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 \text{Direct labor}&22\\ 1) Dilution Reduction in the economic return of your shares and the voting power and control you can exert by owning those shares, The most basic of all corporate securities A truly good person will compliment when deserved and offer constructive criticism when warranted. Disadvantage of Corporations. Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. B) Business Judgment Rule B) Cash flow just makes certain type of adjustments as to which components of the statement reflect where cash is going in and going out i) Shareholders are not authorized to act directly for the corporation, and thus cannot enforce a corporate claim against the managers. View the full answer. What are the Characteristics of Corporations? These characteristics are noted below. 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. D) Meeting materials are sent in advance, but board members do little or no preparation b. iii) Third "Audit stage" is a company that is registered by a state and operates apart from its owners. Bridgewater Corp. offered holders of its 1,000 convertible bonds a premium of $160 per bond to induce conversion into shares of its common stock. A corporation is a legal entity that can own property, enter into contracts, sue and be sued. They call their parents regularly. Key Characteristics of Different Taxes . 2) Was not made in good faith; Hard worker 4. This statement is true. A) The corporation is a separate legal person, but can neither sue nor be sued. If you continue to use this site we will assume that you are happy with it. i) If you have a good cash flow from operating activities you have a health business 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. a) Some companies have established this committee in recent years c) At least three of them have to be financially literate An opportunity cost is next best choice you could have taken.). 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. The filing fee for Articles of Incorporation is $100. Positive character traits can be developed in ourselves. 1) Cash = money in the till and money in demand deposits in the bank Separate entity. a) Company records in its books information concerning every transaction in which it's involved 3M. --owned by shareholders. a) Company classifies and analyzes the information and presents it in a set of financial statements Professional management. (credit). What are 2 characteristics of a corporation? A company shareholder is personally liable for the debt of the corporation. Owner liability 8. Some images used in this set are licensed under the Creative Commons through Flickr.com.Click to see the original works with their full license. One of the disadvantages of a corporate structure is the corporation pays its own tax burden on net income and then the stockholders pay income tax on the dividends they receive. Find the total monthly expenses. Business Law in Canada, 11e (Yates) Chapter 11 Corporations. i) Factors What are the 4 attributes of corporation? i) Revenue - Cost = Income i) Directors can be inside or outside Determine another student's ideal beliefs and the significance of those beliefs for a spa. Ability to Acquire Capital. Brightstone estimates that this certification would cost$165,000. Life span. vii) Can elect tax treatment as partnership Less Is More. Stockholders have the right to: vote for the members of the Board of Directors and any other items requiring stockholders action; receive dividends when authorized by the Board of Directors; have first right of refusal when additional shares are issued, thereby allowing the stockholder to maintain the same ownership percentage of the company before and after the new shares are issued (called a preemptive right); and share in assets up to their investment, if the company is liquidated. The owners of the business entity are representatives of the entity. Assume the company does not use reversing entries. Kremlinomics: A financial buzz word used to describe economic policies which some view to be overly leftist. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. A shareholder's liability is limited to the amount he or she paid for the shares. Since the corporation is a separate legal entity, the owners do not have the power to bind the corporation to business contracts. Consistency. b) Responsible for establishing the terms of any stock options executives may get as compensation maintaining employment process training and development staff, Latin for "let the seller beware"; sellers need to take responsibility for the products they sell, process by which people attempt to preserve, protect, and manage resources, one who selects, purchases, uses, or disposes of services or goods, a movement to pass laws that protect the consumer from unsafe and unfair business practices, basic rights of consumers to safety, to be heard, to choose, to be informed, to have problems corrected, to consumer education, and to service, business practices that are deliberately misleading, the legal responsibility a manufacturer has to make a safe product, collecting items for processing so that they might be used again, when someone advertises a product at a low price to lure consumers into the store, then tries to get them to switch to a more expensive item, a card allowing someone to make a purchase on borrowed money. In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. What are some of the characteristics of a corporation? ii) Formed by operating agreement and filing articles of organization i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock A company shareholder is personally liable for the debt of the corporation. ii) Income - Dividends = Retained earnings B) With contract creditors, plaintiffs will have had every opportunity to get personal guarantees in the contracts, or to protect themselves in the event that funds were not available; whereas, with a tort, it kind of just happens and you can't prepare for it 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. b) Limited partners have no voice in the active management of the partnership (10) Intermingling of property between entities service business. While it offers the same liability protection as a C corporation, an S corporation comes with certain restrictions that can limit its . The investors vote on the Board of Directors who are responsible for hiring management. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. Certain industries, such as banks, financial institutions, and gaming, are also subject to regulations from other governmental agencies. 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. 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. Limited liability 5. 1) Labor laws that govern employees; environmental law; etc. The filing fee for Articles of Incorporation is $100. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Example #4 ? Which is a disadvantage of a corporate structure? 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 Assertive (takes the initiative in a good way!) Is Mutual Agency a characteristic of a corporation? (6) The degree of discretion shown by the allegedly dominant corporation; Expert Answer. Humans Resources. Capital acquisition. Microsoft. a) Presentation of the corporations financial statements fairly and accurately reflects the financial position of the company Output25,00050,00075,000100,000TC$100,000150,000187,500275,500MC$0.501.002.503.00. 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 1) Analysts typically like a 2:1 ratio, this suggests you have enough cushion to pay your bills as they become due An LLC?s life is terminated at any member?s choice or death Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. Domino?s Pizza. 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 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 a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority a) It is an action in equity brought by a shareholder on behalf of the corporation They remember their manners. A corporation is a legal entity that is separate and distinct from its owners. B) Board members don't hold the CEO or management team accountable for actions or inactions The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. (9) Payment of guarantee of the corporation's debt by the dominating entity; and The companys inventory turnover and days inventory outstanding (DIO); accounts receivable turnover and days sales outstanding (DSO), accounts payable turnover and days payable outstanding (DPO), and the number of days in its cash conversion cycle. a) Oversees the way senior executives are paid vi) Majority decision making, i) Partnership w/ general & limited partners A corporation is treated as a "person" with most of the rights and obligations of a real person. $50 per unit 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. A corporation is a legal entity, meaning it is a separate entity from its owners who are called stockholders. a) You have been an employee of the company, or a family member has been an executive of the company ii) Unlike shareholders, board members may not vote by proxy, A) Regular Meeting Scheduled, can be held without notice, and typically at least quarterly meetings See Answer Limited Liability of Stockholders. Assume that the real interest rate, predicted inflation, and inflation are all equal to zero. A. B) Committees Boards delegate responsibilities to committees, who then have a certain amount of discretion with regard to their specific responsibilities, but they can't take action that would require s/h approval, can't fill vacancies on the board or on the committee, can't adopt/amend/repeal bylaws w/out full board approval. C) Board members are accustomed to receiving information packets at the beginning of a meeting, rather than in advance Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Self-Managing It's hard to manage others effectively if you. A number of characteristics distinguish a corporation from a sole proprietor or partnership. Some persons may be employed to help the owner but ultimate control lies with him. 6) The board should adopt appropriate policies and procedures to manage processes, establish guidelines, and determine appropriate risk thresholds for all significant products and services Which is a characteristic of a generally accepted accounting principles? ii) *Compensation Committee* Double taxation of dividends c. Charter d. Corporate managment. The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. ". How long does it take for braces to close gaps. Government regualtions. We use cookies to ensure that we give you the best experience on our website. 2) Marketable Securities = securities that can be readily sold and converted into cash and are not held for current operations A corporation is subject to numerous state and federal regulations. 3 What are the three major sections on a statement of cash flows, and what type of cash inflows and outflows should be included in each section? A) The duty to provide the faith and confidence and the duty of care, loyalty and obedience What are 3 characteristics of corporations? Exxon Mobil. a) At-will dissolved by any partner withdrawal v) Manager-managed: managers act for LLC; members vote on major matters In general, the chief executive officer (CEO) is considered the highest-ranking officer in a company, while the president is second in charge. The par value of corporate shares issued represents a corporations legal capital. What are 2 characteristics of a corporation? 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 Descriptions High because buying stock is attractive Characteristic 1. Creditors are limited to corporate assets for satisfaction of their claims. How does the CPI differ from the Myers-Briggs test? b) Until shares are first sold to stockholders they are authorized, but unissued 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 vi) No shareholder liability Limited to their investment. 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