ADM 1340 Lecture Notes - Lecture 10: Legal Personality, Share Capital, Issued Shares

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23 Jul 2015

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ADM 1340 Full Course Notes

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Adm1340 - lecture 10 - reporting and analyzing shareholders" equity. A corporation is a legal entity that is separate and distinct from its owners, known as shareholders. A corporation can be public or private. Public corporation has many shareholders and its shares are publicly traded and held. Private corporation has only a few shareholders and its shares are closely held and not traded. The corporation acts under its own name rather than the name if its shareholders. The liability of shareholders is limited to their investment in the shares of the corporation. Shareholders do not have to pay for the company"s liabilities out of their personal assets. Shareholders may lose the amount that they have invested , but they will not lose more than their investment. The transfer of ownership rights among shareholders has no effect on a corporation"s assets, liabilities, or shareholders" equity. It is easy for a corporation to obtain capital by issuing shares.

Related Questions

QUESTION 8

Title VII of the Civil Rights Act prevents discrimination in:

	a.	hiring.
	b.	demotion.
	c.	fringe benefits.
	d.	All of the above are covered by the Civil Rights Act.

3.572 points

QUESTION 9

Which of the following is not a method for forming a partnership?

	a.	by transfer
	b.	by estoppel
	c.	by implication
	d.	by agreement

3.572 points

QUESTION 10

Which of the following job interview questions would be a violation of Title VII?

	a.	Why did you leave your previous employment?
	b.	Do you have reliable child-care arrangements?
	c.	Would you be able to travel two days per week?
	d.	None of the above is a violation.

3.572 points

QUESTION 11

In which of the following forms of doing business does the death of one of the owners cause dissolution?

	a.	nonprofit corporation
	b.	closely-held corporation
	c.	partnership
	d.	S Corporation
	e.	C Corporation

3.572 points

QUESTION 12

The Family and Medical Leave Act:

	a.	applies to companies with 20 or more employees.
	b.	requires applicable companies to provide 12 weeks of unpaid leave for family medical reasons.
	c.	allows an employee to take time off to care for a spouse, child, parent or parent-in-law.
	d.	All of the above are true for the FMLA.

3.572 points

QUESTION 13

Dissolution:

	a.	is the same as termination.
	b.	can result from a limited partner leaving the partnership.
	c.	can result from the death of a partner.
	d.	all of the above

3.572 points

QUESTION 14

A partnership is a:

	a.	tax reporting entity.
	b.	tax reporting and tax paying entity.
	c.	tax paying entity.
	d.	neither a tax reporting nor a tax paying entity.

3.572 points

QUESTION 15

A Subchapter S or S Corporation is:

	a.	a special class of close corporation under the MBCA.
	b.	an IRS tax treatment option for corporations owned by a limited number of shareholders.
	c.	a not-for-profit corporation.
	d.	none of the above

3.572 points

QUESTION 16

Seniority systems:

	a.	were outlawed under Title VII.
	b.	are violations of the Age Discrimination Act.
	c.	can be valid if they are not used to perpetuate past discrimination.
	d.	none of the above

3.572 points

QUESTION 17

A corporation is said to have double taxation. What is meant by this statement?

	a.	The corporation pays double the tax rate of individuals.
	b.	The corporation pays taxes on its income and its shareholders pay taxes on their dividends from the corporation.
	c.	both a and b
	d.	none of the above

turquoisedeer344

Regulations are

	A. equal in authorityto legislation if statutory
	B. equal in authorityto legislation
	C. presumed to bevalid and to have almost the same weight as the IRC
	D. equal in authorityto legislation if interpretative

2) Which of the followingstatements regarding proposed regulations is not correct?

	A. Practitioners andother interested parties may comment on proposed regulations.
	B. Proposedregulations expire after 3 years.
	C. Proposed andtemporary regulations are generally issued simultaneously.
	D. Proposedregulations do not provide any insight into the IRS'sinterpretation of the tax law.

3) Identify which of thefollowing statements is false.

	A. Members from boththe House and the Senate are on the Conference Committee.
	B. When tax advisorsspeak of the tax law, they usually have in mind just the InternalRevenue Code.
	C. Records ofcommittee hearings are helpful in determining Congressionalintent.
	D. All arefalse.

4) Which of the followingstatements about a partnership is true?

	A. Partners are taxedon distributions from a partnership.
	B. A partnership is ataxpaying entity.
	C. Partners are taxedon their allocable share of income whether it is distributed ornot.
	D. Partners areconsidered employees of the partnership.

