Question

Identify characteristics of a corporation. Andrea has prepared the following list of statements about corporations. 1. A corporation is an entity separate and distinct from its owners. 2. As a legal entity, a corporation has most of the rights and privileges of a person. 3. Most of the largest U.S. corporations are privately held corporations. 4. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued. 5. The net income of a corporation is not taxed as a separate entity. 6. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. 7. The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders. 8. The board of directors of a corporation legally owns the corporation. 9. The chief accounting officer of a corporation is the controller. 10. Corporations are subject to fewer state and federal regulations than partnerships or proprietorships. Instructions: Identify each statement as true or false. If false, indicate how to correct the statement.

Answer 1

Answer:

1. True

2. True

3. False

4. True

5. False

6. False

7. False

8. False

9. True

10. False

Explanation:

1. True: A corporation is an entity separate and distinct from its owners.

2. True: As a legal entity, a corporation has most of the rights and privileges of a person.

3. False: Most of the largest U.S. corporations are privately held corporations. No, They're publicly held corporations.

4. True: Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.

5. False: The net income of a corporation is not taxed as a separate entity. Actually no, the net income of a corporation is taxed as a separate entity.

6. False: Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. Creditors do not have any legal claim on the personal assets of the owners of a corporation, if the corporation does not pay its debts.

7. False: The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders. The transfer of stock from one owner to another, is typically at the stockholder's discretion and so doesn't require the approval of either the corporation or other stockholders.

8. False: The board of directors of a corporation legally owns the corporation. The stockholders legally own the corporation and not the board of directors, whose duty is to only manage it.

9. True: The chief accounting officer of a corporation is the controller.

10. False: Corporations are subject to fewer state and federal regulations than partnerships or proprietorships. Actually not correct, as they're subject to more state and federal regulations than partnerships or proprietorships.