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. Which is a disadvantage of a corporate structure? Be sure to retrieve the 2016 financial statements, not another year. B) First in, first out Method visualizes inventory as flowing through a pipeline b) Limited partners have no voice in the active management of the partnership 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. 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 One of the disadvantages of a corporate structure is the corporation pays its own tax burden on net income and then the stockholders pay income tax on the dividends they receive. No legal entity: A sole proprietorship has no legal identity separate from that of its owner. \text { Output } & \text { TC } & \text { MC } \\ advantages of corporations, disadvantages of corporations, Ability to increase capital by selling stocks, No managerial skills needed from stockholders because decisions are made by the Board of Directors, Financial and Managerial Accounting: Information for Decisions, Barbara Chiappetta, John J. Business entities are legal organizations that exist by virtue of state law. a market where stocks and bonds are traded. Mutual agency 6. B) Represents the difference/surplus between revenues and cost b) Long-term liabilities Debts due more than one year from the balance sheet date, Accounting & Financial Reporting - Equity, Equity (sometimes referred to as net worth) represents the accounting value of the interests of the firm's owners Are you sure you want to remove #bookConfirmation# Fluctuating demand is another characteristic of B2B markets: a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it. Ability to raise large capital amounts 2. Who is the most powerful person in a corporation? a) It is an action in equity brought by a shareholder on behalf of the corporation Question: Characteristics of a corporation include? i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock Nature of Communication. Kremlinomics alludes to the communist policies of the Russian government during the . A number of characteristics distinguish a corporation from a sole proprietor or partnership. 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 D) Also, corporations are not natural personas, A) A business corporation is organized and carried on primarily for the profits of the shareholders ii) Unlike shareholders, board members may not vote by proxy, A) Regular Meeting Scheduled, can be held without notice, and typically at least quarterly meetings 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. The filing fee for Articles of Incorporation is $100. Stock Terminology. a) Indenture sets out the companies full obligations to the creditors, the company has no fiduciary duty to creditors, their entire obligation and relationship is set forth in the K. In order to pierce the corporate veil, a P must prove (1) The owner has exercised such control that the corporation has become a mere instrumentality of the owner, which is the real actor; (domination) 3. Next to the following list of eight characteristics of business organizations, select a brief description of how each characteristic applies to corporations. Corporations are created under state or federal laws and have many of the same legal rights as a person . 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 iii) Perpetual life A) Average Cost Method visualizes inventory as sold at random from a bin Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. v) Common shareholders elect board and vote on major matters By contrast, any investor with the necessary funds can buy stock in a publicly held firm . Your email address will not be published. What are 2 characteristics of a corporation? Select one: a. 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. The corporations resources are limited to what the stockholders can contribute. c) Must be comprised entirely of independent directors Profits (Losses) can be shared among members in any proportion the members desire. High Fence Whitetail Hunts Nestled in the hills of south central Kentucky lies an oasis of trophy whitetail bucks and the best Kentucky deer hunting you've ever seen. Corporate Authority -- Directors, you are not independent if You are not independent if For the calculation of averages, use the following amounts for 2014: total assets =$2,095,083; total stockholders equity = $1,350,300. Advantage of Corporations. Courteous : I care about workplace atmosphere. 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. The proprietor alone takes all the decisions pertaining to the business. i) Revenue - Cost = Income B) Directors are responsible for the shareholders of the corporation. A corporation is a legal entity that is separate and distinct from its owners. caveat venditor. State laws usually include the requirements for issuing stock and distributions to stockholders. There may be thousands, even millions, of stockholders in a public company. Previous 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. Money borrowed against a home or land. 