Question

Andrea has prepared the following list of statements about corporations. Identify whether each statement is true or false. 1. A corporation is an entity separate and distinct from its owners. select an option 2. As a legal entity, a corporation has most of the rights and privileges of a person. select an option 3. Most of the largest U.S. corporations are privately held corporations. select an option 4. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued. select an option 5. The net income of a corporation is not taxed as a separate entity. select an option 6. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. select an option 7. The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders. select an option 8. The board of directors of a corporation legally owns the corporation. select an option 9. The chief accounting officer of a corporation is the controller. select an option 10. Corporations are subject to fewer state and federal regulations than partnerships or proprietorships.

Answer 1

1. TRUE.

A corporation truly is separate from its owners.

2. TRUE.

As a result of this separation, it has most of the rights and privileges of a person.

3. FALSE.

Most of the largest American companies are public held corporations which is how they got the resources needed for expansion.

4. TRUE.

As corporations are separate entities, they can do all these things.

5. FALSE.

The net income of a corporation is taxed as separate from the income of the owners.

6. FALSE.

Creditors only have a legal claim to the assets of the corporation and not its owners because they are separate entities.

7. FALSE.

The transfer of stock requires the permission of the stockholder selling the stock and the party buying. This is a two party transaction that does not require company approval.

8. FALSE.

The shareholders own the corporation. The Board of Directors simply represent the shareholders.

9. TRUE.

The Chief Accounting Officer truly is the controller.

10 . FALSE.

Corporations are subject to more regulations than partnerships and proprietorships.