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 an advantage of a corporation?

Difficulty in transferring ownership

Limited ability to raise capital

Unlimited personal liability for owners

Limited liability for shareholders

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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 owners are not personally liable for the corporation's debts or obligations.

Review the concept of limited liability: Limited liability means that shareholders are only responsible for the debts of the corporation up to the amount they have invested in the company. Their personal assets are protected from claims against the corporation.

Compare the options provided in the question: Evaluate each option to determine which aligns with the characteristics of a corporation. For example, difficulty in transferring ownership is not an advantage, as corporations typically have ease of ownership transfer through the sale of shares.

Analyze the ability to raise capital: Corporations generally have a greater ability to raise capital compared to other business structures, such as sole proprietorships or partnerships, due to their ability to issue shares to investors.

Identify the correct advantage: Based on the analysis, the correct advantage of a corporation is 'Limited liability for shareholders,' as this is a key feature that distinguishes corporations from other business structures.