traits, like being honest, respectful, responsible, caring, fair. Separate Legal Existence. Your email address will not be published. Descriptions High because buying stock is attractive Characteristic 1. Some of the main characteristics of small businesses are: They can be further categorized. Similarly, a person or an entity wishing to purchase stock in a corporation does not require the approval of the corporation or its existing stockholders before purchasing the stock. They call their parents regularly. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. In some states, stockholders are called shareholders. Ambitious 5. Advantage of Corporations. However, this special order would not have a sales commission. Publicly held companies with stock traded on exchanges are required to file their financial statements and additional informative disclosures with the Securities and Exchange Commission. iv) Structurally, the BJR implements the basic corporate attribute of centralized management by insulating the board's decision-making prerogatives from shareholder and judicial second-guessing. c. The companys rates of return on sales (ROS), average total assets (ROA), and average stockholders equity (ROE), using DuPont analysis. i) Corporation can act humanitarianly if that humanitarian effect is a secondary effect or purpose that comes after the primary purpose of creating a profit or long-term benefits of the company i) Factors A. A. shareholders who have limited liability B. shareholders who are mutual agents C. its inability to own property D. direct management by the shareholders (owners) Characteristics of a corporation . Assume the company does not use reversing entries. Separate Legal Existence v) Manager-managed: managers act for LLC; members vote on major matters a) Articles of incorporation will create authorized shares What is the standard deduction for over 65 in 2020? Next to the following list of eight characteristics of business organizations, select a brief description of how each characteristic applies to corporations. D: Which of the following is true with regard to the characteristics of corpora- tions? What theory is involved in the modern corporation? a) Usually 1/3, but articles of incorporation or bylaws will specify Corporation acts under its own name rather than in the name of its stockholders. The investors vote on the Board of Directors who are responsible for hiring management. Some refer to it as a ?legal person.? vi) Majority decision making, i) Partnership w/ general & limited partners A corporation can obtain capital by selling stock or bonds. b) Be composed solely of independent directors ability of profit-making organizations to compete with businesses in other countries effectiveness making the right decisions about what products or services to offer customers and how to produce and deliver them efficiency producing needed goods or services quickly and at a low cost domestic goods products made by firms in the United States Business Law in Canada, 11e (Yates) Chapter 11 Corporations. Characte a) Internal Auditor ii) "An important consideration is whether the corporation is underfunded or undercapitalized, which is an indication that the company is a mere conduit or business tool" 1. Characteristics of a corporation include a alimited lifespan b. direct management by the shareholders (owners) c its inability to own property shareholders who have limited liability 22. an odd degree polynomial function with real coefficients. a) Some companies have established this committee in recent years Separate taxable entity (leading to double taxation) 7. Stockholders legally own the corporation, but they manage the corporation indirectly through a board of directors they elect. ii) Where the corporate form is used as a shield behind which injustice is sought to be done by those who have control of it that equity penetrates the corporate veil, A) 141 says that the business and affairs of every corporation shall be managed by the board unless otherwise provided in the code, or in the certificate of incorporation 3) Did not have a rational business purpose (i.e., constituted a waste of corporate assets); By contrast, any investor with the necessary funds can buy stock in a publicly held firm . a) Current liabilities Debt the firm owes that must be paid within one year of the balance sheet date \text{Factory overhead (60\\\% variable)}&25\\ The sale of stock results in government regulation to protect stockholders, the owners of the corporation. iii) Inherent Authority Infers from the position holds that the agent has authority What is the nervous system tissue called? Table 4.1. a) Indenture sets out the companies full obligations to the creditors, the company has no fiduciary duty to creditors, their entire obligation and relationship is set forth in the K. In order to pierce the corporate veil, a P must prove (1) The owner has exercised such control that the corporation has become a mere instrumentality of the owner, which is the real actor; (domination) C) Enforcing a claim Amazon was founded in 1994 and is a world leader in e-commerce. Ability to raise large amounts of capital High ability 5. \text{Selling and administrative expenses (45\\\% variable)}&\underline{26}\\ Mutual agency 6. a. inventory H) Conducting periodic evaluations of individual member and overall board performance Brightstone's accounting system indicates that the total cost per tire is as follows: John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Calculus for Business, Economics, Life Sciences and Social Sciences, Karl E. Byleen, Michael R. Ziegler, Michae Ziegler, Raymond A. Barnett, Elliot Aronson, Robin M. Akert, Samuel R. Sommers, Timothy D. Wilson. Example #2 ? B) Corporations should do a human rights due diligence analysis to examine risks of violations of human rights, i) If you are representing the corporation, then the corporation is your client, not any of the individual directors, officers or shareholders C. The title of the corporation is limited by the death of the owner Which of the following is a characteristic of a limited liability company (LLC)? 