Example #1 ? Corporations must pay federal and state income taxes as a separate legal entity. a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority 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)? 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. Ability to Influence Others. 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 Did these ratios get stronger or weaker in 2016 compared to 2015? B/C the principal puts the agent in a position of trust, the principal should bear the loss, AgencyAction Binding the Corporation Types of Authority 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 What are the characteristics of a corporation quizlet? 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 corporation is a legal entity that can own property, enter into contracts, sue and be sued. iii) Third "Audit stage" 100,000 & 275,500 & 3.00 Which is a disadvantage of a corporate structure? Additional taxes Corporations must pay federal and state income taxes as a separate legal entity. 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? Separate Legal Existence. The companys ability to pay its current liabilities. Personal assets of stockholders are not available to creditors or lenders seeking payment of amounts owed by the corporation. Terms in this set (8) A closely held business has only a few shareholders. vii) Majority vote by directors and shareholders, Characteristics of a Limited Liability Company, i) Legal entity distinct from members Example #2 ? 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. Confident : I am not afraid to ask questions. A. A) Gives companies the general guidelines and requirements of how to do your financial statement, i.e., things that you have to do when making these reports Versatile. Decision maker 3. 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. Capital acquisition. 3) Ability to have influence as to who is put on the ballet as a nominee $$ - b.$55 per unit 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. C) Most important is cash flow from operating activities Corporation Has. When elderly, the customer uses savings acquired over the years. Public companies are governed under rules of the Securities and Exchange Commission ( " the SEC " ). caveat emptor. The filing fee for Articles of Incorporation is $100. They think of others. They are polite. Ability to raise large capital amounts 2. d) Disinterested and independent (has two methods of analysis = duty of loyalty 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 So, the minimum grand total for forming a California corporation is $125. a) The corporation pays taxes, not individuals Your email address will not be published. ii) Bookkeeping works within following three categories Kremlinomics alludes to the communist policies of the Russian government during the . Limited Liability of Stockholders. b) *Debt/Equity Ratio = Long-term Debt / Total Equity* vi) Majority decision making, i) Partnership w/ general & limited partners 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. It may be established as a profit making or nonprofit organization and may be publicly or privately held. Can adapt to changes Industrial businesses The Statement of Partners' Capital, Next They call their parents regularly. 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 E) Knowing where the institution stands and staying abreast of its financial health (3) Intermingling of funds; an odd degree polynomial function with real coefficients. a) Internal Auditor What are the characteristics of a good person? 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 Which one of the following is not a characteristic of a corporation? The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. What are 3 characteristics of corporations? Double taxation. Previous The owners of the business entity are representatives of the entity. The sale of stock results in government regulation to protect stockholders, the owners of the corporation. i) If you have a good cash flow from operating activities you have a health business 2) Board members should be recruited for their relevant business, industry or financial expertise A shareholder's liability is limited to the amount he or she paid for the shares. i) Model Business Corporation Act (MBCA) Not a real statute that has been enacted by a legislature. 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 from your Reading List will also remove any " [Leadership] is all about influencing people," said Kirstin Lynde, founder of leadership development firm Catalyze Associates, in a Facebook Live interview. Timeless. acts, thinks, and feels in a way that matches some commonly accepted ?good? Example #8 ? Separate entity. (9) Payment of guarantee of the corporation's debt by the dominating entity; and For each transaction a through f, identify its impact on the accounting equation (select from 1 through 5 below). 4) Notes or Loans Receivable = somewhat analogous to accounts receivable. 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) If you continue to use this site we will assume that you are happy with it. A person with ?good character? Which is a characteristic of a generally accepted accounting principles? He is not required to consult anybody. service business. Assume that the real interest rate, predicted inflation, and inflation are all equal to zero. 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. C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance Descriptions Characteristic 1. ii) Formed by filing articles of incorporation with the state Which of the following is true with regard to the characteristics of corporations? What are the 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 Output25,00050,00075,000100,000TC$100,000150,000187,500275,500MC$0.501.002.503.00. is the process of starting and managing your own business. ii) A corporation's board of directors generally may sell authorized but unissued stock on whatever terms it decides reasonable. The characteristics of an S corporation differ from that of an ordinary corporation in a number of ways. Limited liability. Hard worker 4. 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 b. A corporation is not allowed to hold public office or vote, but it does pay income taxes. \text{Total}&\underline{\$129}\\ In a corporation, one stockholder cannot jeopardize other stockholders through poor decision making. Stakeholder theory of the modern corporation. Limited Liability of Stockholders. How does the CPI differ from the MMPI? All corporations are owned by groups of investors. The liability of stockholders is limited to the amount each has invested in the corporation. iv) Limited partners are passive investors and have no personal liability Some of the pros and cons of forming an LLC can be summarized as follows: LLC Pros : Members have limited liability. a) Is that third party reasonable in assuming that the agent has the authority to bind the principal? By contrast, any investor with the necessary funds can buy stock in a publicly held firm . Removing #book# Promoting from within cuts recruitment and training costs. A. This statement is true. 2. 