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. ii) Income - Dividends = Retained earnings Professional management b. 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 shareholder's liability is limited to the amount he or she paid for the shares. Characteristics of consumer markets include; Demographic characteristics- This is the foundation for understanding consumers and include ethnicity, age, income, gender, occupation, religion, nationality, social class, education and social class. They call their parents regularly. Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. Memorable. Advantage of Corporations. - b.$55 per unit Clothing should always be clean and ironed properly. lego 41446 friends heartlake city vet clinic. 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. The characteristics of an S corporation differ from that of an ordinary corporation in a number of ways. 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) Timeless. Stakeholder theory of the modern corporation. Top 9 Examples of Most Common Corporations (usually, a closed corporation operates like a partnership). Nature of Communication. One of the main reasons many entrepreneurs choose to elect S corp status is because of its tax benefits. 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 Be sure to retrieve the 2016 financial statements, not another year. 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 iii) Officers = Agent/Principal Example #1 ? ii) The derivative suit was developed to alleviate this problem View the full answer. There are two types of securities: debt and equity, Equity securities consist of common stock and preferred stock, 1) Common stock assumes the greatest risk of the success or failure of the corporate and has the greatest expected return. Owner liability Limited 7. 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 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 b) Be composed solely of independent directors Enjoys challenges 7. Corporate managment. Published on 22 Oct 2018. Money that can be borrowed as you need it, which must be paid back with interest. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. 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" 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 B) Board members don't hold the CEO or management team accountable for actions or inactions 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 What are the 4 attributes of corporation? 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 Amazon was founded in 1994 and is a world leader in e-commerce. 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. In addition, Euro has made the order conditional on receiving European safety certification. 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 Humans Resources. 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. J.P. Morgan Chase. 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. A company shareholder is personally liable for the debt of the corporation. F) Ensuring the institution complies with all regulations At its most basic level, what is corporations about? Less is more, fewer is better, and simple rules are the common mantra here. 3 What are 3 characteristics of corporations? The investors vote on the Board of Directors who are responsible for hiring management. C. The title of the corporation is limited by the death of the owner Which of the following is a characteristic of a limited liability company (LLC)? The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Continuous Life. b) Responsible for nominating candidates for the board of directors and deciding whether current directors should be nominated for reelection The LLC can be considered as a partnership or sole proprietorship for income tax purposes. Limited to their investment. Ability to Influence Others. Corporations are created under state or federal laws and have many of the same legal rights as a person . 1) GAAP (Generally Accepted Accounting Principals): What are some of the characteristics of a corporation? 1) Labor laws that govern employees; environmental law; etc. Separate Legal Existence. What are the Characteristics of Corporations? The par value of corporate shares issued represents a corporation?s legal capital. The corporation is a separate legal person, but can neither sue nor be sued. Limited Liability of Stockholders. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. b) Outside Auditors The corporation?s resources are limited to what the stockholders can contribute. Personal assets of stockholders are not available to creditors or lenders seeking payment of amounts owed by the corporation. 50,000 & 150,000 & 1.00 \\ Transferability of ownership Readily transferred 4. Legal status 5. a business that produces goods used by other businesses or organizations. 2) Preferred stock sits between common stock and debt v) Personal liability Characteristics of a professional medical corporation include it being --designated as an HMO or IPA. By setting up a PAC only those who support the politician can give money Which of the following is true with regard to the characteristics of corporations? ii) *Compensation Committee* 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. Limited liability for owners. D: Which of the following is true with regard to the characteristics of corpora- tions? 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. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. a) Must be comprised entirely of independent directors Example #4 ? What are some good character traits to have? One way to view a business entity is as a separate person. You can begin building your success by developing these 11 must-have traits of a powerful and successful leader. These taxes are substantial; they can amount to more than 40% of taxable income publicly held corporation A corporation is a legal entity, meaning it is a separate entity from its owners who are called stockholders. 1) The corporation (the real party at interest) is a nominal defendant and the plaintiff-shareholder (in reality, her attorney), controls prosecution of the suit A company shareholder is personally liable for the debt of the corporation. The same is true for any lawsuits or insurance claims against the company. 