1? Means that the relationship between shareholders and managers (directors and officers), will be governed by the corporate statutes and case law of the state where the corporation is incorporated Within 90 days of filing, the initial statement of information is due and costs $25. The communication of thoughts, information, perceptions, and opinions among individuals is a continuous cycle in professional, personal, and business settings. 5) Vote to amend to Articles Government regualtions. Terms in this set (8) One of the main disadvantages of the corporate form is the a. ii) When looking to who can speak on behalf of the corporation you look to the chain of command, California ApproachPseudo Foreign Affairs (to internal affairs), i) California holds the view that if the most important interest in the company are operated in Californiaif 50 percent of the company is run in the statethen California state law will apply, i) Association of two or more people iv) Ratification of Authority Focuses on the principal, if the agent has acted w/out authority but the principal takes no steps to repudiate the authority and accepts the benefits of the authority, than we can say that the principal has ratified the authority, AgencyAction Binding the Corporation Types of Authority Apparent Authority , Perceptions of the third party, not the principal. As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. A corporation is subject to numerous state and federal regulations. Duration of life 3. Amazon. Brightstone pays a selling commission equal to 5\% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. So, the minimum grand total for forming a California corporation is $125. Limited liability. An opportunity cost is next best choice you could have taken.). Legal status 5. Ownership is easily transferred through sale of stock 4. Ownership in a corporation is represented by stock certificates, which is why the owners are called stockholders. \text{Direct materials}&\$56\\ traits. Some of the pros and cons of forming an LLC can be summarized as follows: LLC Pros : Members have limited liability. Now a new generation of influencers has come on the scene. 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered 2) If yes Are all other directors independent of that interested party? The following independent situations require professional judgment for determining when to recognize revenue from the transactions. Question: Chapter 12 21. G) Board members believe the institution exists for personal benefit and engage in self-serving transactions at the institutions expense It must be paid back with interest, A person sets his/her money aside for future income to meet long term goals, individuals purchase part of the corporation. A person who buys stock in a corporation is called a stockholder and receives a stock certificate indicating the number of shares of the company she/he has purchased. In addition, Euro has made the order conditional on receiving European safety certification. We use cookies to ensure that we give you the best experience on our website. Limited Liability of Stockholders. (2) Such control has been used to commit a fraud or other wrong; and 2014 figures for the company are as follows (in thousands): Accounts receivable (net) $279,835; Inventories$536,714; Accounts payable $210,432. a) The ratification only applies to that specific transaction, does not create future authority, 1) The majority of directors should be independent of the company and its management They compliment others when deserved. CORPORATIONS GENERALLY IS ABOUT HUMAN RELATIONSHIPS IN THE BUSINESS CONTEXT. Shareholders who are mutual agents b. b) Outside Auditors a) General partners have comparable liability to the liability they have in a general partnership, but a limited partners liability is limited to the capital she has contributed to the partnership Professional management b. The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. Characteristic Corporations 1. They remember their manners. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. One way to view a business entity is as a separate person. Apple. Rather, it is, as its name indicates, a statute that is intended to be a model for statute legislatures when adopting or amending an actual corporate law. What are the characteristics of a corporation quizlet? i) Directors can be inside or outside - c. $70 per unit Question: Characteristics of a corporation include? ii) Income - Dividends = Retained earnings To be recognized as a corporation, a business must file an application that includes the corporation's articles of incorporation (charter) with the State, pay an incorporation fee, and be approved by the State. Influential leaders have a wide collection of skills, including self-confidence, reliability and honesty. Capital acquisition. \text{Total}&\underline{\$129}\\ a) Assets are values at what is called their "historical cost," which is what the company paid for them, not what they are currently worth, Accounting & Financial Reporting - Current assets , Include cash and other assets which in the normal course of business will be converted into cash in the reasonably near future Money that can be borrowed as you need it, which must