B) Directors are responsible for the shareholders of the corporation. 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" People pool their money together to buy a variety of stocks. Advantage of Corporations. Memorable. B) Internal Affairs Doctrine 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 (adsbygoogle = window.adsbygoogle || []).push({}); Copyright 2023 Find what come to your mind. franchise. Corporations are created under state or federal laws and have many of the same legal rights as a person . ii) Formed by partnership agreement iv) Default: Member-managed Ability to raise large amounts of capital High ability 5. The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. 10) The board and board committees should conduct a rigorous self-assessment at least every two years, Key Responsibilities of Effective Board Members, A) Providing the institution with effective, competent management As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. This gives a corporation a larger pool of resources because it is not limited to the resources of a small number of individuals. 2) Even if the corporation does well, the holder of the debt security only receives a fixed payment bookmarked pages associated with this title. See Answer What are 2 characteristics of a corporation? a) Company records in its books information concerning every transaction in which it's involved Privately held companies may have some restrictions on the transfer of stock. C) External affairs of a corporation are generally governed by the law of the place where the activities occur and by federal and state regulatory statutes rather than by the place of incorporation They compliment others when deserved. joint venture. So let?s get into a list of character traits ? a) Unless the P can rebut the presumption, a court will evaluate the substantive merits of the action Google. a) Partnership is not a taxpaying entity. Promoting from within cuts recruitment and training costs. ii) Income - Dividends = Retained earnings Stakeholder theory of the modern corporation. Often secured by property. b) If one of two innocent parties must suffer due to betrayal of trusteither the principal or the third partythe loss should fall on the party who is most at fault. Flexibility of transferable ownership. Microsoft. They are polite. 25,000 & \$ 100,000 & \$ 0.50 \\ Assume December 31 falls on a Tuesday, so Lovreks employees have worked 2 days without being paid. A) Articles of Incorporation Every statute requires that each corporation have its own articles of incorporation (sometimes called the charter or the certificate of incorporation), which must be filed with state officials and which represents the "constitution" of that corporation, A) Corporations raise money by issuing securities to their investors. 1) Here, analysts typically like a 1:1 ratio, suggesting you have as much equity as you owe debt, Accounting & Financial Reporting - Income Statement, A) Within a fiscal year the money that a company earns and the expenses it incurs and the result is the net income or net profit, and at the end of the fiscal year the net income is carried over to the total equity line on the balance sheet You'll get a detailed solution from a subject matter expert that helps you learn core concepts. In a corporation, one stockholder cannot jeopardize other stockholders through poor decision making. A corporation can sell shares to new investors, and larger entities can issue bonds to obtain a significant amount of debt financing. 3) Accounts Receivable = amounts not yet collected from customers to whom goods have been shipped or services delivered a) *Current ratio = Current Assets / Current Liabilities* A) Closed Corporation Held by a small group of people and not publicly traded. Separate Legal Existence Generally Accepted Accounting Principles Which of the following is a characteristic of a corporation? What are 2 characteristics of a corporation? vi) No member liability Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. What does a universal WiFi Internet adapter do? ii) No one factor is decisive often referred to as a closely held corporation, usually has only a few stockholders, and does not offer its stock for sale to the general public. According to Lance Wilkins, founder of Call Outdoors, passionate leaders are the backbone of thriving businesses. B) Working with management to promote ethical, positive corporate culture 1) A principal advantage of the corporate form is that a shareholders potential loss is limited to the amount that she invested in the enterprise. ii) Under this rule, courts will defer to the judgment of the board of directors, absent highly unusual circumstances, such as conflict of interest or gross inattention The filing fee for Articles of Incorporation is $100. 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. i) The relationship among what are described as directors, (the officers whom have the day-to-day operations), the shareholders and employeeswhat their rights are with one another Owner authority and control 7. Government regulation 4. Tip. (9) Payment of guarantee of the corporation's debt by the dominating entity; and 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 What are some of the characteristics of a corporation? Removing #book# Public companies are governed under rules of the Securities and Exchange Commission ( " the SEC " ). A closely held business has only a few shareholders. ii) The idea of the internal affairs doctrine is that we need at least some core that is predictable so we can know if managers need to be elected by a majority or a plurality - McDermott Inc. v. Lewis. c) Any recovery, either through judgment or settlement, belongs to the corporation for whose benefits the suit has been brought, Rights of the Corporation under the First Amendment, A) Corporations may not use treasury funds as expenditures to support political candidates Positive character traits can be developed in ourselves. (2) Such control has been used to commit a fraud or other wrong; and iv) Managers = Agent, AgencyAction Binding the Corporation Types of Authority, i) Actual Authority Principal specifies expressly what the agent is authorized to do, through words or conduct Calculate ratios for 2015 and 2016 to determine the following for Under Armour: Limited to their investment. Usually represents a very large portion of the assets of firms engaged in financing businesses If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. a) It is an action in equity brought by a shareholder on behalf of the corporation A company with fewer than 100 employees is generally considered a small-sized business, while one with between 100 and 1,500 employees is a medium-sized business. Capital acquisition. Owner liability 8. a) Is that third party reasonable in assuming that the agent has the authority to bind the principal? b) To rebut the presumption, P must show What is a relevant cost? 1? Study online at quizlet/_4on6v. ii) Debt Securities generally are the least risky and have the lowest expected return. Question: Characteristics of a corporation include? 