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 statements is true of a corporation?

A corporation is a separate legal entity distinct from its owners.

A corporation cannot issue shares of stock to raise capital.

A corporation's owners are personally liable for its debts.

A corporation automatically dissolves upon the death of a shareholder.

Previous problemNext problem

Verified step by step guidance

Understand the concept of a corporation: A corporation is a separate legal entity created under the law, distinct from its owners (shareholders). This means it can own assets, incur liabilities, and enter into contracts independently of its owners.

Evaluate the first statement: 'A corporation is a separate legal entity distinct from its owners.' This is true because the corporation exists as a separate entity under the law, which is one of its defining characteristics.

Evaluate the second statement: 'A corporation cannot issue shares of stock to raise capital.' This is false because one of the primary advantages of a corporation is its ability to issue shares of stock to raise funds from investors.

Evaluate the third statement: 'A corporation's owners are personally liable for its debts.' This is false because shareholders of a corporation have limited liability, meaning they are not personally responsible for the corporation's debts beyond their investment in the company.

Evaluate the fourth statement: 'A corporation automatically dissolves upon the death of a shareholder.' This is false because a corporation has perpetual existence, meaning it continues to exist regardless of changes in ownership or the death of a shareholder.