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 statement about the operation of a corporation is correct?

A corporation is a separate legal entity from its owners.

A corporation cannot issue shares of stock to raise capital.

The owners of a corporation are personally liable for the corporation's debts.

Corporations are not subject to government regulation.

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Verified step by step guidance

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

Evaluate the first statement: 'A corporation is a separate legal entity from its owners.' This is correct because the corporation operates independently of its shareholders, and its liabilities do not directly impact the personal assets of its owners.

Analyze the second statement: 'A corporation cannot issue shares of stock to raise capital.' This is incorrect because issuing shares of stock is one of the primary ways corporations raise capital from investors.

Review the third statement: 'The owners of a corporation are personally liable for the corporation's debts.' This is incorrect because shareholders have limited liability, meaning their personal assets are not at risk for the corporation's debts beyond their investment in the corporation.

Examine the fourth statement: 'Corporations are not subject to government regulation.' This is incorrect because corporations are subject to various government regulations, including tax laws, securities laws, and industry-specific regulations.