock and bond issues, and incorporation fees, are recorded as an intangible asset and amortized over a period of time not to exceed 40 years. B) Cash flow just makes certain type of adjustments as to which components of the statement reflect where cash is going in and going out The filing fee for Articles of Incorporation is $100. Which is characteristic of a limited liability company ( LLC )? $$ How much does it cost to start a California corporation? Cooperative : I get along well in a team setting. Shareholders participate, as shareholders, in the management of the corporation. $$ What will she spend in each stage of her life? They call their parents regularly. Study online at quizlet/_4on6v. Ability to increase capital by selling stocks. The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. (9) Payment of guarantee of the corporation's debt by the dominating entity; and It advances comprehension, proper understanding, and sharing of information applicable for making decisions. provide goods and services to business and individual. D) Also, corporations are not natural personas, A) A business corporation is organized and carried on primarily for the profits of the shareholders B) In order for the board to act, it must This gives a corporation a larger pool of resources because it is not limited to the resources of a small number of individuals. Capital acquisition. a. maintaining employment process training and development staff, Latin for "let the seller beware"; sellers need to take responsibility for the products they sell, process by which people attempt to preserve, protect, and manage resources, one who selects, purchases, uses, or disposes of services or goods, a movement to pass laws that protect the consumer from unsafe and unfair business practices, basic rights of consumers to safety, to be heard, to choose, to be informed, to have problems corrected, to consumer education, and to service, business practices that are deliberately misleading, the legal responsibility a manufacturer has to make a safe product, collecting items for processing so that they might be used again, when someone advertises a product at a low price to lure consumers into the store, then tries to get them to switch to a more expensive item, a card allowing someone to make a purchase on borrowed money. Ability to raise large amounts of capital High ability 5. Clothing should always be clean and ironed properly. Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. \text{Total}&\underline{\$129}\\ 2) To get information from management bookmarked pages associated with this title. It can be easier for a corporation to acquire debt and equity, since it is not constrained by the financial resources of a few owners. Similarly, a person or an entity wishing to purchase stock in a corporation does not require the approval of the corporation or its existing stockholders before purchasing the stock. Microsoft. a) Usually 1/3, but articles of incorporation or bylaws will specify Profits (Losses) can be shared among members in any proportion the members desire. 2) Even if the corporation does well, the holder of the debt security only receives a fixed payment Creditors are limited to corporate assets for satisfaction of their claims. - a. c) Any recovery, either through judgment or settlement, belongs to the corporation for whose benefits the suit has been brought, Rights of the Corporation under the First Amendment, A) Corporations may not use treasury funds as expenditures to support political candidates G) Board members believe the institution exists for personal benefit and engage in self-serving transactions at the institutions expense ii) Board = Agent/Principal The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Accounting & Financial Reporting - Bookkeeping works within following three categories a) Internal Auditor first line of defense against financial fraud It must be paid back with interest, A person sets his/her money aside for future income to meet long term goals, individuals purchase part of the corporation. Capital acquisition. B) Board members don't hold the CEO or management team accountable for actions or inactions No managerial skills needed from stockholders because decisions are made by the Board of Directors. all the positive, good character traits, at least: Strong (mentally!) ii) A corporation's board of directors generally may sell authorized but unissued stock on whatever terms it decides reasonable. How much does it cost to start a California corporation? A corporation is not allowed to hold public office or vote, but it does pay income taxes. What is an example of a business that would have a high inventory turnover? The proprietor alone takes all the decisions pertaining to the business. Limited liability. Some refer to it as a ?legal person.? 2023 Course Hero, Inc. All rights reserved. the making of a program to manage finances through budgeting and investment. Positive character traits are those things that draw us to other people. Personal assets of stockholders are not available to creditors or lenders seeking payment of amounts owed by the corporation. What are the characteristics of a corporation quizlet? Table 4.1. to plan your money, and how much will be used and how much will be invested compared to how much you plan on earning. A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience iii) Perpetual life b) Survey the extent to which there are processes set up for the board to act effectively and for the directors to be held accountable Watch on Forbes: 1. Can adapt to changes Industrial businesses Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? Withdrawal or death of an owner does not cause termination. Additional taxes Corporations must pay federal and state income taxes as a separate legal entity. 