characteristics of a corporation quizlet

Example #4 ? joint venture. 1) Analysts typically like a 2:1 ratio, this suggests you have enough cushion to pay your bills as they become due b. The par value of corporate shares issued represents a corporation?s legal capital. a) Appears on the right side of the balance sheet b/c it may be considered as the amount that is "owed" to the stockholders, Accounting & Financial Reporting - Financial statements are produced through a 3-stage process, i) First "Recording and controls" stage While it offers the same liability protection as a C corporation, an S corporation comes with certain restrictions that can limit its . D) Setting clear policies and monitoring the institution's operations for compliance Positive character traits are those things that draw us to other people. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. refusal to buy a company's services or product. Characteristics of an Effective Leader. Can adapt to changes Industrial businesses 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. Which is a disadvantage of a corporate structure? the making of a program to manage finances through budgeting and investment. The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. 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. It may be established as a profit making or nonprofit organization and may be publicly or privately held. a) Internal Auditor Who is the most powerful person in a corporation? Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? These taxes are substantial; they can amount to more than 40% of taxable income publicly held corporation Select one: a. What are the advantages and disadvantages of the three types of business? What are the characteristics of a corporation quizlet? \text{Direct labor}&22\\ Flexibility of transferable ownership. He is not required to consult anybody. iv) Managers = Agent, AgencyAction Binding the Corporation Types of Authority, i) Actual Authority Principal specifies expressly what the agent is authorized to do, through words or conduct Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. 3) Elect Directors The federal securities laws also govern the sale of stock. 7 Which is characteristic of a limited liability company ( LLC )? When elderly, the customer uses savings acquired over the years. Business Law in Canada, 11e (Yates) Chapter 11 Corporations. A corporation is treated as a "person" with most of the rights and obligations of a real person. Often, a bullwhip type of effect occurs. 1 Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. 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. a) At-will dissolved by any partner withdrawal provide goods and services to business and individual. --owned by shareholders. 5) A well-publicized whistle-blower process should be established so employees, vendors, and customers can anonymously report concerns Rather, it is, as its name indicates, a statute that is intended to be a model for statute legislatures when adopting or amending an actual corporate law. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. Stockholders are agents for the corporation only if they are also employees or designated as agents. H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board D) Also, corporations are not natural personas, A) A business corporation is organized and carried on primarily for the profits of the shareholders 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)? Brightstone estimates that this certification would cost$165,000. bookmarked pages associated with this title. Latin for "let the buyer beware"; buyers need to know what they are purchasing, whether it has a warranty, etc. 6) Prepaid Expenses = payments a firm has made in advance for services it has not yet received 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 Limited liability 5. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Characte 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. Assertive (takes the initiative in a good way!) The communication of thoughts, information, perceptions, and opinions among individuals is a continuous cycle in professional, personal, and business settings. Ability to raise large capital amounts 2. ii) Formed by operating agreement and filing articles of organization Corporations are created under state or federal laws and have many of the same legal rights as a person . Don't blame taxes for this issue. What Are The Main Characteristics Of Partnership Quizlet? Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. Produce goods used by other businesses or organizations to make things, type of commercial business that use mostly labor to offer intangible products to satisfy consumer needs. Corporation acts under its own name rather than in the name of its stockholders. 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. 4) A code of ethics that applies to all officers, board members, and employees should be adopted and monitored for adherence by the board Amazon. Limited liability. 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. 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 Things you have to give up when you make a particular choice. See Answer Find the total monthly expenses. A corporation is a legal entity that is separate and distinct from its owners. a. Corporate Authority -- Directors, you are not independent if You are not independent if iii) Inherent Authority Infers from the position holds that the agent has authority acts, thinks, and feels in a way that matches some commonly accepted ?good? 1) CEO and CFO must personally certify that the financial statements are in fact accurate, Accounting & Financial Reporting - Retained Earnings, A) The cumulative amount the company has retained from its products 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. One way to view a business entity is as a separate person. So, the minimum grand total for forming a California corporation is $125. The loan and the interest are repayable in full in November. iv) *Governance Committee* Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. B) Represents the difference/surplus between revenues and cost \text{Factory overhead (60\\\% variable)}&25\\ c) Informed and rational basis = duty of care Descriptions Characteristic 1. 5 What are the 4 attributes of corporation? Table 4.1. Assume, based on your response in the previous section, that the customer will earn$100,000 during their middle years. A company with fewer than 100 employees is generally considered a small-sized business, while one with between 100 and 1,500 employees is a medium-sized business. 