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 NOT an advantage of a corporation?

Limited liability for shareholders

Continuous existence regardless of ownership changes

Double taxation of earnings

Ability to raise large amounts of capital

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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 specific advantages and disadvantages compared to other business structures.

Review the advantages of a corporation: These include limited liability for shareholders, continuous existence regardless of ownership changes, and the ability to raise large amounts of capital. These are considered benefits because they provide stability, protection, and growth opportunities.

Analyze the term 'double taxation of earnings': This refers to a disadvantage of corporations. Corporations pay taxes on their profits, and when these profits are distributed as dividends to shareholders, the shareholders also pay taxes on the dividends. This results in earnings being taxed twice.

Identify the question's focus: The problem asks which option is NOT an advantage of a corporation. Since 'double taxation of earnings' is a disadvantage, it does not align with the other options listed as advantages.

Conclude the reasoning: Based on the analysis, 'double taxation of earnings' is the correct answer because it is a disadvantage, not an advantage, of a corporation.