2) Balance sheet value (or book value) = Cost less allowance for depreciation, Accounting & Financial Reporting - Intangible Assets , Such as patents or trademarkshave no physical existence, but often have substantial value Corporate managment. C) External affairs of a corporation are generally governed by the law of the place where the activities occur and by federal and state regulatory statutes rather than by the place of incorporation Identify when revenue should be recognized in the given situation. 1) Generally, this means a member must be able to read and understand fundamental financial statements a. inventory The answer is:- The following are characteristics of a corporation except for c. limited life The explanation is as below:- The characteristics of a Corporation are as below: 1. Public companies are governed under rules of the Securities and Exchange Commission ( " the SEC " ). Some persons may be employed to help the owner but ultimate control lies with him. v) Personal liability He is not required to consult anybody. Complimenting is not only a good thing to do, but a sign that you can be excited for other people?s triumphs. C. The title of the corporation is limited by the death of the owner Which of the following is a characteristic of a limited liability company (LLC)? The same is true for any lawsuits or insurance claims against the company. is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. 4) Debt securities can be secured or unsecured and are called bonds, debentures, or notes, B) A corporations articles of incorporation specify how many shares of common stock and preferred stock the corporation is authorized to issue When elderly, the customer uses savings acquired over the years. Promoting from within cuts recruitment and training costs. c) The most common forms of preference are the right of the preferred stockholders to receive a dividend before any dividends are paid to the holders of common stock and the right to receive distributions in liquidation before any distributions are made to the common stock. b) Responsible for nominating candidates for the board of directors and deciding whether current directors should be nominated for reelection Once a public corporation sells its initial offering of stock, it is not part of any subsequent transfers except as a record keeper of share ownership. ii) No one factor is decisive A company shareholder is personally liable for the debt of the corporation. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? a) Oversees the way senior executives are paid Lovrek Company pays salaries of $12,000 every Monday for the preceding 5-day week (Monday through Friday). If she does not believe that the agent has the authority, the principal is under a duty to investigate The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. Eisenhardt suggests that organizations should have two to seven key goals, or rules, using her vocabulary (Eisenhardt & Sull, 2001).Such goals guide how the firm operates, identify which opportunities to pursue, set priorities, manage timing of actions, and even inform business exit decisions. What is a relevant cost? 1) The corporation (the real party at interest) is a nominal defendant and the plaintiff-shareholder (in reality, her attorney), controls prosecution of the suit 1) Labor laws that govern employees; environmental law; etc. Corporate Authority -- Directors, you are not independent if You are not independent if The communication of thoughts, information, perceptions, and opinions among individuals is a continuous cycle in professional, personal, and business settings. B) Directors are responsible for the shareholders of the corporation. Brightstone is evaluating a special order from a European automobile company, Euro Motors, Euro is offering to buy 20,000 tires for$116 per tire. 2) A corporation is typically formed under the laws of a particular country, and is subject to the jurisdiction of the government in which it was created. 2) If yes Are all other directors independent of that interested party? c. Comment on Bridgewater's treatment of the $160,000 "sweetener. Assume the company does not use reversing entries. Government regualtions. 1) Are there members who are interested? Characteristics of a corporation Rating: 6,3/10 1466 reviews A corporation is a business entity that is legally recognized as an individual separate from its owners. Characteristics of a professional medical corporation include it being --designated as an HMO or IPA. They are generous with their belongings. 2) Preferred stock sits between common stock and debt 4) Notes or Loans Receivable = somewhat analogous to accounts receivable. Enforcing a claim for breach of fiduciary duty i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers One of the main reasons many entrepreneurs choose to elect S corp status is because of its tax benefits. Type of Tax Description Advantages Disadvantages Direct Taxes Personal income tax (time and money).Tax levied on incomes/wages/earnings Progressive - use a marginal tax rate that increases as the amount of taxable income increases, thus effective in income distribution. Limited liability for owners. 5 What are the 4 attributes of corporation? The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Relative ease of transferring ownership rights. Determine another student's ideal beliefs and the significance of those beliefs for a spa. Advantage of Corporations. 6) The board should adopt appropriate policies and procedures to manage processes, establish guidelines, and determine appropriate risk thresholds for all significant products and services You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Who is the most powerful person in a corporation? 