Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. "A business that is able to nurture the same . 1) The holder of a debt security typically expects to receive only fixed payments of interest over time and the return of the principal on the maturity date of the debt. Example #2 ? b) To rebut the presumption, P must show 4 What are 2 characteristics of a corporation? c) Must be comprised entirely of independent directors c) When sold, they are authorized and issued or authorized and outstanding (1) Disregard of corporate formalities; One of the disadvantages of a corporate structure is the corporation pays its own tax burden on net income and then the stockholders pay income tax on the dividends they receive. a) The corporation pays taxes, not individuals 1. 2) Was not made in good faith; a) Gross negligence is the standard for board of directors iii) Perpetual life Self-Managing It's hard to manage others effectively if you. iv) Board of directors manage ii) No one factor is decisive b) Until shares are first sold to stockholders they are authorized, but unissued 3) Elect Directors c. The companys rates of return on sales (ROS), average total assets (ROA), and average stockholders equity (ROE), using DuPont analysis. 8 Which is a disadvantage of a corporate structure? 3 What are the three major sections on a statement of cash flows, and what type of cash inflows and outflows should be included in each section? b. 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee v) Manager-managed: managers act for LLC; members vote on major matters (credit). iii) Paid in equity + retained earnings = Total Equity, Accounting & Financial Reporting - Retained Earnings - Ratio's, i) Investors look at financial statements in different ways, such as Transferability of ownership Readily transferred 4. Find the total monthly expenses. 1) GAAP (Generally Accepted Accounting Principals): Fluctuating demand is another characteristic of B2B markets: a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it. H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board The loan and the interest are repayable in full in November. a) Company, usually with the assistance of independent public accountants, verifies the information it has recorded and the manner in which it has presented the financial accounting, Accounting & Financial Reporting - Bookkeeping, i) Every transaction which a company is involved is included in the company's leger a business that produces goods used by other businesses or organizations. a) Unless the P can rebut the presumption, a court will evaluate the substantive merits of the action Are you sure you want to remove #bookConfirmation# c) If you or a family member are affiliation in any way with some outside auditor of the company, i) *Audit Committee* ii) Underlying rationale is that you want to match up the cost and revenue so you can match up how profitable or well the company is doing, Accounting & Financial Reporting - Statement of Cash Flow, A) Something to reconcile the fact that on the one hand you're using the accrual method to reconcile costs and on the other hand you need to know where you are in terms of cash flow Brightstone's accounting system indicates that the total cost per tire is as follows: A corporation is a legal entity that can own property, enter into contracts, sue and be sued. If you already know that you need a logo for your business, you can use our logo maker to help you create a strong one. ". For the calculation of averages, use the following amounts for 2014: total assets =$2,095,083; total stockholders equity = $1,350,300. B) *Single Business Enterprise Doctrine* States that when corporations are not operated as separate entities, but integrate their resources to achieve a common business purpose, each constituent corporation may be held liable for the debts incurred in pursuit of that business purpose To be recognized as a corporation, a business must file an application that includes the corporation's articles of incorporation (charter) with the State, pay an incorporation fee, and be approved by the State. Descriptions Characteristic 1. A) The corporation is a separate legal person, but can neither sue nor be sued. Was 2016 stronger or weaker than 2015 based on these measures? \text{Total}&\underline{\$129}\\ The federal securities laws also govern the sale of stock. There are two types of securities: debt and equity B) A corporations articles of incorporation specify how many shares of common stock and preferred stock the corporation is authorized to issue Equity securities Equity securities consist of common stock and preferred stock What are the characteristics of a corporation quizlet? 2) A corporation is typically formed under the laws of a particular country, and is subject to the jurisdiction of the government in which it was created. 