Chapter (13). Corporation

What is a corporation?

• A government organization

• An entity separate and distinct from its owners

• A partnership between multiple owners

• A sole proprietorship

which one of the following characteristics distinguish corporations from proprietorships and partnerships?

• No Ownership Rights

• Unlimited Liability of Shareholders

• Inability to Acquire Capital

• Limited Liability of Shareholders

What is the advantage of a corporation having a separate legal existence?

• Corporation is owned by its shareholders

• Corporation is not recognized by the law

• Corporation has no legal standing

• Corporation acts under its own name rather than in the name of its shareholders

What is the disadvantage of a corporation's separation of ownership and management?

• Reduces an owner's ability to actively manage the company

• Owners have unlimited liability

• Owners have limited liability

• Shareholders have full control over management decisions

What is the primary source of equity for a corporation?

• Preference Shares

• Share Premium

• Retained Earnings

• Share Capital

What is the purpose of treasury shares for a corporation?

• To reissue the shares to officers and employees under bonus and share compensation plans

• To reduce the number of outstanding shares

• To pay off creditors

• To increase the company's debt