Question

Which of the following is true for a corporation (not an S-corporation)?

a. A corporation is legally obligated to pay preferred stock dividends yearly.
b. A corporation can only issue common stock for cash.
c. A corporation may issue common stock or preferred stock, but not both.
d. Income earned by a corporation is subject to federal income tax.

Answer 1

A corporation is a business that is owned by shareholders and has limited liability for the company's debt but shares in its profits and losses. Corporations may be private or public and may raise funds by selling stock or issuing bonds. The income earned by a corporation is subject to federal income tax.

Step-by-step explanation:

A corporation is a business that is owned by shareholders and has limited liability for the company's debt but shares in its profits and losses. Corporations may be private or public, and may or may not have publicly traded stock. They may raise funds by selling stock or issuing bonds.

Regarding the given options, the correct answer is d. Income earned by a corporation is subject to federal income tax. Corporations are subject to federal income tax on their earnings. They may also be obligated to pay preferred stock dividends yearly, but this is not a universal requirement for all corporations. Additionally, corporations can issue both common and preferred stock, and they can raise funds by selling stock or issuing bonds, not just for cash.