Corporations: Organization and Capital Stock Transactions

Andrea has prepared the following list of statements about corporations

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

Instructions

Identify each statement as true or false. if false, indicates how to correct the statement

Answer

1. True
2. True
3. False because Most of the largest U.S. corporation are publicly held corporations.
4. True
5. False because The net income of a corporation is taxed as a separate entity.
6. False because Creditors have no legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.
7. False because The transfer of stock from one owner to another does not requires the approval of either the corporation or other stockholders.
8. False because The board of directors manage the corporation for the stockholders, who legally own the corporation.
9. True
10. False because Corporations are subject to numerous state and federal regulations than partnerships or proprietorships