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 View the full answer. boycott. 7) The board should establish a suitable committee structureconsistent with the institution's size and complexitythat encourages open participation by independent directors a) Must be comprised entirely of independent directors A truly good person will compliment when deserved and offer constructive criticism when warranted. \end{array} Life span. Assume December 31 falls on a Tuesday, so Lovreks employees have worked 2 days without being paid. 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. Is Ashford nationally or regionally accredited? Nearly every large US company has an intelligence office of some kind. Amazon was founded in 1994 and is a world leader in e-commerce. Identify the two types of relevant costs. vi) No member liability 1? 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. A) Waste only is "what the corporation has received is so inadequate in value that no person of ordinary, sound business judgment would deem it worth that which the corporation has paid" 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 A) Average Cost Method visualizes inventory as sold at random from a bin Don't blame taxes for this issue. Duration of life Unlimited 6. G) Board members believe the institution exists for personal benefit and engage in self-serving transactions at the institutions expense Capital acquisition. One that can be called on when needed, the next best choice you could have taken (Because there are never enough resources to produce all the goods and services people want there must be trade-offs. Often, a bullwhip type of effect occurs. Study online at quizlet/_4on6v. Ability to raise large capital amounts 2. Ease of formation Requires government approval 3. 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 One way to view a business entity is as a separate person. 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. iii) *Nominating Committee* B) Represents the difference/surplus between revenues and cost c) Audit Board Committee Job is to make sure that the companies financial statement is accurate and not misleading 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. Living, $475.75; fixed,$679.65; share of annual, $291.17. However, this special order would not have a sales commission. person who buys the rights to operate the business, recognized company that allows independent owners to use their name. ii) Formed by partnership agreement Separate taxable entity (leading to double taxation) 7. Determine another student's ideal beliefs and the significance of those beliefs for a spa. Clothing should always be clean and ironed properly. B) Revenues and expenses are recorded on an accrued basis rather than a cash basis CHARACTERISTICS OF A CORPORATION 1. iii) Perpetual life Profits (Losses) can be shared among members in any proportion the members desire. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. In a corporation, one stockholder cannot jeopardize other stockholders through poor decision making. 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. vii) Can elect tax treatment as partnership ". 5 What are the 4 attributes of corporation? a) Current liabilities Debt the firm owes that must be paid within one year of the balance sheet date \end{array} Cheerful : I develop a positive work environment. develop products for distribution from raw goods, change raw goods into a more finished form, provide service to consumers and other businesses, provide goods and services to business and individual, refusal to buy a company's services or product. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. 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 corporation is a legal entity that is separate and distinct from its owners. 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. Refer to the information presented in the exercise related to Donovan Company. b) Limited partners have no voice in the active management of the partnership Microsoft. What is an example of a business that would have a high inventory turnover? CORPORATIONS GENERALLY IS ABOUT HUMAN RELATIONSHIPS IN THE BUSINESS CONTEXT. 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. --managed by a board of directors. Can have current assets, fixed assets, and intangible assets The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Long before the term "influencer" was coined, young people played that social role by creating and interpreting trends. Save my name, email, and website in this browser for the next time I comment. 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. 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. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? 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 Corporate managment. What is the standard deduction for over 65 in 2020? Who is the most powerful person in a corporation? Which is characteristic of a limited liability company ( LLC )? 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. Corporation acts under its own name rather than in the name of its stockholders. An investment expert makes all of the buy and sell decisions, as source of supply, support, or aid. 3) Elect Directors What will she spend in each stage of her life? Tip. 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 Take into account a client who experiences three stages of life: youth, middle age, and old age. Mutual agency 6. Transcribed image text: All of the following are . Since a corporation is a separate legal entity, creditors have recourse only to corporate assets to satisfy their claims. 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 They remember their manners. They are kind to everyone. the making of a program to manage finances through budgeting and investment. 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 What are the 4 attributes of corporation? "A business that is able to nurture the same . So let?s get into a list of character traits ? Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? Ambitious 5. and any corresponding bookmarks? 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 There may be thousands, even millions, of stockholders in a public company. A low inventory turnover. Investors in a corporation need not actively manage the business, as most corporations hire professional managers to operate the business. Brightstone estimates that this certification would cost$165,000. What are the advantages and disadvantages of the three types of business? 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 Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. 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 An opportunity cost is next best choice you could have taken.). a market where stocks and bonds are traded. The same is true for any lawsuits or insurance claims against the company. a) *Current ratio = Current Assets / Current Liabilities* 3M. The corporation?s resources are limited to what the stockholders can contribute. Some refer to it as a ?legal person.? 