Question

Identify which of the following statements are true for the corporate form of organization. 1. Ownership rights cannot be easily transferred.2. Owners have unlimited liability for corporate debts.3. Capital is more easily accumulated than with most other forms of organization.4. Corporate income that is distributed to shareholders is usually taxed twice.5. It is a separate legal entity.6. It has a limited life.7. Owners are not agents of the corporation.

Answer 1

These are true:

3.Capital is more easily accumulated than with most other forms of organization.

4. Corporate income that is distributed to shareholders is usually taxed twice.

5. It is a separate legal entity.

7. Owners are not agents of the corporation.

Step-by-step explanation:

A corporation is a legal business that can exchange ownership of a company or ownership of stock through shares. Thus corporation simply means a group of people who come together to form a legal business entity for the purpose of pursing a goal of generating the highest income or net returns for the shareholders. A corporation whether privately or publicly owned has investors and operates in the best interest of the investors. It also has managers and directors serving as agents of the organization.

There are advantages and disadvantages of corporate form of organization. First of all a corporate organization's ownership is easily transferable form one person to another providing easy liquidity to stockholders which enables them to easily enter or exit the corporation.

Secondly, the existence or life of a corporate organization is perpetual and unlimited. It exists even after the owners resign or die. It does not cease to exist except in the event that a corporation is acquired or merged with another then it ceases to exist or a corporation may may fail and cease operations. Another advantage of a corporate organization is that it has limited liability for stockholders if the business fails but the stockholders are not liable for the debts and losses of the organization beyond the amount they invested.

Corporate organizations also have disadvantages. These organizations are taxable entities and the corporate income is taxed twice. Thereby sharing part or larger sum of its income to with government institutions. Also corporate organizations have the problem of excessive tax fillings which requires a lot of paper work depending on the type of income and taxes to be paid.

Answer 2

1.Owners are not agents of the corporation- True Managers and directors are the agents of the owners of the corporation. What owners do is not always on behalf of the corporation.

2. It is a separate legal entity.- True Corporate enjoy separate existence. Their assets and liabilities are different from that of their owners.

3. It has a limited life.- False Corporations have unlimite life. They continue to function even after the death of their owners.

4. Capital is more easily accumulated than with most other forms of organization.- True If a corporation needs capital, it cal raise money by issuing shares in the open market. People invest if the prospects are good and the company can gather more funds whenever required. It is also easier for a corporation to acquire loans.

5. Corporate income that is distributed to shareholders is usually taxed twice- True First the Income of the company is taxed which in a way..