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. \end{array} (6) The degree of discretion shown by the allegedly dominant corporation; 3) Did not have a rational business purpose (i.e., constituted a waste of corporate assets); To be recognized as a corporation, a business must file an application that includes the corporation's articles of incorporation (charter) with the State, pay an incorporation fee, and be approved by the State. B) Committees Boards delegate responsibilities to committees, who then have a certain amount of discretion with regard to their specific responsibilities, but they can't take action that would require s/h approval, can't fill vacancies on the board or on the committee, can't adopt/amend/repeal bylaws w/out full board approval. Certain industries, such as banks, financial institutions, and gaming, are also subject to regulations from other governmental agencies. a) *Current ratio = Current Assets / Current Liabilities* Can have current assets, fixed assets, and intangible assets i) Corporation can act humanitarianly if that humanitarian effect is a secondary effect or purpose that comes after the primary purpose of creating a profit or long-term benefits of the company a) There is a maturity date where you have to pay back to the principal and there is always annual interest Characteristics of corporations Legal entity Rights as person and citizen Creature of state Limited liability of shareholders Unrestricted transferability of corporate shares Perpetual existence Centralized management Corporate taxation Express powers: Ease of formation Requires government approval 3. 4) A code of ethics that applies to all officers, board members, and employees should be adopted and monitored for adherence by the board 1) GAAP requires firms to carry intangible assets they have purchased at cost less an allowance for amortization (the equivalent of depreciation, applied to intangibles), Accounting & Financial Reporting - Liabilities, Liabilities account for the accounts that firms owe to others, whether pursuant to written evidence of indebtness or otherwise Which one of the following is not a characteristic of a corporation? 1) Dilution Reduction in the economic return of your shares and the voting power and control you can exert by owning those shares, The most basic of all corporate securities The liability of stockholders is limited to the amount each has invested in the corporation. A. ii) If you have a good cash flow from investing and you're not an investing company that can be odd & sometimes it could be from debt, i) Represents permanent commitments of capital to a corporation by which the contributor is given shares in the corporation in the type of share that the corporation is authorized to issue A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience How long does it take for braces to close gaps. Creditors are limited to corporate assets for satisfaction of their claims. (8) Whether the corporations are treated as independent profit centers (big one); A company shareholder is personally liable for the debt of the corporation. a. 1 What are the characteristics of a corporation quizlet? d) Disinterested and independent (has two methods of analysis = duty of loyalty Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. 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. a) It is less risk than common stock but more risk than debt An investment expert makes all of the buy and sell decisions, as source of supply, support, or aid. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? Separation of owners and entity (no mutual agency). Characteristics of a professional medical corporation include it being --designated as an HMO or IPA. Your email address will not be published. C) Most important is cash flow from operating activities The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management.. What are some features of a corporation quizlet? ii) Apparent Authority Perceptions of the third party, not the principal. Examples of personal positive qualities: kind, gentle, strong, resilient, caring, assertive, hard-working, reliable, honest, practical, responsible, loyal, mature, creative, consistent, appreciative, capable, quick, sensitive, perceptive, patient, thoughtful, fit, trustworthy, shows initiative, motivated, versatile. Thrifty (not wasteful!) b) If one of two innocent parties must suffer due to betrayal of trusteither the principal or the third partythe loss should fall on the party who is most at fault. 5) A well-publicized whistle-blower process should be established so employees, vendors, and customers can anonymously report concerns Capital acquisition. 5 What are the 4 attributes of corporation? 2) Even if the corporation does well, the holder of the debt security only receives a fixed payment i) A non-shareholder defendant may be, "in reality" the equitable owner of a corporation where the non-shareholder defendant "exercises considerable authority over the corporation to the point of completely disregarding the corporate form and acting as though its assets are his alone to manage and control", Piercing the Corporate Veil -- Parent-Subsidiary Corporation, A) *Alter Ego Doctrine* Allows the imposition of liability on a corporation for the acts of another corporation when the subject corporation is organized or operated as a mere tool or business conduit Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. G) Board members believe the institution exists for personal benefit and engage in self-serving transactions at the institutions expense 1? iii) Inherent Authority Infers from the position holds that the agent has authority 2022-11-23. Is Ashford nationally or regionally accredited? Hard worker 4. (d) You borrow money in August from RBC Financial Group. B) Business Judgment Rule 1) Labor laws that govern employees; environmental law; etc. These characteristics are as follows: Capital acquisition. i) The relationship among what are described as directors, (the officers whom have the day-to-day operations), the shareholders and employeeswhat their rights are with one another 2 Which one of the following is not a characteristic of a corporation? Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. c) Audit Board Committee Job is to make sure that the companies financial statement is accurate and not misleading E) Knowing where the institution stands and staying abreast of its financial health Owner liability Limited 7. B) Directors are responsible for the shareholders of the corporation. What are the characteristics of a corporation quizlet? ii) Formed by filing articles of incorporation with the state ii) No one factor is decisive These characteristics are noted below. Latin for "let the buyer beware"; buyers need to know what they are purchasing, whether it has a warranty, etc. Personal assets of stockholders are not available to creditors or lenders seeking payment of amounts owed by the corporation. Advantage of Corporations. c) Keeping detailed minutes of the meeting, AgencyAction Binding the Corporation Parties to the legal agency relationship, i) Corporation = Principal traits, like being honest, respectful, responsible, caring, fair. a) Company classifies and analyzes the information and presents it in a set of financial statements Requirements b. setup time What are the Characteristics of Corporations? b) Anytime you're dealing w/ a wholly owned subsidiary, it's a good idea for the other company to do its due diligence and inquire whether the subsidiary is authorized to act in the way that it is acting w/out approval of its parent company, AgencyAction Binding the Corporation Types of Authority Inherent Authority , Inherent Authority Infers from the position holds that the agent has authority --managed by a board of directors. In a corporation, one stockholder cannot jeopardize other stockholders through poor decision making. franchise. Some refer to it as a ?legal person.? Owner liability 8. What is the unit product cost using absorption costing? Identify the two types of relevant costs. C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance Limited to their investment. Top 9 Examples of Most Common Corporations. Separate Legal Existence. (3) The fraud or wrong results in an unjust loss or injury to the P. Piercing the Corporate Veil general overview -- advantages, etc. from your Reading List will also remove any If you continue to use this site we will assume that you are happy with it. 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 joint venture. You can begin building your success by developing these 11 must-have traits of a powerful and successful leader. Clothing should always be clean and ironed properly. Positive character traits are those things that draw us to other people. Tip. 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. a) Must be comprised entirely of independent directors 1) A principal advantage of the corporate form is that a shareholders potential loss is limited to the amount that she invested in the enterprise. What are the Characteristics of Corporations? Legal status Separate legal entity 8. What are the characteristics of a good person? Here are certain characteristics that are not representative of corporations: The stockholders of a corporation have unlimited liability. One way to view a business entity is as a separate person. Investors in a corporation need not actively manage the business, as most corporations hire professional managers to operate the business. (1) Disregard of corporate formalities; Corporations are distinguished by the subchapter in chapter 1 of the IRS code that governs their tax structure. 9) Management and the board of directors should have formal succession plans in place that are reviewed annually How to Market Your Business with Webinars? Example #6 ? Cooperative : I get along well in a team setting. Partnership income and expenses are said to "flow/pass through" to the partners in proportion to their ownership interests. OutputTCMC25,000$100,000$0.5050,000150,0001.0075,000187,5002.50100,000275,5003.00\begin{array}{rrr} Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. View the full answer. 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. The owners of the business entity are representatives of the entity. agreement among two or more businesses to work together to provide a good or service; each business shares the costs of doing business as well as the profits. Corporation management (can be separate from ownership). a business that uses mostly labor to offer intangible products. B) In order for the board to act, it must B) Internal Affairs Doctrine Means that the relationship between shareholders and managers (directors and officers), will be governed by the corporate statutes and case law of the state where the corporation is incorporated i) 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 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee Ability to raise large amounts of capital High ability 5. D: Which of the following is true with regard to the characteristics of corpora- tions? i) Must be a quorum present Separate Legal Existence Government regulation 4. 2) Was not made in good faith; Amazon was founded in 1994 and is a world leader in e-commerce. Self-Managing It's hard to manage others effectively if you. iii) Paid in equity + retained earnings = Total Equity, Accounting & Financial Reporting - Retained Earnings - Ratio's, i) Investors look at financial statements in different ways, such as CHARACTERISTICS OF A CORPORATION 1. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. It may be established as a profit making or nonprofit organization and may be publicly or privately held. All corporations are owned by groups of investors. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. a) Some companies have established this committee in recent years Corporations have an indefinite life. vi) No member liability \text{Total}&\underline{\$129}\\ Example #3 ? These 5 qualities make a logo instantly identifiable, and ensure that when customers look at it, they'll connect with your brand. a) Unless the P can rebut the presumption, a court will evaluate the substantive merits of the action A corporation is treated as a person with most of the rights and obligations of a real person. 3 What are 3 characteristics of corporations? Long before the term "influencer" was coined, young people played that social role by creating and interpreting trends. 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 Dividends. The most significant of these are: Separate Legal Existence Continuous Life Ability to Acquire Capital Transferability Limited Liability Government Regulations Taxation Governance and Management Let's look at each of these in turn. Which is a characteristic of a generally accepted accounting principles? J.P. Morgan Chase. In some states, stockholders are called shareholders. Example #1 ? A) The corporation is a separate legal person, but can neither sue nor be sued. Timeless. Goal setter 6. 100,000 & 275,500 & 3.00 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 Who is the most powerful person in a corporation? What are the 4 attributes of corporation? A person who buys stock in a corporation is called a stockholder and receives a stock certificate indicating the number of shares of the company she/he has purchased. Was 2016 stronger or weaker than 2015 based on these measures? d. The company pays cash dividends to shareholders. iii) General partners manage and have personal liability is a company that is registered by a state and operates apart from its owners. Corporations have a number of distinguishing characteristics. refusal to buy a company's services or product. Domino?s Pizza. Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. d) If they are repurchased by the corporation they become authorized and issued, but not outstanding, Before a corporation that has issued all the shares authorized by the articles of incorporation can issue more stock, it must amend the articles of incorporation to authorize additional shares Within 90 days of filing, the initial statement of information is due and costs $25. Characteristics of Entrepreneurs 1.Risk taker 2. Good people understand that others need praise. H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board iii) Corporate managers who breach their fiduciary duties can be held personally liable for any losses they cause the corporation, i) In order to encourage directors to take risks on behalf of the corporation w/out fear of personal liability for any losses which may ensue, courts have developed this rule " [Leadership] is all about influencing people," said Kirstin Lynde, founder of leadership development firm Catalyze Associates, in a Facebook Live interview. Lovrek Company pays salaries of $12,000 every Monday for the preceding 5-day week (Monday through Friday). Professional management b. Clever : I can juggle multiple tasks. (10) Intermingling of property between entities c) If you or a family member are affiliation in any way with some outside auditor of the company, i) *Audit Committee* Usually represents a very large portion of the assets of firms engaged in financing businesses --owned by shareholders. Duration of life 3. an odd degree polynomial function with real coefficients. The characteristics of an S corporation differ from that of an ordinary corporation in a number of ways. What is the difference between Hardie board and Hardie plank? ii) "An important consideration is whether the corporation is underfunded or undercapitalized, which is an indication that the company is a mere conduit or business tool" So, the minimum grand total for forming a California corporation is $125. A. Money that can be borrowed as you need it, which must be paid back with interest. 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)? Limited liability for owners. Characteristic Corporations 1. ii) Formed by partnership agreement (9) Payment of guarantee of the corporation's debt by the dominating entity; and a) Partnership is not a taxpaying entity. Business Law in Canada, 11e (Yates) Chapter 11 Corporations. F) Meetings are characterized by little or no discussion, or board members go out of their way to avoid conflict, resulting in rubber stamping B) Working with management to promote ethical, positive corporate culture According to Lance Wilkins, founder of Call Outdoors, passionate leaders are the backbone of thriving businesses. c. 1) Here, analysts typically like a 1:1 ratio, suggesting you have as much equity as you owe debt, Accounting & Financial Reporting - Income Statement, A) Within a fiscal year the money that a company earns and the expenses it incurs and the result is the net income or net profit, and at the end of the fiscal year the net income is carried over to the total equity line on the balance sheet The sale of stock results in government regulation to protect stockholders, the owners of the corporation. The corporation is a separate legal person, but can neither sue nor be sued. ii) Income - Dividends = Retained earnings Dividends. 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