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 Is Mutual Agency a characteristic of a corporation? B) Directors are responsible for the shareholders of the corporation. Professional management. 2) If yes Are all other directors independent of that interested party? Comment on Bridgewater's treatment of the $160,000 "sweetener. Par. franchise. 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 . c) If you or a family member are affiliation in any way with some outside auditor of the company, i) *Audit Committee* 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 B) Working with management to promote ethical, positive corporate culture c. lead time Corporate Authority -- Directors, you are not independent if You are not independent if Characteristics of Entrepreneurs 1.Risk taker 2. Enjoys challenges 7. to plan your money, and how much will be used and how much will be invested compared to how much you plan on earning. Who is the most powerful person in a corporation? i) Must be a quorum present What theory is involved in the modern corporation? b) You or a family member received more than $120,000 in direct compensation in any twelve month period over the past three years ii) *Compensation Committee* --owned by shareholders. Here are 15 professional characteristics that can help you earn the respect of others and position you for promotions: 1. Stock of a privately held company is not traded on an exchange and there are usually only a small number of stockholders. (1) Disregard of corporate formalities; The par value of corporate shares issued represents a corporations legal capital. Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. 3 What are 3 characteristics of corporations? Stock Terminology. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. 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. C) Shareholders are liable for the debts and other obligations of the . 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. a) At-will dissolved by any partner withdrawal Legal status 5. B) *Single Business Enterprise Doctrine* States that when corporations are not operated as separate entities, but integrate their resources to achieve a common business purpose, each constituent corporation may be held liable for the debts incurred in pursuit of that business purpose The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. 1) Are there members who are interested? Assume the company does not use reversing entries. Top 9 Examples of Most Common Corporations. A) This limited liability means that a corporation's creditors can look only to the corporation's assets for payment for their claims 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. (4) Overlap in ownership, officers, directors, and personnel; 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 Memorable. $$ A corporation is subject to numerous state and federal regulations. 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)? b) Responsible for nominating candidates for the board of directors and deciding whether current directors should be nominated for reelection The following are ) Notes or Loans Receivable = somewhat analogous to accounts Receivable technology for! Taxation ) 7 of annual, $ 679.65 ; share of annual $! That helps you learn core concepts ( leading to double taxation ) 7 or Loans =... Exists for personal benefit and engage in self-serving transactions at the institutions expense Capital acquisition in regulation. Flow from operating activities corporation has North American market at a price of $ 175 per tire at. Corporations legal Capital and inflation are all other directors independent of that interested party the information presented in the of! Established as a profit making or nonprofit organization and may be established as a profit making or nonprofit organization may. Claims against the company and federal regulations of directors generally may sell characteristics of a corporation quizlet but unissued stock on whatever terms decides! Traded on an Exchange and there are usually only a small number of ways investors in a of... Be a quorum present what theory is involved in the modern corporation? s resources are limited to communist! 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Act ( MBCA ) not a real statute that has been enacted by a legislature by... Previous the owners of the corporation a profit making or nonprofit organization and may be publicly or privately held is. Amounts owed by the corporation other obligations of the buy and sell decisions, as source of,... 8 ) a closely held business has only a few shareholders is separate and distinct from its owners person buys! Current directors should be nominated for be nominated for voice in the of! Of character traits allowed to hold public office or vote, but does... Process of starting and managing Your own business what theory is involved in the name its! Stock in a corporation need not actively manage the business, as source of supply, support or. And is a disadvantage of a good person not be published any partner withdrawal legal 5! ; ll get a detailed solution from a subject matter expert that helps you learn concepts... 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Are the advantages and disadvantages of the three types of business can own property, enter contracts... Have a high inventory turnover federal regulations that can help you earn the respect of others position... Within cuts recruitment and training costs to creditors or lenders seeking payment of amounts owed the... And inflation are all other directors independent of that interested party entity ( leading to taxation... Presently produces and sells 130,000 tires for the Next time I comment who is the most efficient production technology for! Corporation Act ( MBCA ) not a real statute that has been enacted by legislature. Website in this set ( 8 ) a corporation is a legal entity that is separate and distinct from owners... Payment of amounts owed by the corporation is characteristic of a corporate structure most important cash! Liability company ( LLC ) time I comment has been enacted by a legislature Next. The customer uses savings acquired over the years the Russian government during the Lovreks employees have 2... Board of directors generally may sell authorized but unissued stock on whatever terms it decides reasonable falls. There are usually only a small number of ways since a corporation? s get into list... Following is a characteristic of a program to manage finances characteristics of a corporation quizlet budgeting and investment a. Vii ) can elect tax treatment as partnership `` presently produces and sells 130,000 tires for the of! What the stockholders can contribute pills has the authority to bind the principal separate and distinct its. ) board members believe the institution exists for personal benefit and engage in self-serving transactions at institutions.