ACCT 202 - Chapter 11 - CORPORATION T/F - E 11-1

(T/F) The net income of a corporation is not taxed as a separate entity.

False; it is taxed as a separate entity---this is referred to as double taxation.

(T/F) Corporations are subject to fewer state and federal regulations than partnerships or proprietorships.

False; they are subject to just as many regulations if not more.

(T/F) Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.

False; they do not have a legal claim due to the limited liability provided as an advantage of a corporation.

(T/F) A corporation is an entity separate and distinct from its owners.

True

(T/F) As a legal entity, a corporation has most of the rights and privileges of a person.

True

(T/F) Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.

True

(T/F) The chief accounting officer of a corporation is known as the controller.

True

(T/F) Most of the largest U.S. corporations are privately held corporations.

False; most are publicly held.

(T/F) The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders.

False; no approval is needed.

(T/F) The board of directors of a corporation legally owns the corporation.

False; the owners of a corporation are its stockholders.