Using a list of corporate characteristics, the student will indicate whether the characteristic is an advantage...

Using a list of corporate characteristics, the student will indicate whether the characteristic is an advantage or a disadvantage for the corporate form

Does anybody know how to start figuring which is an ADVANTAGE or DISADVANTAGE???

Options or term examples are

1. Ownership and management are separated

2. The entity has a continuous life.

3. Transfer of ownership is easy.

4. Stockholder's liability is limited.

5. Exposure to double taxation is evident, (that sounds bad)

6. An entity can raise MORE money than a partnership or sole proprietorship.

7. Government regulation is expensive.

Financial Accounting

Solutions

Expert Solution

1. Ownership and management are separated is an advantage as the Burden of work are divided between them as well as the accountability and responsibility.So now in corporate form the division of work takes place according to their skills and qualification which brings effectiveness and efficiency in the work.

2. The entity has a continuous life is an advantage as it means that the life of the company is beyond the life of a person which means that after the death of its stockholders the company is still able to exist by tranferring the shares to the other person or persons. so the company like FORD motors are still able to exist.

3. Transfer of ownership is easy is an advantage as it means that shares can easily be tranferred from one person to other person.Stocks of a corporate form can easily be easily be sold on the stock exchnages whenever they wish to.so this makes it an advantage.

4 Stockholder's liability is limited is an advantage as it means that stockholders of an corporate form have limited liability to the any loans, credit facility or any other type of loan which company avail so this means that the sole responsilibilty lies with company and the stockholders have to pay to certain amount according to their share in case of any lawsuit and bankruptcy.

5. Exposure to double taxation is evident is a disadvantage as on the business level the corporate form is taxed as business where as when profits are distributed they are being taxed in form of dividends.so this becames a disavantage of the corporate form.

6. An entity can raise more money than a partnership or sole proprietorship is an advantage as they can issue shares of its company to the public ( Only a Company can issue ) from that thay can generate money in form of capital which they can invest in business projects which requires huge amount of capital and they get their capital this way

7. Government regulation is expensive is a disadvantage as to form a corporate form there so many government formalities which needs to be fulfilled properly so corporates form appoints well qualified attorneys for the work and thier are many steps which is costly to corporate forms so government regulations are costly

ekkarill92 answered 1 year ago

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