The corporation is a separate legal person, but can neither sue nor be sued. In some states, stockholders are called shareholders. vi) Majority decision making, i) Partnership w/ general & limited partners Limited liability 5. For each transaction a through f, identify its impact on the accounting equation (select from 1 through 5 below). Memorable. Be sure to retrieve the 2016 financial statements, not another year. 5) Vote to amend to Articles Capital Acquisition 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. Its charter may limit the corporation's life although the corporation may continue if the charter is extended. ii) *Compensation Committee* ii) Debt Securities generally are the least risky and have the lowest expected return. \text{Factory overhead (60\\\% variable)}&25\\ 5) Inventory = goods held for use in production or for sale to customers (average cost method; first in, first out method; last in, last out method) Ability to raise large capital amounts 2. UNLESS- the shareholder/s guarantee the debts of the company. A corporation is a legal entity that is separate and distinct from its owners. ii) Under this rule, courts will defer to the judgment of the board of directors, absent highly unusual circumstances, such as conflict of interest or gross inattention However, this special order would not have a sales commission. Tip. Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. Legal status 5. The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. 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. v) Common shareholders elect board and vote on major matters Less Is More. A corporation is treated as a "person" with most of the rights and obligations of a real person. (Hint: The consumer will attempt to maintain constant consumption for her final two life periods as long as she can consume at least $20,000 in each period after she reaches middle age.). c) If you or a family member are affiliation in any way with some outside auditor of the company, i) *Audit Committee* The owners of the business entity are representatives of the entity. State laws usually include the requirements for issuing stock and distributions to stockholders. Cooperative : I get along well in a team setting. Ambitious 5. By setting up a PAC only those who support the politician can give money (9) Payment of guarantee of the corporation's debt by the dominating entity; and Cheerful : I develop a positive work environment. What are 2 characteristics of a corporation? 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 of the following is true with regard to the characteristics of corporations? iii) General partners manage and have personal liability What are some of the characteristics of a corporation? Ease of formation Requires government approval 3. Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. 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. a. 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. It may be established as a profit making or nonprofit organization and may be publicly or privately held. 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. Shareholders who are mutual agents b. Thrifty (not wasteful!) Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? 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. to plan your money, and how much will be used and how much will be invested compared to how much you plan on earning. 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. Corporations are distinguished by the subchapter in chapter 1 of the IRS code that governs their tax structure. 4) Vote on major transactions "A business that is able to nurture the same . Stakeholder theory of the modern corporation. Can have current assets, fixed assets, and intangible assets Separate entity. The customer makes $20,000 in labour income when they are young. The corporation is considered a separate legal entity, conducting business in its own name. Removing #book# 8 Which is a disadvantage of a corporate structure? 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) Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except --managed by a board of directors. One of the main reasons many entrepreneurs choose to elect S corp status is because of its tax benefits. Separate taxable entity (leading to double taxation) 7. When you see the list of filings for the company, select the Form 10-K for 2016. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Amazon was founded in 1994 and is a world leader in e-commerce. Kremlinomics: A financial buzz word used to describe economic policies which some view to be overly leftist. 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. A company shareholder is personally liable for the debt of the corporation. \begin{array}{lr} Accounting & Financial Reporting - Fundamental equation of financial accounting Accounting & Financial Reporting - Assets generally, Assets include entries representing the property, both tangible and intangible, owned by the firm. Corporation management (can be separate from ownership). Within 90 days of filing, the initial statement of information is due and costs $25. 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 An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. 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? Will consumption remain the same over the course of the consumer's life? What will she spend in each stage of her life? 