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 d. overhead costs. \text{Direct labor}&22\\ It advances comprehension, proper understanding, and sharing of information applicable for making decisions. i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers. iii) At-will or definite period 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 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. What Are The Main Characteristics Of Partnership Quizlet? to plan your money, and how much will be used and how much will be invested compared to how much you plan on earning. a) There is a maturity date where you have to pay back to the principal and there is always annual interest The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. See Answer d) Disinterested and independent (has two methods of analysis = duty of loyalty 1) A corporation is an organizational entity that is constituted by a group of people who have pooled their resources to create a singular entity with the intention of making a profit. A corporation is a legal entity that is separate and distinct from its owners. \end{array} When elderly, the customer uses savings acquired over the years. 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. c) Informed and rational basis = duty of care Nearly every large US company has an intelligence office of some kind. (10) Intermingling of property between entities 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 Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except Duration of life Unlimited 6. The loan and the interest are repayable in full in November. The companys ability to pay its current liabilities. 3) Ability to have influence as to who is put on the ballet as a nominee 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. Flexibility of transferable ownership. 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. Stock of a privately held company is not traded on an exchange and there are usually only a small number of stockholders. traits, like being honest, respectful, responsible, caring, fair. What is the standard deduction for over 65 in 2020? What are 2 characteristics of a corporation? c) Keeping detailed minutes of the meeting, AgencyAction Binding the Corporation Parties to the legal agency relationship, i) Corporation = Principal A closely held business has only a few shareholders. 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. A. One of the main disadvantages of the corporate form is the a. b. c. inability to raise large amounts of capital double taxation . Now a new generation of influencers has come on the scene. vii) Majority vote by directors and shareholders, Characteristics of a Limited Liability Company, i) Legal entity distinct from members B) Working with management to promote ethical, positive corporate culture C) Actively helping plan the long-term direction and goals for the institution Take into account a client who experiences three stages of life: youth, middle age, and old age. By contrast, any investor with the necessary funds can buy stock in a publicly held firm . What are some of the characteristics of a corporation? 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 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 Assume the company does not use reversing entries. ii) Underlying rationale is that you want to match up the cost and revenue so you can match up how profitable or well the company is doing, Accounting & Financial Reporting - Statement of Cash Flow, A) Something to reconcile the fact that on the one hand you're using the accrual method to reconcile costs and on the other hand you need to know where you are in terms of cash flow 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. These characteristics are noted below. Competitive: I thrive under pressure. 2) Note that these outside auditors are hired by management are in a position that their performance will decide whether they are hired next year and so on, creating its own issues The corporations resources are limited to what the stockholders can contribute. (2) Such control has been used to commit a fraud or other wrong; and Required fields are marked *. What is a relevant cost? 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered Clever : I can juggle multiple tasks. b) *Debt/Equity Ratio = Long-term Debt / Total Equity* Question: Chapter 12 21. One of the main disadvantages of the corporate form is the a. C) Last in, last out Method visualizes inventory as being added to and sold from the top of the stack, Accounting & Financial Reporting - Fixed Assets , Sometimes referred to as long-term assets or as property plant and equipment, are assets a firm uses to conduct its operations Some refer to it as a legal person.. 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 C) Shareholders are liable for the debts and other obligations of the . 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. 2) To get information from management Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. boycott. Separate taxable entity (leading to double taxation) 7. a. UNLESS- the shareholder/s guarantee the debts of the company. Did these ratios get stronger or weaker in 2016 compared to 2015? Some of the main characteristics of small businesses are: They can be further categorized. Cheerful : I develop a positive work environment. b) Responsible for establishing the terms of any stock options executives may get as compensation 4 What are 2 characteristics of a corporation? c) Must be comprised entirely of independent directors 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 a business that uses mostly labor to offer intangible products. Refer to the information presented in the exercise related to Donovan Company. ii) Debt Securities generally are the least risky and have the lowest expected return. Separation of owners and entity (no mutual agency). service business. No legal entity: A sole proprietorship has no legal identity separate from that of its owner. (6) The degree of discretion shown by the allegedly dominant corporation; Par. iii) Perpetual life Example #1 Amazon. They are honest in relationships. v) Manager-managed: managers act for LLC; members vote on major matters ii) Formed by partnership agreement 2) Marketable Securities = securities that can be readily sold and converted into cash and are not held for current operations a) Unless the P can rebut the presumption, a court will evaluate the substantive merits of the action Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. Living, $475.75; fixed,$679.65; share of annual, $291.17. Microsoft. The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. 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 5) A well-publicized whistle-blower process should be established so employees, vendors, and customers can anonymously report concerns 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. Tip. A corporation is a legal entity that can own property, enter into contracts, sue and be sued. Confident : I am not afraid to ask questions. is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. --owned by shareholders. The Statement of Partners' Capital, Next c) At least three of them have to be financially literate The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience Google. 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. Characteristic Corporations 1. 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