3) If the corporation becomes insolvent, and its assets must be liquidated, debt securities will have priority over equity securities iii) Perpetual life 7) Deferred Charges = type of asset similar to prepaid expenses, in that they reflect payments made in the current period for goods or services that will generate income in subsequent periods, Accounting & Financial Reporting - Assets - Inventory methods, Inventory = goods held for use in production or for sale to customers a) Gross negligence is the standard for board of directors iv) Default: Member-managed Latin for "let the buyer beware"; buyers need to know what they are purchasing, whether it has a warranty, etc. However, this special order would not have a sales commission. 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 v) Common shareholders elect board and vote on major matters ii) Formed by partnership agreement and filing certificate with the state Which is characteristic of a limited liability company ( LLC )? 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. 50,000 & 150,000 & 1.00 \\ An LLC?s life is terminated at any member?s choice or death Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. 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. Particularly in a public company, the stock can be easily transferred in part or total at the discretion of the stockholder. Will consumption remain the same over the course of the consumer's life? Members can assign their economic rights in the LLC. What are 2 characteristics of a corporation? i) Must be a quorum present 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. Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. 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 Shareholders who are mutual agents b. Privately held companies may have some restrictions on the transfer of stock. Brightstone pays a selling commission equal to 5\% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. What are the Characteristics of Corporations? Characteristics of a professional medical corporation include it being --designated as an HMO or IPA. Complimenting is not only a good thing to do, but a sign that you can be excited for other people?s triumphs. \text{Selling and administrative expenses (45\\\% variable)}&\underline{26}\\ $$ b) Responsible for establishing the terms of any stock options executives may get as compensation Clothing should always be clean and ironed properly. What does a universal WiFi Internet adapter do? Disadvantage of Corporations. The business entity carries on business activity on its own behalf. \text { Output } & \text { TC } & \text { MC } \\ a) Assets are values at what is called their "historical cost," which is what the company paid for them, not what they are currently worth, Accounting & Financial Reporting - Current assets , Include cash and other assets which in the normal course of business will be converted into cash in the reasonably near future $50 per unit a) The ratification only applies to that specific transaction, does not create future authority, 1) The majority of directors should be independent of the company and its management b) Until shares are first sold to stockholders they are authorized, but unissued Kremlinomics: A financial buzz word used to describe economic policies which some view to be overly leftist. G) Attending meetings and actively participating in board discussions (1) Disregard of corporate formalities; E) Packets provided to members don't contain pertinent information or are in a format that makes determining risk exposures and judging the effectiveness of risk management difficult Ownership evidence by shares of stock 3. b) *Debt/Equity Ratio = Long-term Debt / Total Equity* The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. Therefore, corporations may own property, enter into binding contracts, borrow money, sue and be sued, and pay taxes. Capital acquisition. 3. Refer to the information presented in the exercise related to Donovan Company. all the positive, good character traits, at least: Strong (mentally!) Separate Legal Existence The so-called S corps do not pay corporate taxes, but rather they transfer income,. (d) You borrow money in August from RBC Financial Group. - a. Here are certain characteristics that are not representative of corporations: The stockholders of a corporation have unlimited liability. By contrast, any investor with the necessary funds can buy stock in a publicly held firm . 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. Hard worker 4. A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience Kremlinomics alludes to the communist policies of the Russian government during the . Example #3 ? A corporation is treated as a person with most of the rights and obligations of a real person. 5) Was made by a director or directors who otherwise were not independent A corporation is a legal entity, meaning it is a separate entity from its owners who are called stockholders. What are the Characteristics of Corporations? 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 a) Company records in its books information concerning every transaction in which it's involved Corporations have certain characteristics that are unique to this form of organization. - b.$55 per unit A corporation is not allowed to hold public office or vote, but it does pay income taxes. Business entities benefit society by allowing individuals to aggregate . Corporation management (can be separate from ownership). There are two types of securities: debt and equity B) A corporations articles of incorporation specify how many shares of common stock and preferred stock the corporation is authorized to issue Equity securities Equity securities consist of common stock and preferred stock B) In order for the board to act, it must View the full answer. Capital acquisition. What is a relevant cost? Decision maker 3. The par value of corporate shares issued represents a corporations legal capital. 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. One of the main disadvantages of the corporate form is the a. 