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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is a characteristic of a corporation?

Limited liability of shareholders

Direct management by all shareholders

Unlimited life only if owned by a single individual

Owners are personally liable for corporate debts

Previous problemNext problem

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 characteristics that distinguish it from other business structures like sole proprietorships or partnerships.

Review the characteristic of limited liability: In a corporation, shareholders have limited liability, meaning they are not personally responsible for the corporation's debts. Their financial risk is limited to the amount they invested in the corporation.

Analyze the option 'Direct management by all shareholders': This is not a characteristic of a corporation. Corporations are typically managed by a board of directors and executives, not directly by all shareholders.

Evaluate the option 'Unlimited life only if owned by a single individual': This is incorrect. A corporation has an unlimited life regardless of the number of owners. It continues to exist even if ownership changes or shareholders leave.

Assess the option 'Owners are personally liable for corporate debts': This is incorrect. In a corporation, owners (shareholders) are not personally liable for corporate debts due to the principle of limited liability.