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?