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. a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. to put money to use by buying a part of something, so that you may have profitable returns such as interest, or income. Brightstone estimates that this certification would cost$165,000. 3) Did not have a rational business purpose (i.e., constituted a waste of corporate assets); 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. Clever : I can juggle multiple tasks. ii) *Compensation Committee* OutputTCMC25,000$100,000$0.5050,000150,0001.0075,000187,5002.50100,000275,5003.00\begin{array}{rrr} What are 2 characteristics of a corporation? B) In order for the board to act, it must iii) General partners manage and have personal liability iii) *Nominating Committee* 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 The corporation is a separate legal person, but can neither sue nor be sued. Legal status 5. Characteristic Corporations 1. Published on 22 Oct 2018. b. Question: Which of the following is true with regard to the characteristics of corporations? a) At-will dissolved by any partner withdrawal The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. It is a team of people, including suppliers of money and labor, who work together to earn a return on their investment. 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. 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 1) GAAP (Generally Accepted Accounting Principals): (7) Whether the dealing between the entities are at arms length; Some of the main characteristics of small businesses are: They can be further categorized. Relevant. The limited liability and ease of transferring ownership rights makes it easier for a corporation to acquire capital by selling stock, and the size of the corporation allows it to issue bonds based on its name. 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 3. ii) The derivative suit was developed to alleviate this problem A company shareholder is personally liable for the debt of the corporation. all the positive, good character traits, at least: Strong (mentally!) Characte Tip. It can be easier for a corporation to acquire debt and equity, since it is not constrained by the financial resources of a few owners. These characteristics are noted below. caveat venditor. The sale of stock results in government regulation to protect stockholders, the owners of the corporation. The loan and the interest are repayable in full in November. Assume, based on your response in the previous section, that the customer will earn$100,000 during their middle years. 8 Which is a disadvantage of a corporate structure? What are the Characteristics of Corporations? i) Accrual method says that what we want to do is determine when you are entitled to receive revenue and when we want to record that during that period b) Shareholders, particularly in closely held corporations, may be reluctant to approve a board resolution to issue more shares out of the fear that those additional shares will dilute their voting power Which is characteristic of a limited liability company ( LLC )? i) A non-shareholder defendant may be, "in reality" the equitable owner of a corporation where the non-shareholder defendant "exercises considerable authority over the corporation to the point of completely disregarding the corporate form and acting as though its assets are his alone to manage and control", Piercing the Corporate Veil -- Parent-Subsidiary Corporation, A) *Alter Ego Doctrine* Allows the imposition of liability on a corporation for the acts of another corporation when the subject corporation is organized or operated as a mere tool or business conduit What will she spend in each stage of her life? Clothing should always be clean and ironed properly. These characteristics are noted below. 1) Labor laws that govern employees; environmental law; etc. Corporation acts under its own name rather than in the name of its stockholders. Once a public corporation sells its initial offering of stock, it is not part of any subsequent transfers except as a record keeper of share ownership. Organization costs, including legal fees, underwriters' fees for stock and bond issues, and incorporation fees, are recorded as an intangible asset and amortized over a period of time not to exceed 40 years. Ability to Influence Others. Latin for "let the buyer beware"; buyers need to know what they are purchasing, whether it has a warranty, etc. Example #7 ? The board, in turn, formulates operating policies and also selects officers to execute policy and to perform daily management functions. CliffsNotes study guides are written by real teachers and professors, so no matter what you're studying, CliffsNotes can ease your homework headaches and help you score high on exams. (credit). Can adapt to changes Industrial businesses Dividends. Two key characteristics of a C-Corporation are: it provides limited liability to the owners/shareholders; and, unlike an S-Corp, it is not a flow-through entity. Tip. Who is the most powerful person in a corporation? Is Mutual Agency a characteristic of a corporation? 2023 Course Hero, Inc. All rights reserved. Money borrowed against a home or land. 3 What are 3 characteristics of corporations? What are the characteristics of a corporation quizlet? is a business owned by two or more people who share its risks and rewards. Ambitious 5. \text{Direct materials}&\$56\\ I) Ensuring and maintaining the board's independence, Red Flags of Deficiency in Governance to Watch For, A) A strong or dominant CEO "runs the show," soliciting little or no input from others and not tolerating the opposing view Examine these ideal beliefs and significance weights, and then create a verbal description (i.e., concept) of a new brand for these items that would satisfy this student's needs. 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 What is an example of a business that would have a high inventory turnover? Apple. \end{array} is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. In a corporation, one stockholder can not jeopardize other stockholders through decision... 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