Acct Inter 2 Chap 18
corporation
A business that has equity accounts labeled "common stock" and "retained earnings" is a
mutual agency
A corporation's investors may not bind the corporation to a contract. Therefore, investors of a corporation lack
does not have the same limited liability protection
A limited liability partnership (LLP) is similar to a limited liability company (LLC), except it
retained earnings
Amounts earned by the corporation on behalf of its shareholders and recorded as a single amount are referred to as:
Other comprehensive income
Comprehensive income statement
-operating at a profit -borrowing -issuing stock
Corporations can raise capital by:
-operating at a profit -issuing stock
Corporations raise equity capital by
limited to the amount of the investment.
In a corporation, shareholders' liability is
shareholders' equity
Net assets equals
Individual investors may not bind the corporation to a contract
One advantage of investing in a corporation is the lack of mutual agency, which means that:
S
Owners of ___corporations have the limited liability of a corporation, but income and expenses are passed through the owners as in a partnership, avoiding double taxation.
as a single amount
Retained earnings is typically reported on the balance sheet
treasury stock
Shares of stock previously sold by the corporation that are repurchased are called
-Income and expenses are passed through to the owners. -All members can be involved with management without losing liability protection. -Owners are liable to the extent of their investment.
The characteristics of a limited liability company include which of the following features?
-Right to dividends when declared. -Right to vote for corporate directors. -Right to distribution of assets in liquidation.
The rights of common stockholders typically include which of the following? (Select all that apply.)
profit and not-for-profit
The two types of corporations are
-Income and expenses pass through to owners, avoiding double taxation. -Owners' liability is limited to the extent of their initial investment.
What is a benefit of a limited liability corporation? (Select all that apply)
Not-for-profit
What type of corporations include churches, hospitals, universities, and charities?
Ownership interests of the shareholders
Which of the following accurately describes shareholders' equity?
Right to vote on certain matters
Which of the following are included in the rights of common stockholders?
Debt; equity
___ represents the creditors' interest in the company, whereas ___ represents the investors' interest in the company.
-double taxation -government regulation
Disadvantages of the corporate form of business are (Select all that apply.)
owners are liable for their own actions, but not entirely liable for the actions of other partners
In a limited liability partnership...
Debt
Represents a creditor's interest that must be repaid
Equity
Represents an ownership interest in the company
-issuance of stock -repurchase of stock -nature of share authorization
State laws regulate which of the following corporate activities? (Select all that apply.)
serves as the model for corporate laws in most states
The Model Business Corporation Act
Model
The ___ Business Corporation Act is designed to serve as a guide for states in developing their corporate laws.
S corporation
Which of the following has limited liability for its owners, but passes income through to its investors and avoids double taxation?
Accumulated other comprehensive income
Which of the following is reported on the balance sheet?
Corporations
Which of the following is subject to double taxation?
limited liability Reasons: -Double taxation is a disadvantage for corporations. -Regulation is a disadvantage to the corporate form of business.
The most important advantage to the corporate form of business is
False Reason: Treasury stock represents shares of stock previously issued by the corporation that are repurchased by the corporation.
True or false: Treasury stock represents investments in treasury securities of the U.S. government.
False Reason: When investors purchase shares of stock in a corporation, the corporation records the transaction as paid-in capital.
True or false: When investors purchase shares of stock from a corporation, it is recorded by the corporation as investments in securities.
shareholders' equity
The ownership interests of the investors in a corporation are referred to as
-adjustments from foreign currency translations -net holding gains and losses on investments that are available for sale
Which of the following items are included in other comprehensive income?
-net holding gains and losses on certain types of investments -deferred gains and losses on derivatives -gains and losses from amendments to postretirement programs -adjustments from foreign currency translations -net holding gains and losses on investments that are available for sale
Which of the following items are included in other comprehensive income? (Select all that apply.)
-Company repurchases some of its outstanding common stock -Company sells stock to investors -Share-based compensation activities
Which of the following may be a source of paid-in capital?
The state in which the corporation is incorporated
Who regulates the nature of shares that can be authorized, the issuance and repurchase of those shares, and the distributions to shareholders?