chapter 12

A disadvantage of the corporate form of business entity is a. corporations are subject to more governmental regulations. b. unlimited liability for stockholders. c. the ease of transfer of ownership. d. single taxation of dividends.

a

Characteristics of a corporation include a. shareholders who have limited liability. b. direct management by the shareholders (owners). c. its inability to own property. d. a limited lifespan.

a

Under the corporate form of business organization, a. ownership rights are easily transferred. b. corporations are not subject to the Sarbanes-Oxley Act. c. stockholders wishing to sell their corporate shares must get the approval of other stockholders. d. a stockholder is personally liable for the debts of the corporation.

a

Which of the following is not a characteristic of a corporation? a. Cash dividends paid by a corporation are deductible as expenses by the corporation. b. A corporation can own property in its name. c. The financial loss that a stockholder may suffer from owning stock in a public company is limited. d. Corporations are required to file federal income tax returns.

a

One of the main disadvantages of the corporate form is the a. requirement to stock. b. charter. c. double taxation of dividends. d. inability to raise large amounts of capital.

c

A corporation is a separate entity for accounting purposes but not for legal purposes.

false

Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied to partnerships.

false

Twenty percent of all businesses in the United States are corporations, and they account for 80% of the total business dollars generated.

false

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

true

Under the Internal Revenue Code, corporations are required to pay federal income taxes.

true