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 Required fields are marked *. a) Unless the P can rebut the presumption, a court will evaluate the substantive merits of the action 1. ii) Board = Agent/Principal a) Must be comprised entirely of independent directors 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 A corporation can obtain capital by selling stock or bonds. b) Limited partners have no voice in the active management of the partnership ii) Formed by partnership agreement 2023 Course Hero, Inc. All rights reserved. Corporations are created under state or federal laws and have many of the same legal rights as a person . I) Ensuring and maintaining the board's independence, Red Flags of Deficiency in Governance to Watch For, A) A strong or dominant CEO "runs the show," soliciting little or no input from others and not tolerating the opposing view service business. Some of the pros and cons of forming an LLC can be summarized as follows: LLC Pros : Members have limited liability. a) Company classifies and analyzes the information and presents it in a set of financial statements 3M. Is South Africa registered as corporation? 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) Represents the difference/surplus between revenues and cost Shareholders participate, as shareholders, in the management of the corporation. 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 v) Manager-managed: managers act for LLC; members vote on major matters These 5 qualities make a logo instantly identifiable, and ensure that when customers look at it, they'll connect with your brand. When someone is generous, kind, energetic, or optimistic they exude energy that attracts others. 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. 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. 3) If the corporation becomes insolvent, and its assets must be liquidated, debt securities will have priority over equity securities Which is characteristic of a limited liability company ( LLC )? Business entities benefit society by allowing individuals to aggregate . 1) Labor laws that govern employees; environmental law; etc. B) Instead, they need to set up Political Action Committees (PAC) & raise revenues separately and can support that way 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. Don't blame taxes for this issue. A. 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. Are you sure you want to remove #bookConfirmation# - a. a) Board of directors must recommend the amendment, which must then be approved by the holders of at least a majority of its outstanding stock Long before the term "influencer" was coined, young people played that social role by creating and interpreting trends. iv) Board of directors manage 1) If they find no irregularities they offer a "clean" opinion that it represents fairly in all material aspects C) Most important is cash flow from operating activities How much does it cost to start a California corporation? 1) GAAP (Generally Accepted Accounting Principals): a) Company, usually with the assistance of independent public accountants, verifies the information it has recorded and the manner in which it has presented the financial accounting, Accounting & Financial Reporting - Bookkeeping, i) Every transaction which a company is involved is included in the company's leger Particularly in a public company, the stock can be easily transferred in part or total at the discretion of the stockholder. Most corporate detectives avoid terms like spying and espionage, preferring the more dignified label "competitive intelligence", but whatever they call it, snooping on business rivals has become an entrenched sub-industry. lego 41446 friends heartlake city vet clinic. Direct management by the shareholders (owners) c. Its inability to own property d. Shareholders who have limited liability 3. a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority 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 So, the minimum grand total for forming a California corporation is $125. The par value of corporate shares issued represents a corporations legal capital. Corporations have an indefinite life. Terms in this set (8) \end{array} 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. Brightstone's accounting system indicates that the total cost per tire is as follows: (7) Whether the dealing between the entities are at arms length; 9) Management and the board of directors should have formal succession plans in place that are reviewed annually Calculate ratios for 2015 and 2016 to determine the following for Under Armour: They call their parents regularly. Professional management b. What are the characteristics of a good person? 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. As a leader, you may exhibit the following traits: If you have strong leadership skills, one of your biggest advantages to a company is that they can eventually promote you. a) *Current ratio = Current Assets / Current Liabilities* The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. Is Ashford nationally or regionally accredited? Confident : I am not afraid to ask questions. They think of others. (10) Intermingling of property between entities " [Leadership] is all about influencing people," said Kirstin Lynde, founder of leadership development firm Catalyze Associates, in a Facebook Live interview. to put money to use by buying a part of something, so that you may have profitable returns such as interest, or income. - b.$55 per unit C) Enforcing a claim 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. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. 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. 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 They remember their manners. Which is a characteristic of a generally accepted accounting principles? Relative ease of transferring ownership rights. a) It is less risk than common stock but more risk than debt Example #7 ? They call their parents regularly. There is a 50% chance that the customer will earn$40,000 and a 50% chance that the consumer will earn $100,000 throughout middle age. jmu women's field hockey roster a) Presentation of the corporations financial statements fairly and accurately reflects the financial position of the company Google. from your Reading List will also remove any A) No requirement that a corporation incorporate in the state of its principal place of business, it can incorporate under the laws of whatever state best suits its needs Characteristics of a professional medical corporation include it being --designated as an HMO or IPA. 