Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Characteristics of a Corporation

Financial Accounting

12. Stockholders' Equity

Characteristics of a Corporation

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Multiple Choice

Which of the following statements is true of a corporation?

A corporation's life is limited to the lifespan of its founders.

Ownership in a corporation cannot be transferred without dissolving the business.

A corporation is a separate legal entity distinct from its owners.

The owners of a corporation have unlimited liability for the corporation's debts.

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Verified step by step guidance

Step 1: Understand the concept of a corporation. A corporation is a separate legal entity created under the laws of a specific jurisdiction. It is distinct from its owners, meaning it can own assets, incur liabilities, and enter into contracts independently of its shareholders.

Step 2: Analyze the first statement: 'A corporation's life is limited to the lifespan of its founders.' This is incorrect because a corporation has a perpetual existence unless explicitly dissolved. Its life is not tied to the lifespan of its founders.

Step 3: Evaluate the second statement: 'Ownership in a corporation cannot be transferred without dissolving the business.' This is incorrect because ownership in a corporation is typically represented by shares, which can be bought, sold, or transferred without affecting the corporation's existence.

Step 4: Examine the third statement: 'A corporation is a separate legal entity distinct from its owners.' This is correct because a corporation operates independently of its shareholders and is recognized as a separate legal entity.

Step 5: Assess the fourth statement: 'The owners of a corporation have unlimited liability for the corporation's debts.' This is incorrect because shareholders of a corporation generally have limited liability, meaning their financial risk is limited to their investment in the corporation.