Terms in this set (8) iii) BJR creates a presumption that, "in making a business decision, the directors of a corporation acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interest of the company - b.$55 per unit Type of Tax Description Advantages Disadvantages Direct Taxes Personal income tax (time and money).Tax levied on incomes/wages/earnings Progressive - use a marginal tax rate that increases as the amount of taxable income increases, thus effective in income distribution. Separate taxable entity (leading to double taxation) 7. c) When sold, they are authorized and issued or authorized and outstanding Ability to Acquire Capital. A good logo is: Simple. i) Model Business Corporation Act (MBCA) Not a real statute that has been enacted by a legislature. The communication of thoughts, information, perceptions, and opinions among individuals is a continuous cycle in professional, personal, and business settings. Assume, based on your response in the previous section, that the customer will earn$100,000 during their middle years. d) If they are repurchased by the corporation they become authorized and issued, but not outstanding, Before a corporation that has issued all the shares authorized by the articles of incorporation can issue more stock, it must amend the articles of incorporation to authorize additional shares ii) If you have a good cash flow from investing and you're not an investing company that can be odd & sometimes it could be from debt, i) Represents permanent commitments of capital to a corporation by which the contributor is given shares in the corporation in the type of share that the corporation is authorized to issue A corporation is subject to numerous state and federal regulations. ". Brightstone pays a selling commission equal to 5\% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. 50,000 & 150,000 & 1.00 \\ You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Was 2016 stronger or weaker than 2015? Advantage of Corporations. A corporation is a legal entity, meaning it is a separate entity from its owners who are called stockholders. 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 One of the main disadvantages of the corporate form is the a. iv) Default: Member-managed c) Audit Board Committee. A corporation is owned by stockholders C. All shares of a corporation must be held by a single individual D. Each stockholder has the authority to commit the corporation to a binding contract through his actions. Exxon Mobil. franchise. F) Ensuring the institution complies with all regulations Bridgewater Corp. offered holders of its 1,000 convertible bonds a premium of $160 per bond to induce conversion into shares of its common stock. They compliment others when deserved. Assume that the real interest rate, predicted inflation, and inflation are all equal to zero. An LLCs life is terminated at any members choice or death Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. ii) A corporation's board of directors generally may sell authorized but unissued stock on whatever terms it decides reasonable. State laws usually include the requirements for issuing stock and distributions to stockholders. " [Leadership] is all about influencing people," said Kirstin Lynde, founder of leadership development firm Catalyze Associates, in a Facebook Live interview. If she does not believe that the agent has the authority, the principal is under a duty to investigate Kremlinomics: A financial buzz word used to describe economic policies which some view to be overly leftist. a) There is a maturity date where you have to pay back to the principal and there is always annual interest 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. 1? v) Manager-managed: managers act for LLC; members vote on major matters The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management.. What are some features of a corporation quizlet? It is a team of people, including suppliers of money and labor, who work together to earn a return on their investment. These taxes are substantial; they can amount to more than 40% of taxable income publicly held corporation Required fields are marked *. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? (Assume all sales were on account.) (7) Whether the dealing between the entities are at arms length; The limited liability and ease of transferring ownership rights makes it easier for a corporation to acquire capital by selling stock, and the size of the corporation allows it to issue bonds based on its name. One of the main disadvantages of the corporate form is the a. b. c. inability to raise large amounts of capital double taxation . Some persons may be employed to help the owner but ultimate control lies with him. i) Corporation can act humanitarianly if that humanitarian effect is a secondary effect or purpose that comes after the primary purpose of creating a profit or long-term benefits of the company Brightstone estimates that this certification would cost$165,000. Shareholders who are mutual agents b. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Kremlinomics alludes to the communist policies of the Russian government during the . a) Indenture sets out the companies full obligations to the creditors, the company has no fiduciary duty to creditors, their entire obligation and relationship is set forth in the K. In order to pierce the corporate veil, a P must prove (1) The owner has exercised such control that the corporation has become a mere instrumentality of the owner, which is the real actor; (domination) Particularly in a public company, the stock can be easily transferred in part or total at the discretion of the stockholder. d. The company pays cash dividends to shareholders. What will she spend in each stage of her life? i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers. C. The title of the corporation is limited by the death of the owner Which of the following is a characteristic of a limited liability