(3) Intermingling of funds; The federal securities laws also govern the sale of stock. a. inventory Requirements Separate taxable entity (leading to double taxation) 7. Who is the most powerful person in a corporation? a) Board of directors must recommend the amendment, which must then be approved by the holders of at least a majority of its outstanding stock b) Survey the extent to which there are processes set up for the board to act effectively and for the directors to be held accountable 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. A. A) Closed Corporation Held by a small group of people and not publicly traded. 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. A low inventory turnover. b) You or a family member received more than $120,000 in direct compensation in any twelve month period over the past three years What are the 4 attributes of corporation? 8) The board, through its audit committee, should verify the institution's financial management strength and effectiveness through an annual external audit b. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Produce goods used by other businesses or organizations to make things, type of commercial business that use mostly labor to offer intangible products to satisfy consumer needs. Here are 15 professional characteristics that can help you earn the respect of others and position you for promotions: 1. Example #4 ? Ownership evidence by shares of stock 3. What are some good character traits to have? Similarly, a person or an entity wishing to purchase stock in a corporation does not require the approval of the corporation or its existing stockholders before purchasing the stock. 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. a) Articles of incorporation will create authorized shares 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" Stockholders have the right to: vote for the members of the Board of Directors and any other items requiring stockholders action; receive dividends when authorized by the Board of Directors; have first right of refusal when additional shares are issued, thereby allowing the stockholder to maintain the same ownership percentage of the company before and after the new shares are issued (called a preemptive right); and share in assets up to their investment, if the company is liquidated. a) The ratification only applies to that specific transaction, does not create future authority, 1) The majority of directors should be independent of the company and its management Shareholders who are mutual agents b. ii) Formed by partnership agreement What are the characteristics of a good person? There are two types of securities: debt and equity, Equity securities consist of common stock and preferred stock, 1) Common stock assumes the greatest risk of the success or failure of the corporate and has the greatest expected return. Characteristics of corporations Legal entity Rights as person and citizen Creature of state Limited liability of shareholders Unrestricted transferability of corporate shares Perpetual existence Centralized management Corporate taxation Express powers: Key Characteristics of Different Taxes . 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered 1) What are the voting rights that s/s are able to exercise? Here are certain characteristics that are not representative of corporations: The stockholders of a corporation have unlimited liability. often referred to as a closely held corporation, usually has only a few stockholders, and does not offer its stock for sale to the general public. The companys ability to pay its current liabilities. 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 is a legal agreement to use the name and sell the products of a parent company in a designated geographic area. So, the minimum grand total for forming a California corporation is $125. What are some of the characteristics of a corporation? How to Market Your Business with Webinars? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Withdrawal or death of an owner does not cause termination. Ownership and management are vested in the same person. The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. 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. 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 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. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. 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. 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 1) Dividends v) Personal liability Characteristic Corporations 1. Identify the two types of relevant costs. v) Dissolved by withdrawal of a general partner, i) Legal entity separate from shareholders The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. 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. Complimenting is not only a good thing to do, but a sign that you can be excited for other people?s triumphs. D) Setting clear policies and monitoring the institution's operations for compliance It is a team of people, including suppliers of money and labor, who work together to earn a return on their investment. i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock Additional taxes Corporations must pay federal and state income taxes as a separate legal entity. 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. Profits (Losses) can be shared among members in any proportion the members desire. and any corresponding bookmarks? Direct management by the shareholders (owners) c. Its inability to own property d. Shareholders who have limited liability 3. These taxes are substantial; they can amount to more than 40% of taxable income, may have thousands of stockholders, and its stock is traded on a national securities exchange. The business entity carries on business activity on its own behalf. B) With contract creditors, plaintiffs will have had every opportunity to get personal guarantees in the contracts, or to protect themselves in the event that funds were not available; whereas, with a tort, it kind of just happens and you can't prepare for it iii) Inherent Authority Infers from the position holds that the agent has authority Decision maker 3. iii) Third "Audit stage" a) Current liabilities Debt the firm owes that must be paid within one year of the balance sheet date \text{Direct labor}&22\\ 1 What are the characteristics of a corporation quizlet? The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. ii) Second "Accounting stage" Some refer to it as a ?legal person.? (adsbygoogle = window.adsbygoogle || []).push({}); Copyright 2023 Find what come to your mind. 9) Management and the board of directors should have formal succession plans in place that are reviewed annually Limited to their investment. (2) Such control has been used to commit a fraud or other wrong; and Business entities benefit society by allowing individuals to aggregate . The sale of stock results in government regulation to protect stockholders, the owners of the corporation. Don't blame taxes for this issue. Money borrowed against a home or land. $$ B/C the principal puts the agent in a position of trust, the principal should bear the loss, AgencyAction Binding the Corporation Types of Authority Ratification of Authority , Focuses on the principal, if the agent has acted w/out authority but the principal takes no steps to repudiate the authority and accepts the benefits of the authority, than we can say that the principal has ratified the authority 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. A) Average Cost Method visualizes inventory as sold at random from a bin What are the characteristics of a corporation quizlet? 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 How does the CPI differ from the Myers-Briggs test? b) Be composed solely of independent directors Example #3 ? 2) Marketable Securities = securities that can be readily sold and converted into cash and are not held for current operations Stock of a privately held company is not traded on an exchange and there are usually only a small number of stockholders. --B and C only --A, B, and C This problem has been solved! What theory is involved in the modern corporation? A good logo is: Simple. 2) To get information from management Corporations have certain characteristics that are unique to this form of organization. E) Packets provided to members don't contain pertinent information or are in a format that makes determining risk exposures and judging the effectiveness of risk management difficult Corporate Authority -- Directors, you are not independent if You are not independent if c) Must be comprised entirely of independent directors A) The corporation is a separate legal person, but can neither sue nor be sued. 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 Disadvantage of Corporations. (2) Inadequate capitalization (big one); Business Law in Canada, 11e (Yates) Chapter 11 Corporations. Courteous : I care about workplace atmosphere. Example #1 Amazon. 1) GAAP (Generally Accepted Accounting Principals): Corporations have a number of distinguishing characteristics. Dividends. B) The typical test of unfairness is that the entity has been undercapitalized, where a corporation will be using the corporate form only to avoid liability 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. a) Must be comprised entirely of independent directors Creditors are limited to corporate assets for satisfaction of their claims. ii) Formed by partnership agreement and filing certificate with the state Terms in this set (8) 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 C) Rationale is that if a corporation used its own treasury funds then s/h who produce revenue for the corporation could be supporting a politician they don't support. What are some of the characteristics of a corporation? 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. The filing fee for Articles of Incorporation is $100. 5 What are the 4 attributes of corporation? advantages of corporations, disadvantages of corporations, Ability to increase capital by selling stocks, No managerial skills needed from stockholders because decisions are made by the Board of Directors, Financial and Managerial Accounting: Information for Decisions, Barbara Chiappetta, John J. They think of others. Amazon was founded in 1994 and is a world leader in e-commerce. B) Special Meetings Can be called pursuant to articles that are set forth in the bylaws, needs to give notice & some general information about what the meeting will be about B) First in, first out Method visualizes inventory as flowing through a pipeline A corporation is treated as a "person" with most of the rights and obligations of a real person. C) Shareholders are liable for the debts and other obligations of the . If she does not believe that the agent has the authority, the principal is under a duty to investigate a) Company classifies and analyzes the information and presents it in a set of financial statements 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)? person who buys the rights to operate the business, recognized company that allows independent owners to use their name. Professionals should always strive for a professional appearance, including appropriate attire and proper hygiene and grooming. 3) Did not have a rational business purpose (i.e., constituted a waste of corporate assets); A corporation is a legal entity that is separate and distinct from its owners. 3. Government regualtions. 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 i) Directors can be inside or outside c) Informed and rational basis = duty of care Removing #book# franchise. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. v) Manager-managed: managers act for LLC; members vote on major matters D: Which of the following is true with regard to the characteristics of corpora- tions? Ownership of a corporation is held in shares of capital stock, which are transferable units. In a corporation, one stockholder cannot jeopardize other stockholders through poor decision making. If you continue to use this site we will assume that you are happy with it. 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. A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience a) The corporation pays taxes, not individuals At its most basic level, what is corporations about? a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority All corporations are owned by groups of investors. b) Outside Auditors 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 par value of corporate shares issued represents a corporation?s legal capital. This statement is true. Transcribed image text: All of the following are . ii) The derivative suit was developed to alleviate this problem H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board Corporations are created under state or federal laws and have many of the same legal rights as a person . \text{Direct materials}&\$56\\ C) Most important is cash flow from operating activities Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. 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