Which of the following statements describe the corporate of easy transfer of cor

Question

Which of the following statements describe the corporate of easy transfer of corporate ownership? Shareholders are not authorized to sign contracts or make business commitments on behalf of the corporation. Corporation pay income tax on corporate earnings, and shareholders pay personal income tax on corporate and gains from sale of stock. The liabilities of the corporation cannot be extended to the personal assets of the shareholder. Shares of stock can be readily bought and sold by investors on the market.

Explanation / Answer

Ans(d) Shares of stock can be readily bought and sold by investors on the open market.

When the term stockholders’ equity,we instantly think of a corporation. That is because corporations are the only type of entity that have stockholders..

A corporation is an entity structure that offers a number of characteristics The important characteristics of a corporation are:

Separate Entity

When you create a corporation, it is like giving birth to a child. The corporation is a being separate from the owner.

Unlimited Life and Continuous Existence

Because a corporation is an entity separate from the owner, even if shareholder were to pass away, the corporation still exists.

Easy Transfer of Ownership

If we watch the stock market, we know how easy it is to buy and sell stock. Every time a stock transaction takes place, partial ownership of the company changes hands. Due to the fact that a corporation is a separate entity from its owners, owners can easily dispose of their ownership stake by simply selling their stock. As long as there is a willing buyer, ownership transfers can take place.

Limited Liability for Shareholders

A corporation can establish credit and enter into business transactions with third-parties. Shareholders are not liable for the actions of the corporation unless a shareholder personally guarantees a debt (which is often required when small corporations are establishing credit). Therefore, shareholders have limited liability against personal losses.

Separation of Ownership and Management

Corporations allow for the separation of ownership and management.

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