Question

In: Accounting

(1) A privately held corporation has a limited life because it is tied to the physical...

(1) A privately held corporation has a limited life because it is tied to the physical lives of its owners.

True or False

(2) A corporation is a legal entity separate from its owners.

True or False

(3) Discuss the differences between common and preferred shares.

(4)

Buying shares in a corporation is attractive to investors because

Multiple Choice

(A) corporation has unlimited life.

(B) All of these answers are correct.

(C) Shareholders are not agents of the corporation.

(D) Shareholders are not liable for the corporation's actions and debts.

(E) Shares are easily transferred.

Solutions

Expert Solution

(1) A privately held corporation has a limited life because it is tied to the physical lives of its owners.

Answer: - False

Reason: - Corporations, privately or publicly have separate legality and identity than its owners.

(2) A corporation is a legal entity separate from its owners.

Answer: - True

Reason: - Corporations, privately or publicly have separate legality and identity than its owners.

(3) Discuss the differences between common and preferred shares.

Common shares are owners of the company with voting rights and only get residual income of company, that is they are last in line to be settled when company is wound up. Preference shareholders are alos owners, but they do not enjoy the voting rights and have preference in income of company. They will be payable the preferred rate, even when company has negative profits. They fall ahead of common shareholders on winding up of company.

(4) Buying shares in a corporation is attractive to investors because

Answer:-(B) All of these answers are correct.

Reason: - All the statements about the life, agency, personal liability and transfer rights area true.

ekkarill92 answered 2 years ago
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