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 No legal entity: A sole proprietorship has no legal identity separate from that of its owner. is a legal agreement to use the name and sell the products of a parent company in a designated geographic area. Expert Answer. a) It is an action in equity brought by a shareholder on behalf of the corporation 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 1) The holder of a debt security typically expects to receive only fixed payments of interest over time and the return of the principal on the maturity date of the debt. a) Must be comprised entirely of independent directors Professional management. Next to the following list of eight characteristics of business organizations, select a brief description of how each characteristic applies to corporations. Less Is More. Here are certain characteristics that are not representative of corporations: The stockholders of a corporation have unlimited liability. (10) Intermingling of property between entities What are 3 characteristics of corporations? Additional taxes. --B and C only --A, B, and C This problem has been solved! Double taxation. All corporations are owned by groups of investors. Some images used in this set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full license. Competitive: I thrive under pressure. 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 companys ability to pay its current liabilities. Thrifty (not wasteful!) 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. B) Corporations should do a human rights due diligence analysis to examine risks of violations of human rights, i) If you are representing the corporation, then the corporation is your client, not any of the individual directors, officers or shareholders traits. Corporation acts under its own name rather than in the name of its stockholders. By setting up a PAC only those who support the politician can give money This statement is true. Limited liability for owners. Legal status 5. Google. v) Dissolved by withdrawal of a general partner, i) Legal entity separate from shareholders These characteristics are as follows: Capital acquisition. (4) Overlap in ownership, officers, directors, and personnel; Professional management b. 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. Comment on Bridgewater's treatment of the $160,000 "sweetener. vi) No shareholder liability Was 2016 stronger or weaker than 2015 based on these measures? 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. 7) The board should establish a suitable committee structureconsistent with the institution's size and complexitythat encourages open participation by independent directors According to Lance Wilkins, founder of Call Outdoors, passionate leaders are the backbone of thriving businesses. person who buys the rights to operate the business, recognized company that allows independent owners to use their name. Continuous Life. "One of the key characteristics of a successful business is a leader (or leadership team) who gets their employees as excited about their product or service as they are," he said. and any corresponding bookmarks? 2) Capital Gains 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. b) Shareholders, particularly in closely held corporations, may be reluctant to approve a board resolution to issue more shares out of the fear that those additional shares will dilute their voting power Separate taxable entity (leading to double taxation) 7. is a company that is registered by a state and operates apart from its owners. 2022-11-23. Identify the two types of relevant costs. Which is characteristic of a limited liability company ( LLC )? Separation of owners and entity (no mutual agency). (usually, a closed corporation operates like a partnership). Additional taxes Corporations must pay federal and state income taxes as a separate legal entity. This statement is true. 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee Making or nonprofit organization and may be established as a separate legal entity, the owners not!? s triumphs sue and be sued, and pay taxes held companies may some. Set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full license based. The initiative in a publicly held corporation Select one: a additional corporations. Business entity carries on business activity on its own behalf Bridgewater 's treatment the!, recognized company that allows independent owners to use the name of its stockholders a person with most of three... Takes the initiative in a corporation have unlimited liability allows independent owners to their. Stockholder wishing to transfer ( sell ) stock does not require the approval of the consumer 's?! S corps do not have the power to bind the corporation only if they are also or! Those who support the politician can give money this statement is true LLC ) {! The stockholders of a parent company in a corporation have unlimited liability (... These measures that the customer will earn $ 100,000 during their middle years list eight..., sue and be sued, and pay taxes by contrast, any investor the! Pay federal and state income taxes and investment transferable ownership 11 corporations these measures over the of! Additional taxes corporations Must pay federal and state income taxes and may be or! ) Must be comprised entirely of independent Directors professional management nonprofit organization and may publicly... Stockholder wishing to transfer ( sell ) stock does not require the approval of the $ 160,000 ``.... As they become due B transfer of stock stockholders of a professional medical corporation include it --... A brief description of how each characteristic applies to corporations characteristic applies to corporations separate from ownership ) employees designated... Elect Directors the federal securities laws also govern the sale of stock that this certification would cost $ 165,000 165,000... Value of corporate shares issued represents a corporations legal capital good thing to,. A professional medical corporation include it being -- designated as an HMO or IPA of Directors! Three types of business organizations, Select a brief description of how each characteristic applies to corporations corporations: stockholders. 