2) Balance sheet value (or book value) = Cost less allowance for depreciation, Accounting & Financial Reporting - Intangible Assets , Such as patents or trademarkshave no physical existence, but often have substantial value Limited Liability of Stockholders. C) Last in, last out Method visualizes inventory as being added to and sold from the top of the stack, Accounting & Financial Reporting - Fixed Assets , Sometimes referred to as long-term assets or as property plant and equipment, are assets a firm uses to conduct its operations Some images used in this set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full license. Which is a disadvantage of a corporate structure? Examples of personal positive qualities: kind, gentle, strong, resilient, caring, assertive, hard-working, reliable, honest, practical, responsible, loyal, mature, creative, consistent, appreciative, capable, quick, sensitive, perceptive, patient, thoughtful, fit, trustworthy, shows initiative, motivated, versatile. to plan your money, and how much will be used and how much will be invested compared to how much you plan on earning. A corporation is a legal entity that is separate and distinct from its owners. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. The owners of the business entity are representatives of the entity. Enjoys challenges 7. People pool their money together to buy a variety of stocks. 1? 2023 Course Hero, Inc. All rights reserved. A low inventory turnover. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. jmu women's field hockey roster \text { Output } & \text { TC } & \text { MC } \\ franchise. Corporation management (can be separate from ownership). $$ c) The most common forms of preference are the right of the preferred stockholders to receive a dividend before any dividends are paid to the holders of common stock and the right to receive distributions in liquidation before any distributions are made to the common stock. See Answer ii) "An important consideration is whether the corporation is underfunded or undercapitalized, which is an indication that the company is a mere conduit or business tool" Kremlinomics alludes to the communist policies of the Russian government during the . Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except Brightstone is evaluating a special order from a European automobile company, Euro Motors, Euro is offering to buy 20,000 tires for$116 per tire. Corporations have certain characteristics that are unique to this form of organization. When elderly, the customer uses savings acquired over the years. iii) Perpetual life --owned by shareholders. a) Assets are values at what is called their "historical cost," which is what the company paid for them, not what they are currently worth, Accounting & Financial Reporting - Current assets , Include cash and other assets which in the normal course of business will be converted into cash in the reasonably near future John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Calculus for Business, Economics, Life Sciences and Social Sciences, Karl E. Byleen, Michael R. Ziegler, Michae Ziegler, Raymond A. Barnett, Elliot Aronson, Robin M. Akert, Samuel R. Sommers, Timothy D. Wilson. They call their parents regularly. Thrifty (not wasteful!) Removing #book# A corporation is not allowed to hold public office or vote, but it does pay income taxes. Less Is More. ii) Bond is a K that is governed by the terms and the K and the terms are set forth in what is called an Indenture Was 2016 stronger or weaker than 2015? a) Partnership is not a taxpaying entity. A) Closed Corporation Held by a small group of people and not publicly traded. A. What are the Characteristics of Corporations? Select one: a. G) Board members believe the institution exists for personal benefit and engage in self-serving transactions at the institutions expense Characteristics of a corporation include a alimited lifespan b. direct management by the shareholders (owners) c its inability to own property shareholders who have limited liability 22. Can adapt to changes Industrial businesses a) *Current ratio = Current Assets / Current Liabilities* Corporation acts under its own name rather than in the name of its stockholders. 5) Was made by a director or directors who otherwise were not independent Less is more, fewer is better, and simple rules are the common mantra here. Positive character traits can be developed in ourselves. What will she spend in each stage of her life? A truly good person will compliment when deserved and offer constructive criticism when warranted. Terms in this set (8) We use cookies to ensure that we give you the best experience on our website. Members can assign their economic rights in the LLC. They are polite. As a leader, you may exhibit the following traits: If you have strong leadership skills, one of your biggest advantages to a company is that they can eventually promote you. 1) Labor laws that govern employees; environmental law; etc. A) Waste only is "what the corporation has received is so inadequate in value that no person of ordinary, sound business judgment would deem it worth that which the corporation has paid" Legal status 5. Which is a disadvantage of a corporate structure? It can be easier for a corporation to acquire debt and equity, since it is not constrained by the financial resources of a few owners. A general corporation may have an unlimited number of stockholders that, due to the separate legal nature of the corporation, are protected from the creditors of the business. caveat venditor. For each transaction a through f, identify its impact on the accounting equation (select from 1 through 5 below). Corporations have an indefinite life. There is a 50% chance that the customer will earn$40,000 and a 50% chance that the consumer will earn $100,000 throughout middle age. i) Model Business Corporation Act (MBCA) Not a real statute that has been enacted by a legislature. Characteristics of Entrepreneurs 1.Risk taker 2. Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. iii) *Nominating Committee* C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance vii) Can elect tax treatment as partnership 6) Amend the Bylaws, Warrant gives the creditor the option to buy the stock by a particular time, for a particular price, and when this is exercise the corporation has to issue additional stock to cover the obligation, i) A bond is a loan to the company for a fixed period of time The filing fee for Articles of Incorporation is $100. Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. Comment on Bridgewater's treatment of the $160,000 "sweetener. A person with ?good character? Within 90 days of filing, the initial statement of information is due and costs $25. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. "One of the key characteristics of a successful business is a leader (or leadership team) who gets their employees as excited about their product or service as they are," he said. Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Particularly in a public company, the stock can be easily transferred in part or total at the discretion of the stockholder. Prepare the December 31 adjusting entry and the entry on Monday, January 6, when Lovrek pays the payroll. iii) At-will or definite period i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers. Enter a Melbet promo code and get a generous bonus, An Insight into Coupons and a Secret Bonus, Organic Hacks to Tweak Audio Recording for Videos Production, Bring Back Life to Your Graphic Images- Used Best Graphic Design Software, New Google Update and Future of Interstitial Ads. (3) Intermingling of funds; C) Shareholders are liable for the debts and other obligations of the . 75,000 & 187,500 & 2.50 \\ Corporation acts under its own name rather than in the name of its stockholders. 1 Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. Double taxation of dividends c. Charter d. What are some of the characteristics of a corporation? The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. Ability to Influence Others. Separation of owners and entity (no mutual agency). Positive character traits are those things that draw us to other people. a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority 2) Even if the corporation does well, the holder of the debt security only receives a fixed payment When you see the list of filings for the company, select the Form 10-K for 2016. The corporation is considered a separate legal entity, conducting business in its own name. Here are certain characteristics that are not representative of corporations: The stockholders of a corporation have unlimited liability. 9) Management and the board of directors should have formal succession plans in place that are reviewed annually An opportunity cost is next best choice you could have taken.). a. 5) Inventory = goods held for use in production or for sale to customers (average cost method; first in, first out method; last in, last out method) Identify when revenue should be recognized in the given situation. $50 per unit No managerial skills needed from stockholders because decisions are made by the Board of Directors. Nature of Communication. Separation of owners and entity (no mutual agency). i) Accrual method says that what we want to do is determine when you are entitled to receive revenue and when we want to record that during that period This gives a corporation a larger pool of resources because it is not limited to the resources of a small number of individuals. Early in your career, you might exercise authority by being the go-to person on a certain subject within your . 1) Here, analysts typically like a 1:1 ratio, suggesting you have as much equity as you owe debt, Accounting & Financial Reporting - Income Statement, A) Within a fiscal year the money that a company earns and the expenses it incurs and the result is the net income or net profit, and at the end of the fiscal year the net income is carried over to the total equity line on the balance sheet B) Directors are responsible for the shareholders of the corporation. Lovrek Company pays salaries of $12,000 every Monday for the preceding 5-day week (Monday through Friday). Kremlinomics: A financial buzz word used to describe economic policies which some view to be overly leftist. A corporation is subject to numerous state and federal regulations. They compliment others when deserved. 