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 statements is true of a corporation?

A corporation cannot issue shares of stock to raise capital.

A corporation is a separate legal entity distinct from its owners.

A corporation's owners have unlimited liability for its debts.

A corporation dissolves automatically upon the death of a shareholder.

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

Analyze the first statement: 'A corporation cannot issue shares of stock to raise capital.' This is incorrect because corporations commonly issue shares of stock to raise capital from investors.

Evaluate the second statement: 'A corporation is a separate legal entity distinct from its owners.' This is correct because the corporation operates independently of its shareholders, and its existence is not tied to any individual owner.

Review the third statement: 'A corporation's owners have unlimited liability for its debts.' This is incorrect because shareholders of a corporation typically have limited liability, meaning their financial risk is limited to their investment in the corporation.

Assess the fourth statement: 'A corporation dissolves automatically upon the death of a shareholder.' This is incorrect because a corporation has perpetual existence, meaning it continues to exist regardless of changes in ownership or the death of a shareholder.