company (LLC)? The proprietor alone takes all the decisions pertaining to the business. What are the Characteristics of Corporations? iii) Officers = Agent/Principal D) Setting clear policies and monitoring the institution's operations for compliance 1) Analysts typically like a 2:1 ratio, this suggests you have enough cushion to pay your bills as they become due Some of the main characteristics of small businesses are: They can be further categorized. Business entities benefit society by allowing individuals to aggregate . Versatile. Most corporate detectives avoid terms like spying and espionage, preferring the more dignified label "competitive intelligence", but whatever they call it, snooping on business rivals has become an entrenched sub-industry. Your email address will not be published. (10) Intermingling of property between entities 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. When elderly, the customer uses savings acquired over the years. The filing fee for Articles of Incorporation is $100. 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. A) Articles of Incorporation Every statute requires that each corporation have its own articles of incorporation (sometimes called the charter or the certificate of incorporation), which must be filed with state officials and which represents the "constitution" of that corporation, A) Corporations raise money by issuing securities to their investors. Corporations have certain characteristics that are unique to this form of organization. d) Disinterested and independent (has two methods of analysis = duty of loyalty The corporations resources are limited to what the stockholders can contribute. A company shareholder is personally liable for the debt of the corporation. Tax status of income Previous question Next question Transferability of ownership Readily transferred 4. Example #5 ? --B and C only --A, B, and C This problem has been solved! Separate Legal Existence. Who is the most powerful person in a corporation? ii) Formed by partnership agreement and filing certificate with the state Dividends. Goal setter 6. A) Closed Corporation Held by a small group of people and not publicly traded. A corporation is not allowed to hold public office or vote, but it does pay income taxes. A. boycott. i) If there is an emergency, the notice requirement can be waived, A) Directors Limited Liability of Stockholders. Don't blame taxes for this issue. Calculate ratios for 2015 and 2016 to determine the following for Under Armour: ii) Where the corporate form is used as a shield behind which injustice is sought to be done by those who have control of it that equity penetrates the corporate veil, A) 141 says that the business and affairs of every corporation shall be managed by the board unless otherwise provided in the code, or in the certificate of incorporation 2) If yes Are all other directors independent of that interested party? Within 90 days of filing, the initial statement of information is due and costs $25. In some states, stockholders are called shareholders. No managerial skills needed from stockholders because decisions are made by the Board of Directors. b) To rebut the presumption, P must show 2) Note that these outside auditors are hired by management are in a position that their performance will decide whether they are hired next year and so on, creating its own issues a) Appears on the right side of the balance sheet b/c it may be considered as the amount that is "owed" to the stockholders, Accounting & Financial Reporting - Financial statements are produced through a 3-stage process, i) First "Recording and controls" stage D) Also, corporations are not natural personas, A) A business corporation is organized and carried on primarily for the profits of the shareholders Domino?s Pizza. a) It is less risk than common stock but more risk than debt C) Enforcing a claim Ability to increase capital by selling stocks. Additional taxes Corporations must pay federal and state income taxes as a separate legal entity. A corporation is a legal entity that can own property, enter into contracts, sue and be sued. 2) Preferred stock sits between common stock and debt How much does it cost to start a California corporation? Will consumption remain the same over the course of the consumer's life? Decision maker 3. 1) Was not informed; i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. Consistency. is a legal agreement to use the name and sell the products of a parent company in a designated geographic area. An investment expert makes all of the buy and sell decisions, as source of supply, support, or aid. b. setup time If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. v) Common shareholders elect board and vote on major matters The stock of a public company is traded on a stock exchange. 6) The board should adopt appropriate policies and procedures to manage processes, establish guidelines, and determine appropriate risk thresholds for all significant products and services As a corporation is owned by stockholders and managed by employees, the sale of stock, death of a stockholder, or inability of an employee to function does not impact the continuous life of the corporation. ii) *Compensation Committee* 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 1) Dividends 2 Which one of the following is not a characteristic of a corporation? The companys ability to pay its current liabilities. iv) Each partner has an equal voice 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. b) Typically, preferred stockholders will receive a fixed dividend payment although the declaration of a preferred stock dividend is also at the discretion of the board of directors Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. 3 What are 3 characteristics of corporations? So, the minimum grand total for forming a California corporation is $125. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. ii) Formed by operating agreement and filing articles of organization The liability of stockholders is limited to the amount each has invested in the corporation. What are 3 characteristics of corporations? So, the minimum grand total for forming a California corporation is $125. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Government regualtions. These characteristics are as follows: Capital acquisition. 8) The board, through its audit committee, should verify the institution's financial management strength and effectiveness through an annual external audit Is South Africa registered as corporation? Transferable ownership rights. 5) Vote to amend to Articles The companys inventory turnover and days inventory outstanding (DIO); accounts receivable turnover and days sales outstanding (DSO), accounts payable turnover and days payable outstanding (DPO), and the number of days in its cash conversion cycle. An LLC?s life is terminated at any member?s choice or death Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. Money that can be borrowed as you need it, which must be paid back with interest. \text{Direct materials}&\$56\\ Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. 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? Separate Legal Existence The LLC can be considered as a partnership or sole proprietorship for income tax purposes. B) Corporations should do a human rights due diligence analysis to examine risks of violations of human rights, i) If you are representing the corporation, then the corporation is your client, not any of the individual directors, officers or shareholders 2023 Course Hero, Inc. All rights reserved. Flexibility of transferable ownership. Memorable. Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except 15 Simple Traits Of A Truly Good Person i) Revenue - Cost = Income c) Any recovery, either through judgment or settlement, belongs to the corporation for whose benefits the suit has been brought, Rights of the Corporation under the First Amendment, A) Corporations may not use treasury funds as expenditures to support political candidates How does the CPI differ from the Myers-Briggs test? 2) Board members should be recruited for their relevant business, industry or financial expertise Corporations have a number of distinguishing characteristics. a market where stocks and bonds are traded. They compliment others when deserved. vi) Majority decision making, i) Partnership w/ general & limited partners Which is characteristic of a limited liability company ( LLC )? vii) Can elect tax treatment as partnership Which is a disadvantage of a corporate structure? Comment on Bridgewater's treatment of the $160,000 "sweetener. Owners elect a board of directors to set corporate policies and select officials to manage the corporation 6. C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance 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 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. Instead, it is a separate taxable entity which is taxed at both the corporate and shareholder levels. maintaining employment process training and development staff. Advantage of Corporations. Owner authority and control 7. 2014 figures for the company are as follows (in thousands): Accounts receivable (net) $279,835; Inventories$536,714; Accounts payable $210,432. If you continue to use this site we will assume that you are happy with it. A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience 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. Influential leaders have a wide collection of skills, including self-confidence, reliability and honesty. A truly good person will compliment when deserved and offer constructive criticism when warranted. b) Anytime you're dealing w/ a wholly owned subsidiary, it's a good idea for the other company to do its due diligence and inquire whether the subsidiary is authorized to act in the way that it is acting w/out approval of its parent company, AgencyAction Binding the Corporation Types of Authority Inherent Authority , Inherent Authority Infers from the position holds that the agent has authority (usually, a closed corporation operates like a partnership). Owner liability 8. Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. i) External affairs of a corporation are generally governed by the law of the place where the activities occur and by federal and state regulatory statutes rather than by the place of incorporation 100,000 & 275,500 & 3.00 Legal status 5. Business entities are legal organizations that exist by virtue of state law. 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" Examine these ideal beliefs and significance weights, and then create a verbal description (i.e., concept) of a new brand for these items that would satisfy this student's needs. 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. The characteristics of an S corporation differ from that of an ordinary corporation in a number of ways. Is Ashford nationally or regionally accredited? c) Audit Board Committee Job is to make sure that the companies financial statement is accurate and not misleading Llc can be waived, a ) directors Limited Liability of stockholders issuing stock debt... 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A truly good person will compliment when deserved and offer constructive criticism when.. The products of a corporate claim against the managers additional taxes Corporations must pay federal and state income.... Filing fee for Articles of Incorporation is $ 125 on Bridgewater 's treatment of the Russian during! Form of organization customer uses savings acquired over the course of the main disadvantages the... Which is a team of people, including self-confidence, reliability and honesty, predicted inflation and! Employed to help the owner but ultimate control lies with him are authorized! Required fields are marked characteristics of a corporation quizlet name and sell decisions, as source of supply support!