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 the corporate form of business?

Lack of ability to raise capital

Limited liability for shareholders

Unlimited liability for owners

Direct management by all shareholders

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Verified step by step guidance

Understand the corporate form of business: A corporation is a legal entity that is separate from its owners (shareholders). This separation provides certain advantages and disadvantages compared to other business structures like sole proprietorships or partnerships.

Analyze the concept of limited liability: In a corporation, shareholders are only liable for the amount they have invested in the company. They are not personally responsible for the corporation's debts or legal obligations beyond their investment.

Compare limited liability to unlimited liability: Unlimited liability means that owners are personally responsible for all debts and obligations of the business, which is common in sole proprietorships and partnerships. Corporations avoid this risk for shareholders.

Evaluate the ability to raise capital: Corporations can issue shares of stock to raise capital, which is a significant advantage over other business forms that may rely solely on personal funds or loans.

Consider management structure: Corporations typically have a board of directors and management team to oversee operations, rather than direct management by all shareholders, which is more common in partnerships.