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 two disadvantages of a corporation?

Easy transfer of ownership and limited liability

Unlimited liability and limited life

Double taxation and increased government regulation

Direct management by owners and lack of access to capital

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Verified step by step guidance

Step 1: Understand the concept of a corporation. A corporation is a legal entity that is separate from its owners, providing limited liability to its shareholders and allowing for easy transfer of ownership.

Step 2: Review the advantages of a corporation, such as limited liability, ease of raising capital, and perpetual existence. These are important features that distinguish corporations from other business structures.

Step 3: Identify the disadvantages of a corporation. Common disadvantages include double taxation (profits are taxed at the corporate level and again at the shareholder level when dividends are distributed) and increased government regulation (corporations must comply with more complex legal and reporting requirements).

Step 4: Analyze the options provided in the question. Eliminate choices that describe advantages of a corporation, such as 'Easy transfer of ownership and limited liability,' and focus on the disadvantages.

Step 5: Confirm the correct answer by matching the disadvantages of a corporation to the options provided. The correct answer is 'Double taxation and increased government regulation,' as these are well-known drawbacks of the corporate structure.