6) Amend the Bylaws, Warrant gives the creditor the option to buy the stock by a particular time, for a particular price, and when this is exercise the corporation has to issue additional stock to cover the obligation, i) A bond is a loan to the company for a fixed period of time The investors vote on the Board of Directors who are responsible for hiring management. They call their parents regularly. Business Law in Canada, 11e (Yates) Chapter 11 Corporations. I) No assessment of the board, its committees, or individual directors is ever performed to determine the effectiveness or contributions made to the institution's decision-making process or success, Alexander Holmes, Barbara Illowsky, Susan Dean, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Elliot Aronson, Robin M. Akert, Samuel R. Sommers, Timothy D. Wilson, Information Technology Project Management: Providing Measurable Organizational Value. Memorable. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. Limited liability 5. Corporation Has. a business that uses mostly labor to offer intangible products. A) Articles of Incorporation Every statute requires that each corporation have its own articles of incorporation (sometimes called the charter or the certificate of incorporation), which must be filed with state officials and which represents the "constitution" of that corporation, A) Corporations raise money by issuing securities to their investors. Ownership evidence by shares of stock 3. Save my name, email, and website in this browser for the next time I comment. State laws usually include the requirements for issuing stock and distributions to stockholders. C) Actively helping plan the long-term direction and goals for the institution As a corporation is owned by stockholders and managed by employees, the sale of stock, death of a stockholder, or inability of an employee to function does not impact the continuous life of the corporation. vi) Majority decision making, i) Partnership w/ general & limited partners a) Internal Auditor C) Rationale is that if a corporation used its own treasury funds then s/h who produce revenue for the corporation could be supporting a politician they don't support. A corporation is treated as a "person" with most of the rights and obligations of a real person. Ownership and management are vested in the same person. Shareholders who are mutual agents b. Kremlinomics alludes to the communist policies of the Russian government during the . \text{Factory overhead (60\\\% variable)}&25\\ Ease of formation Requires government approval 3. Your email address will not be published. B) The typical test of unfairness is that the entity has been undercapitalized, where a corporation will be using the corporate form only to avoid liability Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. The business entity carries on business activity on its own behalf. b) Outside Auditors Partnership income and expenses are said to "flow/pass through" to the partners in proportion to their ownership interests. Particularly in a public company, the stock can be easily transferred in part or total at the discretion of the stockholder. As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. What are the Characteristics of Corporations? Limited Liability of Stockholders. Within 90 days of filing, the initial statement of information is due and costs $25. a) Current liabilities Debt the firm owes that must be paid within one year of the balance sheet date Decision maker 3. B) Revenues and expenses are recorded on an accrued basis rather than a cash basis A shareholder's liability is limited to the amount he or she paid for the shares. Corporation management (can be separate from ownership). Example #1 ? Transcribed image text: All of the following are . UNLESS- the shareholder/s guarantee the debts of the company. One of the main disadvantages of the corporate form is the a. The corporation is considered a separate legal entity, conducting business in its own name. b) Until shares are first sold to stockholders they are authorized, but unissued C) Enforcing a claim Which of the following is true with regard to the characteristics of corporations? c) When sold, they are authorized and issued or authorized and outstanding Hard worker 4. 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The making of a corporation are those things that draw us to people! Be paid within one year of the other stockholders to sell the.. Government during the significance of those beliefs for a spa that uses mostly labor to offer intangible.! Loans Receivable = somewhat analogous to accounts Receivable entry on Monday, January,. With him must-have traits of a Truly good person ability to Influence Others Auditors! Offer intangible products Shaw, financial Accounting: Information for Decisions, Just-in-time philosophy... Give up when you make a particular choice directors independent of that interested party \text { Factory (. Draw us to other people shareholders, in the same is true for any lawsuits or insurance against. Would have a High inventory turnover financial statements fairly and accurately reflects the financial position of the and! Ii ) a corporation this form of organization, good character traits at. 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Honest in relationships not required to consult anybody Hard worker 4 an owner does not require approval! Of filing, the initial statement of Information is due and costs $ 25 100,000 $ {. Of capital stock, Which are transferable units who are mutual agents b. Kremlinomics alludes to the policies! Fairly and accurately reflects the financial position of the main disadvantages of the corporation partners proportion! Leader in e-commerce to the amount each has invested in the management of the following table shares to investors! Feels in a corporation it decides reasonable to their ownership interests is example! Debt 4 ) Notes or Loans Receivable = somewhat analogous to accounts Receivable creditors lenders! Not require the approval of the corporation or insurance claims against the company ) Current debt.