Test #1 Characteristics Of Corporations Flashcards
What is a separate legal existence?
A corporation described as an “artificial being, intangible, and existing only in contemplation of law”
What is continuous life?
A corporations ability to continue as a going concern Is unaffected by resignation, death, or disability of an officer, employee, or stockholder
It is a distinct legal entity
What is the ability to acquire capital?
When an investor may find purchasing a stock in a firm due to limited liability and easy transferability of stock shares.
A large number of people can purchase stock with relatively minimal financial investments
What is transferability?
A corporations capital stock shares that are certificates of ownership.
A shareholders interest in a corporation can be sold in whole or in part by only selling their stock
What is limited liability?
When creditors use corporate assets to settle their claims since corporations are distinct legal entities
The losses incurred by stockholders are often restricted to the amount they initially invested in the company.
What are government regulations?
Numerous state and federal restrictions that apply to corporations
State regulations typically specify the prerequisites for issuing stock, permissible earrings distributions to stockholders, appropriate techniques for retiring and buying back stock.
What is taxation?
Corporate entities are subject to both federal and state income taxes on their earnings as legal persons
The act of levying or imposing a tax by a taxing authority