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 F) Meetings are characterized by little or no discussion, or board members go out of their way to avoid conflict, resulting in rubber stamping Duration of life 3. 1) Cash = money in the till and money in demand deposits in the bank Which is a characteristic of a generally accepted accounting principles? J.P. Morgan Chase. The companys inventory turnover and days inventory outstanding (DIO); accounts receivable turnover and days sales outstanding (DSO), accounts payable turnover and days payable outstanding (DPO), and the number of days in its cash conversion cycle. The stock of a public company is traded on a stock exchange. Characteristics of Entrepreneurs 1.Risk taker 2. bookmarked pages associated with this title. Terms in this set (8) Professionals should always strive for a professional appearance, including appropriate attire and proper hygiene and grooming. Good people understand that others need praise. a. Ability to raise large capital amounts 2. 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 A) Closed Corporation Held by a small group of people and not publicly traded. Previous traits. 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. Professional management. Descriptions Characteristic 1. Owner liability 8. Some refer to it as a legal person.. a) Oversees the way senior executives are paid Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. A) This limited liability means that a corporation's creditors can look only to the corporation's assets for payment for their claims 100,000 & 275,500 & 3.00 50,000 & 150,000 & 1.00 \\ Ability to Acquire Capital. Separate Legal Existence D) Meeting materials are sent in advance, but board members do little or no preparation Two key characteristics of a C-Corporation are: it provides limited liability to the owners/shareholders; and, unlike an S-Corp, it is not a flow-through entity. They are honest in relationships. Requirements 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 What is the unit product cost using absorption costing? Nearly every large US company has an intelligence office of some kind. Top 9 Examples of Most Common Corporations. a business that uses mostly labor to offer intangible products. What is the nervous system tissue called? H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board D) Setting clear policies and monitoring the institution's operations for compliance iv) Ratification of Authority Focuses on the principal, if the agent has acted w/out authority but the principal takes no steps to repudiate the authority and accepts the benefits of the authority, than we can say that the principal has ratified the authority, AgencyAction Binding the Corporation Types of Authority Apparent Authority , Perceptions of the third party, not the principal. 7) The board should establish a suitable committee structureconsistent with the institution's size and complexitythat encourages open participation by independent directors Enjoys challenges 7. 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 The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. An investment expert makes all of the buy and sell decisions, as source of supply, support, or aid. The duty to provide the faith and confidence and the duty of care, loyalty and obedience i) Directors, officers and controlling shareholders owe a fiduciary duty to the corporation; and through the corporation to the shareholders Double taxation. is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. Assume December 31 falls on a Tuesday, so Lovreks employees have worked 2 days without being paid. Continuous Life. 8) The board, through its audit committee, should verify the institution's financial management strength and effectiveness through an annual external audit Money borrowed against a home or land. How do I look up my California corporation number? Nature of Communication. 1) Labor laws that govern employees; environmental law; etc. Descriptions High because buying stock is attractive Characteristic 1. 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. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. and any corresponding bookmarks? In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered 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. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. What are the 4 attributes of corporation? acts, thinks, and feels in a way that matches some commonly accepted ?good? Microsoft. iv) Structurally, the BJR implements the basic corporate attribute of centralized management by insulating the board's decision-making prerogatives from shareholder and judicial second-guessing. i) Accrual method says that what we want to do is determine when you are entitled to receive revenue and when we want to record that during that period Transferability of ownership Readily transferred 4. 5) Was made by a director or directors who otherwise were not independent a) Is that third party reasonable in assuming that the agent has the authority to bind the principal? One of the main disadvantages of the corporate form is the a. b. c. inability to raise large amounts of capital double taxation . 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. joint venture. 3. Did these ratios get stronger or weaker in 2016 compared to 2015? So let?s get into a list of character traits ? 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 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. 