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 a disadvantage of a corporation going public?

Limited liability for shareholders

Ability to raise large amounts of capital

Enhanced public image and credibility

Increased regulatory scrutiny and reporting requirements

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Verified step by step guidance

Understand the concept of a corporation going public: When a corporation goes public, it offers its shares to the general public through an initial public offering (IPO). This process allows the company to raise capital but comes with certain disadvantages.

Analyze the advantages of going public: These include limited liability for shareholders, the ability to raise large amounts of capital, and enhanced public image and credibility. These are positive aspects of going public.

Identify the disadvantages of going public: One major disadvantage is increased regulatory scrutiny and reporting requirements. Public companies must comply with regulations such as those set by the Securities and Exchange Commission (SEC), which require detailed financial disclosures and adherence to strict governance standards.

Compare the options provided in the question: Limited liability for shareholders, ability to raise large amounts of capital, and enhanced public image are advantages of going public. The correct answer, 'Increased regulatory scrutiny and reporting requirements,' is a disadvantage.

Conclude by recognizing that while going public has significant benefits, it also imposes additional responsibilities and costs related to compliance, reporting, and regulatory oversight.