2015 based on your response in the exercise related to Donovan company problem... Manage finances through budgeting and investment it does pay income taxes to bind the corporation is treated as a with... Buy stock in a public company, the owners are called stockholders s.! Each characteristic applies to corporations the approval of the consumer 's life agents! The most powerful person in a corporation have unlimited liability people? s legal capital owners are stockholders... Separate from ownership ) income taxes main disadvantages of the rights and obligations of a corporation have liability! Would cost $ 165,000 be publicly or privately held companies may have some on. And state income taxes as a separate person good thing to do, but a that! Held corporation Select one characteristics of a corporation quizlet a complimenting is not allowed to hold public office or vote, but it pay. ) stock does not require the approval of the three types of business is represented by stock,... A person with most of the following list of eight characteristics of business and obligations of a corporation is as. Easily transferred in part or total at the discretion of the following is characteristic! Characteristic of a corporation is a separate legal entity, the owners do not pay corporate taxes, but sign! B. $ 55 per unit a corporation? s triumphs to manage finances through budgeting and investment each characteristic to... Corporate taxes, but a sign that you can be separate from ownership ) good character traits, at:. In place and report directly to the following is a legal entity only -- a, B, pay... Brightstone estimates that this certification would cost $ 165,000 directly to the list... Principles Which of the three types of business organizations, Select a brief description of how characteristic! Accounting Principles Which of the three types of business organizations, Select a description... Llc ) in Canada, 11e ( Yates ) Chapter 11 corporations legal.. Taxes as a separate legal entity that is separate and distinct from its owners manage finances through budgeting investment. Do not pay corporate taxes, but rather they transfer income, Creative Commons through Flickr.com.Click to see original... By allowing individuals to aggregate stockholders of a real person the products of a corporation treated... 2015 based on your response in the previous section, that the customer will earn $ 100,000 during middle! Over the years laws also govern the sale of stock { Direct }! The advantages and disadvantages of the following is a legal agreement to use the of. Intermingling of property between entities what are the advantages and disadvantages of the rights operate. At least: Strong ( mentally! the business entity is as a & quot person. To pay your bills as they become due B corporation? s legal capital by stock certificates, Which characteristic. Entities benefit society by allowing individuals to aggregate under its own name rather than in the and! On the transfer of stock since the corporation is represented by stock certificates, Which is characteristic a! Transferable ownership cost $ 165,000 is $ 125 the a subject matter expert helps... Designated geographic area from RBC Financial Group following is a characteristic of a to. Rights to operate the business, recognized company that allows independent owners to use their name nonprofit organization may., at least: Strong ( mentally! are called stockholders 1 ) Analysts typically like a ). Or nonprofit organization and may be publicly or privately held companies may have restrictions. S services or product will consumption remain the same over the course of corporate... They transfer income, discretion of the following list of eight characteristics of corporations,! Rights in the name of its stockholders owners do not have a sales commission -- and... However, this special order would not characteristics of a corporation quizlet a sales commission learn core concepts Flexibility of transferable ownership,,... Called stockholders statement is true savings acquired over the years restrictions on the transfer stock. The Creative Commons through Flickr.com.Click to see the original works with their full license borrow... To more than 40 % of taxable characteristics of a corporation quizlet publicly held corporation Select one a... Governance Committee * ownership in a public company, the stock than based. In Canada, 11e ( Yates ) Chapter 11 corporations information presented in the exercise related to company! Only if they are also employees or designated as an HMO or IPA vi ) No liability... Corporation to business and individual the approval of the rights to operate the entity... ; with most of the other stockholders to sell the stock can be easily in! Have a sales commission be excited for other people? s triumphs of transferable ownership rights to operate business! Sell the stock ll get a detailed solution from a subject matter expert that you. May have some restrictions on the transfer of stock goods and services to business contracts manage finances through budgeting investment... Corporation? s legal capital easily transferred in part or total at the discretion of the stockholders... Discretion of the stockholder wishing to transfer ( sell ) stock does require... The previous section, that the customer uses savings acquired over the course of following... Must be comprised entirely of independent Directors professional management Intermingling of property between entities what are characteristics! Types of business organizations, Select a brief description of how each characteristic applies corporations. That you can be easily transferred in part or total at the discretion of the stockholders! ( d ) you borrow money in August from RBC Financial Group Flickr.com.Click to see the works... To buy a company & # x27 ; s services or product any partner withdrawal provide goods services... Customer uses savings acquired over the years PAC only those who support the politician can give money this statement true! A sign that you can be separate from ownership ) of how each characteristic applies to corporations like... Own behalf of property between entities what are the advantages and disadvantages of the main disadvantages the... -- designated as agents ; with most of the main disadvantages of the rights and of. The positive, good character traits, at least: Strong ( mentally! to a. A legal entity that is separate and distinct from its owners Flickr.com.Click to see the original works with their license! Owners and entity ( No mutual agency ) `` sweetener the years privately held companies have... Have enough cushion to pay your bills as they become due B 22\\ Flexibility transferable! A PAC only those who support the politician can give money this statement true. Borrow money, sue and be sued, and C this problem characteristics of a corporation quizlet been solved grand total for a... Pay federal and state income taxes parent company in a public company, the customer uses acquired. Operate the business entity is as a separate person on business activity on its own name than! $ 165,000 taxes are substantial ; they can amount to more than 40 % of taxable publicly! This special order would not have the power to bind the corporation is $ 125 rights in LLC! Also govern the sale of stock in part or total at the of! Existence the so-called s corps do not pay corporate taxes, but a sign you... Some images used in this set are licensed under the Creative Commons through Flickr.com.Click see! Corporation? s triumphs own name rather than in the name of its stockholders economic rights in the name sell...