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

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Which of the following is a main advantage of organizing a firm as a corporation?

Corporations are easier to form than sole proprietorships

Owners have unlimited personal liability for business debts

Limited liability for shareholders

Profits are only taxed once at the shareholder level

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Verified step by step guidance

Understand the concept of a corporation: A corporation is a legal entity that is separate from its owners (shareholders). It has its own rights and responsibilities, and its structure provides certain advantages and disadvantages compared to other business forms like sole proprietorships or partnerships.

Identify the key advantage of a corporation: One of the main benefits of organizing a firm as a corporation is 'limited liability.' This means that shareholders are not personally liable for the corporation's debts or obligations beyond their investment in the company.

Compare the options provided in the question: Evaluate each statement to determine which aligns with the advantages of a corporation. For example, corporations are not easier to form than sole proprietorships, and owners do not have unlimited liability in a corporation.

Focus on the correct answer: Limited liability for shareholders is a defining characteristic of corporations. This protects personal assets of shareholders from being used to settle business debts.

Clarify the taxation aspect: Corporations typically face double taxation—profits are taxed at the corporate level and again at the shareholder level when dividends are distributed. This makes the statement 'Profits are only taxed once at the shareholder level' incorrect in the context of corporations.