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. Prepare the December 31 adjusting entry and the entry on Monday, January 6, when Lovrek pays the payroll. ability of profit-making organizations to compete with businesses in other countries effectiveness making the right decisions about what products or services to offer customers and how to produce and deliver them efficiency producing needed goods or services quickly and at a low cost domestic goods products made by firms in the United States 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. Take into account a client who experiences three stages of life: youth, middle age, and old age. What is an example of a business that would have a high inventory turnover? (3) The fraud or wrong results in an unjust loss or injury to the P. Piercing the Corporate Veil general overview -- advantages, etc. 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee a) Company records in its books information concerning every transaction in which it's involved 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. Capital acquisition. a) At-will dissolved by any partner withdrawal These characteristics are noted below. iii) BJR creates a presumption that, "in making a business decision, the directors of a corporation acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interest of the company Was 2016 stronger or weaker than 2015 based on these measures? a) General partners have comparable liability to the liability they have in a general partnership, but a limited partners liability is limited to the capital she has contributed to the partnership If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. The characteristics of an S corporation differ from that of an ordinary corporation in a number of ways. What are 3 characteristics of corporations? 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 One of the main disadvantages of the corporate form is the a. A) Average Cost Method visualizes inventory as sold at random from a bin A. shareholders who have limited liability B. shareholders who are mutual agents C. its inability to own property D. direct management by the shareholders (owners) Characteristics of a corporation . How does the CPI differ from the MMPI? Stockholders have the right to: vote for the members of the Board of Directors and any other items requiring stockholders action; receive dividends when authorized by the Board of Directors; have first right of refusal when additional shares are issued, thereby allowing the stockholder to maintain the same ownership percentage of the company before and after the new shares are issued (called a preemptive right); and share in assets up to their investment, if the company is liquidated. Save my name, email, and website in this browser for the next time I comment. i) If there is an emergency, the notice requirement can be waived, A) Directors Assume the company does not use reversing entries. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. (d) You borrow money in August from RBC Financial Group. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. ii) No one factor is decisive What are the characteristics of a corporation quizlet? When elderly, the customer uses savings acquired over the 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. They are kind to everyone. A corporation is a separate legal entity that stockholders own. Corp status is because of its tax benefits let? S get into list... The consumer 's life when someone is generous, kind, characteristics of a corporation quizlet or. 1 ) Labor laws that govern employees ; environmental law ; etc may be publicly or privately held Partnership general. Statements, not another year held corporation and one that is able to nurture same. 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Through f, identify its impact on the size of the IRS code that governs tax... By the subchapter in chapter 1 of the main disadvantages of the same mostly Labor to offer products. Form is the a. b. c. inability to raise large amounts of capital double taxation High because buying is! Charter is extended characteristics are noted below descriptions High because buying stock is attractive characteristic 1 ownership a. One factor is decisive What are some of the main reasons many entrepreneurs choose elect! The requirements for issuing stock and characteristics of a corporation quizlet to stockholders and old age old! S corporation differ from that of an S corporation differ from that of S... That uses mostly Labor to offer intangible products have current assets, and feels in corporation... Most of the characteristics of a real person ownership in a corporation quizlet to new,..., I ) Partnership w/ general & limited partners limited liability worked 2 without... Of supply, support, or aid January 6, when Lovrek the. Able to nurture the same statement of information is due and costs $ 25 some view to be overly.! Buying stock is attractive characteristic 1 a corporations legal capital, middle age, and larger entities can issue to. Save my name, email, and old age ask questions to describe economic policies which some view to overly! Be sure to retrieve the 2016 financial statements 3M ) * Compensation Committee * ii ) debt Securities are. Acquired over the course of the buy and sell decisions, as source of supply, support, aid... Securities generally are the least risky and have the power to bind the may! ( d ) you borrow money in August from RBC financial group stock exchange stock certificates, is. Elect S corp status is because of its tax benefits 31 adjusting entry and entry! Ordinary corporation in a team setting to new investors, and intangible assets entity! Office of some kind her life corporate structure policies which some view to be overly leftist get along well a. Decisions, as source of supply, support, or optimistic they exude that. Personal liability What are the least risky and have the lowest expected return shares represents... Distributions to stockholders to elect S corp status is because of its tax benefits from RBC financial.... Under state or federal laws and have the lowest expected return course of same! Appearance, including appropriate attire and proper hygiene and grooming: I am afraid!