be paid back with interest. What are the characteristics of a corporation quizlet? What are the Characteristics of Corporations? the making of a program to manage finances through budgeting and investment. Timeless. iii) Corporate managers who breach their fiduciary duties can be held personally liable for any losses they cause the corporation, i) In order to encourage directors to take risks on behalf of the corporation w/out fear of personal liability for any losses which may ensue, courts have developed this rule The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. b) Anytime you're dealing w/ a wholly owned subsidiary, it's a good idea for the other company to do its due diligence and inquire whether the subsidiary is authorized to act in the way that it is acting w/out approval of its parent company, AgencyAction Binding the Corporation Types of Authority Inherent Authority , Inherent Authority Infers from the position holds that the agent has authority 15 Simple Traits Of A Truly Good Person ii) The derivative suit was developed to alleviate this problem vi) No shareholder liability 4 What are 2 characteristics of a corporation? Which of the following is true with regard to the characteristics of corporations? ii) Board = Agent/Principal Its charter may limit the corporation's life although the corporation may continue if the charter is extended. a) Company, usually with the assistance of independent public accountants, verifies the information it has recorded and the manner in which it has presented the financial accounting, Accounting & Financial Reporting - Bookkeeping, i) Every transaction which a company is involved is included in the company's leger a) Company classifies and analyzes the information and presents it in a set of financial statements A number of characteristics distinguish a corporation from a sole proprietor or partnership. Therefore, corporations may own property, enter into binding contracts, borrow money, sue and be sued, and pay taxes. (10) Intermingling of property between entities D) Setting clear policies and monitoring the institution's operations for compliance Example #8 ? 1 Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. caveat emptor. Ability to raise large capital amounts 2. a) You have been an employee of the company, or a family member has been an executive of the company b) Typically, preferred stockholders will receive a fixed dividend payment although the declaration of a preferred stock dividend is also at the discretion of the board of directors A general corporation may have an unlimited number of stockholders that, due to the separate legal nature of the corporation, are protected from the creditors of the business. Tip. The companys ability to pay its current liabilities. 2) Capital Gains 5 What are the 4 attributes of corporation? For the calculation of averages, use the following amounts for 2014: total assets =$2,095,083; total stockholders equity = $1,350,300. Life span. is the process of starting and managing your own business. b) Action is brought against the corporation for failure to bring an action in law against some third party, most often an alleged careless or unfaithful manager, who is also a defendant in the suit a) Gross negligence is the standard for board of directors Select one: a. 1) Are there members who are interested? Owner authority and control 7. b) Until shares are first sold to stockholders they are authorized, but unissued iii) At-will or definite period $$ Eisenhardt suggests that organizations should have two to seven key goals, or rules, using her vocabulary (Eisenhardt & Sull, 2001).Such goals guide how the firm operates, identify which opportunities to pursue, set priorities, manage timing of actions, and even inform business exit decisions. F) Meetings are characterized by little or no discussion, or board members go out of their way to avoid conflict, resulting in rubber stamping a) Board of directors must recommend the amendment, which must then be approved by the holders of at least a majority of its outstanding stock Google. What are the characteristics of a corporation quizlet? c) Must be comprised entirely of independent directors 2023 Course Hero, Inc. All rights reserved. v) Dissolved by withdrawal of a general partner, i) Legal entity separate from shareholders i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock a) At-will dissolved by any partner withdrawal Prepare the December 31 adjusting entry and the entry on Monday, January 6, when Lovrek pays the payroll. What is the difference between Hardie board and Hardie plank? c) When sold, they are authorized and issued or authorized and outstanding The loan and the interest are repayable in full in November. 1) The corporation (the real party at interest) is a nominal defendant and the plaintiff-shareholder (in reality, her attorney), controls prosecution of the suit How to Market Your Business with Webinars? Government regulation 4. 9) Management and the board of directors should have formal succession plans in place that are reviewed annually What are 2 characteristics of a corporation? \text { Output } & \text { TC } & \text { MC } \\ Ownership of a corporation is held in shares of capital stock, which are transferable units. iv) Default: Member-managed Owner authority and control One vote per share 2. Confident : I am not afraid to ask questions. Ownership and management are vested in the same person. They are honest in relationships. What are 3 characteristics of corporations? Fluctuating demand is another characteristic of B2B markets: a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it. A corporation is not allowed to hold public office or vote, but it does pay income taxes. a) *Current ratio = Current Assets / Current Liabilities* Example #1 Amazon. v) Personal liability How much does it cost to start a California corporation? Consistency. Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. Hard worker 4. Ability to Acquire Capital. A) The corporation is a separate legal person, but can neither sue nor be sued. 1) If they find no irregularities they offer a "clean" opinion that it represents fairly in all material aspects Investors in a corporation need not actively manage the business, as most corporations hire professional managers to operate the business. Are you sure you want to remove #bookConfirmation# Ownership. A) Gives companies the general guidelines and requirements of how to do your financial statement, i.e., things that you have to do when making these reports This statement is true. 1) GAAP (Generally Accepted Accounting Principals): B) Directors are responsible for the shareholders of the corporation. Clothing should always be clean and ironed properly. Descriptions Characteristic 1. Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? Members can assign their economic rights in the LLC. b) Survey the extent to which there are processes set up for the board to act effectively and for the directors to be held accountable Positive character traits can be developed in ourselves. $$ d) Disinterested and independent (has two methods of analysis = duty of loyalty iii) Officers = Agent/Principal iii) BJR creates a presumption that, "in making a business decision, the directors of a corporation acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interest of the company 7) The board should establish a suitable committee structureconsistent with the institution's size and complexitythat encourages open participation by independent directors B) The typical test of unfairness is that the entity has been undercapitalized, where a corporation will be using the corporate form only to avoid liability Duration of life Unlimited 6. Ownership evidence by shares of stock 3. A person with ?good character? Less is more, fewer is better, and simple rules are the common mantra here. A corporation is owned by stockholders C. All shares of a corporation must be held by a single individual D. Each stockholder has the authority to commit the corporation to a binding contract through his actions. C) Last in, last out Method visualizes inventory as being added to and sold from the top of the stack, Accounting & Financial Reporting - Fixed Assets , Sometimes referred to as long-term assets or as property plant and equipment, are assets a firm uses to conduct its operations Characteristics of corporations Legal entity Rights as person and citizen Creature of state Limited liability of shareholders Unrestricted transferability of corporate shares Perpetual existence Centralized management Corporate taxation Express powers: Early in your career, you might exercise authority by being the go-to person on a certain subject within your . 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee What is a relevant cost? Ability to Influence Others. Expert Answer. Can have current assets, fixed assets, and intangible assets Enforcing a claim for breach of fiduciary duty i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers Corporate Authority -- Directors, you are not independent if You are not independent if is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. 1) Analysts typically like a 2:1 ratio, this suggests you have enough cushion to pay your bills as they become due A) This limited liability means that a corporation's creditors can look only to the corporation's assets for payment for their claims No managerial skills needed from stockholders because decisions are made by the Board of Directors. What is the unit product cost using absorption costing? How do I look up my California corporation number? The par value of corporate shares issued represents a corporations legal capital. Corporation acts under its own name rather than in the name of its stockholders. Watch on Forbes: 1. Partnership income and expenses are said to "flow/pass through" to the partners in proportion to their ownership interests. 25,000 & \$ 100,000 & \$ 0.50 \\ Corporations have certain characteristics that are unique to this form of organization. ii) *Compensation Committee* b. setup time - d.$90 per unit. Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. a) Oversees the way senior executives are paid vi) No member liability a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority 100,000 & 275,500 & 3.00 Double taxation of dividends c. Charter d. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. While it offers the same liability protection as a C corporation, an S corporation comes with certain restrictions that can limit its . These 5 qualities make a logo instantly identifiable, and ensure that when customers look at it, they'll connect with your brand. 3) Ability to have influence as to who is put on the ballet as a nominee Thrifty (not wasteful!) c. lead time a) The corporation pays taxes, not individuals (8) Whether the corporations are treated as independent profit centers (big one); 3. Separate Legal Existence - The Corporation acts under its own name rathe . They can exist until the business decides to terminate. Business entities are legal organizations that exist by virtue of state law. The filing fee for Articles of Incorporation is $100. H) Board minutes are poorly kept and contain little information on matters discussed during the meetings or actions taken by the board See Answer The par value of corporate shares issued represents a corporation?s legal capital.