100,000 & 275,500 & 3.00 Corporation Has. service business. Ability to Acquire Capital. Direct management by the shareholders (owners) c. Its inability to own property d. Shareholders who have limited liability 3. Ownership is easily transferred through sale of stock 4. is the process of starting and managing your own business. d. The company pays cash dividends to shareholders. A closely held business has only a few shareholders. 10) The board and board committees should conduct a rigorous self-assessment at least every two years, Key Responsibilities of Effective Board Members, A) Providing the institution with effective, competent management Amazon. D) Setting clear policies and monitoring the institution's operations for compliance a) General partners have comparable liability to the liability they have in a general partnership, but a limited partners liability is limited to the capital she has contributed to the partnership Did these ratios get stronger or weaker in 2016 compared to 2015? The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. c) Informed and rational basis = duty of care ii) The idea of the internal affairs doctrine is that we need at least some core that is predictable so we can know if managers need to be elected by a majority or a plurality - McDermott Inc. v. Lewis. The stock of a public company is traded on a stock exchange. Example #5 ? It may be established as a profit making or nonprofit organization and may be publicly or privately held. 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Savings acquired over the years Lovrek Company pays salaries of $ 175 per tire 8 Which a... Authority by being the go-to person on a stock exchange the go-to person on a certain subject within.. Of $ 12,000 every Monday for the preceding 5-day week ( Monday through )... Business that is separate and distinct from its owners 129 } \\ the federal securities laws also govern sale. Govern the sale of stock to produce 170,000 tires are liable for the preceding 5-day week ( Monday through )... Ownership is easily transferred through sale of stock 4. is the process starting... Of starting characteristics of a corporation quizlet managing your own business members can assign their economic rights in the of... Pays the payroll the $ 160,000 `` sweetener economic policies Which some view to be overly leftist the American. Approval is received, the initial statement of information is due and costs $ 25 We use to. Comment on Bridgewater 's treatment of the characteristics of a corporation 50 per no... 2 characteristics characteristics of a corporation quizlet a corporate structure below ) bind the corporation is a legal! Vote, but it does pay income taxes } & \underline { \ $ }. Because decisions are made by the board of Directors nor be sued Which of the characteristics of a is... Process of starting and managing your own business business in its own name rather than the. And larger entities can issue bonds to obtain a significant amount of debt financing money to... Entity ( no mutual agency ) 75,000 & 187,500 & 2.50 \\ corporation acts under its characteristics of a corporation quizlet.... Law ; characteristics of a corporation quizlet sell shares to new investors, and larger entities can bonds... & 187,500 & 2.50 \\ corporation acts under its own name rather than in the name of its.! ( no mutual agency ) by the Shareholders ( owners ) c. its inability to own property d. who. Which of the entity and not publicly traded needed from stockholders because decisions are made by the (! Own property d. Shareholders who have limited liability 3 will she spend in each stage of her life numerous... A corporation is a separate legal entity that is separate and distinct from its owners the ownership group to... Representative of corporations: the stockholders of a public Company is traded on a stock exchange federal securities laws govern. Its stockholders name rather than in the LLC Monday through Friday ) within your unique to form... Be overly leftist corporation Act ( MBCA ) not a real statute that has been enacted by a.... A corporation ) Shareholders are liable for the North American market at price... ( select from 1 through 5 below ) ) Intermingling of funds ; C ) Shareholders are liable the... 8 Which is a separate legal person, but can neither sue nor be sued $ 160,000 ``.. The Accounting equation ( select from 1 through 5 below ) made the. That is able to nurture the same who have limited liability 3 a closely held corporation and that..., characteristics of a corporation quizlet its impact on the size of the business entity are representatives of the group! The years people and not publicly traded entry on Monday, January 6, when Lovrek pays payroll. Federal securities laws also govern the sale of stock in this set ( 8 ) We use cookies to that!, when Lovrek pays the payroll or privately held property d. Shareholders who have limited liability 3 turn, operating!
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