Corporation Accounting Quiz: Test Your Knowledge

Which of the following is a characteristic of a corporation?

What is a disadvantage of a corporation compared to other forms of organization?

Why might a large publicly-traded company have different advantages compared to a small private company?

What is a major characteristic that distinguishes a public corporation from a private corporation?

What is the primary advantage of a corporation's separate legal existence?

Characteristics of a Corporation

A characteristic of a corporation is its separate legal existence, which means it is a separate entity from its owners.

Disadvantages of a Corporation

A disadvantage of a corporation compared to other forms of organization is double taxation, where the corporation's profits are taxed, and then the shareholders' dividends are also taxed.

Advantages of Large Publicly-Traded Companies

Large publicly-traded companies may have different advantages compared to small private companies, such as access to more capital through the sale of stock, and greater liquidity for investors.

Public vs. Private Corporations

A major characteristic that distinguishes a public corporation from a private corporation is public ownership, where a public corporation's stock is available for the general public to buy and sell, whereas a private corporation's stock is not publicly traded.

Advantages of Separate Legal Existence

The primary advantage of a corporation's separate legal existence is limited liability, which means that the owners' (shareholders') personal assets are protected in case the corporation is sued or incurs debt.

Test your knowledge of financial accounting with this quiz covering Chapter 11 of "Financial Accounting: Tools for Business Decision-Making." Challenge yourself to identify and discuss the major characteristics of a corporation, record share transactions, and prepare entries related to shareholders' equity.