5) Which of the followingstatements is incorrect?

	A. The number of Scorporation shareholders is unlimited.
	B. S corporationsmust allocate income and expenses to their shareholders based ontheir proportionate ownership interest.
	C. S corporationincome is taxed to shareholders when earned.
	D. S corporationlosses can offset shareholder income from other sources.

6) Which of the followingstatements is incorrect?

	A. Limited partners'liability for partnership debt is limited to their amount ofinvestment.
	B. In a generalpartnership, all partners have unlimited liability for partnershipdebts.
	C. In a limitedpartnership, all partners participate in managerialdecision-making.
	D. All of thestatements are correct.

7) Three members form an LLC inthe current year. Which of the following statements is incorrect?

	A. The LLC can electto have its default classification ignored.
	B. The LLC's defaultclassification under the check-the-box rules is as apartnership.
	C. The LLC can electto be taxed as a C corporation with no special taxconsequences.
	D. If the LLC electsto use its default classification, it can elect to change itsstatus to being taxed as a C corporation beginning with the thirdtax year after the initial classification.

8) Identify which of thefollowing statements is false.

	A. Under thecheck-the-box regulations, an LLC that has only two members(owners) must be taxed as a partnership.
	B. The check-the-boxregulations permit an LLC to be taxed as a C corporation.
	C. A business neednot be incorporated under state or federal law to be taxed as acorporation.
	D. Once an electionis made to change its classification, an entity cannot change againfor 60 months.

9) Identify which of thefollowing statements is true.

	A. The check-the-boxregulations permit an LLC to be taxed as a C corporation.
	B. Under thecheck-the-box regulations, an LLC that has only two members(owners) default classification is as a partnership.
	C. Once an electionis made to change its classification, an entity cannot change againfor 60 months.
	D. All of thestatements are true.

10) For Sec. 351 purposes theterm property does not include

	A. accountsreceivable
	B. cash
	C. inventory
	D. servicesrendered

11) Identify which of thefollowing statements is true.

	A. The exchange ofstock for services rendered is not a taxable transaction.
	B. The repeal of Sec.351 would result in more existing businesses beingincorporated.
	C. Section 351 wasenacted to allow taxpayers to incorporate without incurring adversetax consequences.
	D. All arefalse.

12) Barry, Dan, and Edithtogether form a new corporation; Barry and Dan each contributeproperty in exchange for stock. Within 2 weeks after the formation,the corporation issues additional stock to Edith in exchange forproperty. Barry and Dan each hold 10,000 shares and Edith willreceive 9,000 shares. Which transactions will qualify fornonrecognition?

	A. Only the secondtransaction will qualify for nonrecognition.
	B. Only the firsttransaction will qualify for nonrecognition.
	C. Because of thestep transaction doctrine neither transaction will qualify.
	D. Both transactionswill qualify under Sec. 351 if they are part of the same plan ofincorporation.

peararmadillo631

Match the items below by entering the appropriate answer letter choice from the column provided on the right.

	1.Net income retained in the corporation.
	2. Creditors cannot go after stockholderâs personal assets to satisfy their claims.
	3. Retained earnings currently unavailable for dividends.
	4. A corporationâs own stock that has been reacquired by the corporation.
	5. Responsible to stockholders for corporate activity.
	6. The amount assigned to each share of stock in the corporate charter.
.	7. The date the board of directors formally declares the dividend and announces it to stockholders.
	8. A debit balance in retained earnings.
	9. Capital contributed by stockholders.
	10. The death of a stockholder or employee does not affect the going concern of the corporation.
	11. The company determines ownership of the outstanding shares for dividend purposes.
	12. Unit of ownership in a corporation.
-	13. This type of dividend for the stockholder results in more shares of stock, but no change in ownership interest.
	14. The issuance of additional shares of stock to stockholders accompanied by a reduction in the par or stated value per share. This stock transaction does not require an accounting entry.
	15. The acts of the owners (stockholders) do not bind the corporation.

A.	Par value
B.	Record date
C.	Retained Earnings
D.	Indefinite life
E.	Treasury stock
F.	Stock split
G.	Declaration date
H.	Retained Earnings restrictions
I.	Stock dividend
J.	Capital stock
K.	Deficit
L.	Paid-in capital
M.	Cash dividend
N.	Board of directors
O.	Separate legal entity
P.	Limited liability

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ADM 1340 Lecture Notes - Lecture 10: Legal Personality, Share Capital, Issued Shares

ADM 1340 Full Course Notes

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