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 are C corporations NOT able to do?

Exist as a separate legal entity from their owners

Avoid double taxation on corporate earnings

Issue shares of stock to raise capital

Enter into contracts in the corporation's name

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Verified step by step guidance

Understand the concept of a C corporation: A C corporation is a legal entity that is separate from its owners (shareholders). It is subject to corporate income tax and can engage in business activities, enter contracts, and issue stock.

Review the characteristics of C corporations: They can exist as separate legal entities, issue shares of stock to raise capital, and enter into contracts in the corporation's name. These are fundamental features of C corporations.

Clarify the concept of double taxation: C corporations are subject to double taxation, meaning corporate earnings are taxed at the corporate level, and dividends distributed to shareholders are taxed again at the individual level. This is a key disadvantage of C corporations.

Identify the limitation: C corporations cannot avoid double taxation on corporate earnings. This is inherent to their structure and distinguishes them from other business entities like S corporations or partnerships.

Conclude the analysis: Based on the characteristics and limitations of C corporations, the correct answer is that they are NOT able to avoid double taxation on corporate earnings.