Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation. To find: which characteristic of a corporation is a disadvantage.

Question

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Answer 1

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

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Students have asked these similar questions

No AI The accounting principle that requires matching revenues with related expenses is the:A. Going Concern PrincipleB. Matching PrincipleC. Cost PrincipleD. Full Disclosure Principle

Revenue is recognized in the accounting records when it is:A. CollectedB. EarnedC. DepositedD. Reported

The accounting principle that requires matching revenues with related expenses is the:A. Going Concern PrincipleB. Matching PrincipleC. Cost PrincipleD. Full Disclosure Principle

Answer 2

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

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Answer 3

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

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Answer 4

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

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Answer 5

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

Answer 6

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Conclusion

Hence, the correct answer is option (b).

Answer 7

Chapter 13, Problem 1QC

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To find: which characteristic of a corporation is a disadvantage.

Answer 8

Expert Solution & Answer

Answer to Problem 1QC

(b) Double taxation

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Explanation for correct answer:

A corporation is entitled to double taxation. The corporation is required to pay the taxes based on its net income. In addition, the dividend income that are distributed to the shareholders are also taxable. Hence, this option is correct.

Explanation for incorrect answers:

Option (a) Mutual agency: Mutual agency is an advantage for a corporation. Unlike ,partnership and sole proprietorship, there is no mutual agency in a corporation as there is no mutual agreement between the stockholders’ and the corporation to form a corporation. The stockholders’ cannot bind the business into a contract. In a corporation form of business, the company is not liable for any unethical or immoral activities done by the stockholders. Hence, this option is incorrect.
Option (c) Limited liability: The liability of a corporation is limited and it is an adavantage. It means that the liability of a stockholders is limited only to the extent of their investment amount. They are not personally liable. This is because, a corporation is a separate legal entity. Thus, the corporation is liable to settle all its debts and obligations from the assets available in the corporation. Hence, this option is incorrect.
Option (d) None are disadvanatages: As explained above, since double taxation is the disadvanatage of the corporation out of the given four options, this option is incorrect.

Answer 12

Conclusion

Hence, the correct answer is option (b).

Answer 13

Ch. 13 - Prob. 1QC Ch. 13 - Prob. 2QC Ch. 13 - Suppose Value Home and Garden Imports issued...Ch. 13 - Prob. 4QC Ch. 13 - Prob. 5QC Ch. 13 - Assume that a company paid 6 per share to purchase...Ch. 13 - Prob. 7QC Ch. 13 - A small stock dividend a. decreases common stock....Ch. 13 - Prob. 9QC Ch. 13 - Jackson Health Foods has 8,000 shares of 2 par...

Answer to Problem 1QC

Explanation of Solution

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