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 is true of an S corporation?

It is taxed at the corporate level only.

It is not required to file articles of incorporation.

It allows income to pass through to shareholders and avoids double taxation.

It can have an unlimited number of shareholders.

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Verified step by step guidance

Understand the concept of an S corporation: An S corporation is a type of corporation that meets specific Internal Revenue Service (IRS) requirements, allowing it to pass income directly to shareholders and avoid double taxation.

Clarify the taxation structure: Unlike a C corporation, which is taxed at both the corporate and shareholder levels, an S corporation's income is taxed only at the shareholder level, avoiding double taxation.

Review the filing requirements: An S corporation is required to file articles of incorporation with the state where it is established, just like other corporations.

Examine shareholder limitations: An S corporation is limited to a maximum of 100 shareholders, and all shareholders must meet specific eligibility criteria, such as being U.S. citizens or residents.

Identify the correct statement: Based on the characteristics of an S corporation, the correct answer is the statement that highlights its ability to pass income through to shareholders and avoid double taxation.