Which of the following is true of a corporation?

Which of the following is true of a corporation? A corporation can be organized publicly, but it cannot be organized privately. A corporation has a limited life. … Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.

Which of the following is a feature of a corporation?

The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management.

Which of the following is an advantage of the corporate form of organization?

Advantages of a corporation include personal liability protection, business security and continuity, and easier access to capital. Disadvantages of a corporation include it being time-consuming and subject to double taxation, as well as having rigid formalities and protocols to follow.

What happens if no par value stock does not have a stated value?

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock becomes legal capital.

What are examples of corporations?

Almost all large businesses are corporations, including Microsoft Corp., the Coca-Cola Co., and Toyota Motor Corp. Some corporations do business under their names and also under separate business names, such as Alphabet Inc., which famously does business as Google.

What is most characteristic of corporations quizlet?

Characteristics of Corporations
  • Legal Entity.
  • Legally a person (same rights)
  • Limited Liability.

How does a corporation recognize a deficit in retained earnings?

Companies report negative retained earnings as accumulated deficit in the balance sheet. The accumulated deficit is a note to the original retained earnings account. … A company could be in an imminent danger of bankruptcy if the negative assets on the balance sheet has exceeded the amount of contributed capital.

What is stated capital of a corporation?

Generally, an amount equal to the cash consideration (or equivalent fair value of property or past services) received by a corporation in exchange for the issue of shares. … Stated capital can be increased or decreased by various transactions in which the corporation redeems or purchases its own shares.

Why is par value important?

Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. … Par value for a share refers to the stock value stated in the corporate charter.

How do companies use retained earnings?

Retained earnings can be used to pay additional dividends, finance business growth, invest in a new product line, or even pay back a loan. Most companies with a healthy retained earnings balance will try to strike the right combination of making shareholders happy while also financing business growth.

Where does retained earnings appear?

balance sheetRetained earnings are a type of equity and are therefore reported in the shareholders’ equity section of the balance sheet.

What is deficit on a balance sheet?

Deficits on the Balance Sheet

In financial accounting, the company has a deficit if the retained earnings figure is negative. This indicates the firm’s equity is less than the amount investors originally paid for the stock.

Why retained earnings are liabilities?

Retained earnings are actually considered a liability to a company because they are a sum of money set aside to pay stockholders in the event of a sale or buyout of the business. … Any profits not distributed at the end of a fiscal year are considered retained earnings.

Which of the following correctly describes retained earnings?

The answer is B. It represents the investments by stockholders in a company. Retained earnings is the leftover of net income after dividend payment….

What are a companies earnings?

A company’s earnings are its after-tax net income, or profits, in a given quarter or fiscal year. … Earnings per share (EPS) is a company’s net income (or earnings) divided by the number of common shares outstanding.

Is accounts receivable an asset?

Accounts receivable is an asset account on the balance sheet that represents money due to a company in the short term. Accounts receivables are created when a company lets a buyer purchase their goods or services on credit.

Is Notes Receivable an asset?

A note receivable is a written promise to receive a specific amount of cash from another party on one or more future dates. This is treated as an asset by the holder of the note.

Is share capital an asset?

No, equity share capital is not an asset. But the investor who buys equity shares of the company brings in cash in exchange for the shares given. This increases the assets of the company. … It comes under the head “Equity & Liabilities” in the balance sheet.

Is cash an asset?

Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. Examples of current assets include: Cash and cash equivalents: Treasury bills, certificates of deposit, and cash.

Is goodwill an asset?

Goodwill is an intangible asset that accounts for the excess purchase price of another company. Items included in goodwill are proprietary or intellectual property and brand recognition, which are not easily quantifiable.