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 NOT a characteristic of a corporation?

Unlimited liability of owners

Continuous life

Separate legal existence

Ability to issue shares of stock

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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, meaning it has its own legal existence and can enter into contracts, own assets, and incur liabilities independently of its shareholders.

Step 2: Review the characteristics of a corporation. Common characteristics include: (1) Separate legal existence, (2) Limited liability of owners, (3) Ability to issue shares of stock, and (4) Continuous life.

Step 3: Analyze the term 'Unlimited liability of owners.' This is a characteristic of sole proprietorships and partnerships, where owners are personally responsible for the debts of the business. Corporations, however, offer limited liability, meaning shareholders are only liable up to the amount they invested.

Step 4: Compare the options provided in the question with the characteristics of a corporation. Identify which option does not align with the typical traits of a corporation.

Step 5: Conclude that 'Unlimited liability of owners' is NOT a characteristic of a corporation, as corporations provide limited liability to their owners.