Which of the following statements reflects a characteristic of corporations Ther

Question

Which of the following statements reflects a characteristic of corporations There is mutual agency for the stockholders meaning that the stockholders have the power to bind the corporation to contracts. A corporation has a limited life which means if a stockholder dies or sells the stock it owns, then a new corporate charter must be submitted. The stockholders have unlimited liability and therefore are ultimately responsible for the corporation's debts. The corporation is a separate legal entity and therefore pays income taxes. Morgan Company issues 10,000 shares of $2 par value common stock for $500,000. The effect of this transaction on the financial statements is: An increase to Common Stock for $500,000. An increase to Paid-in Capital in Excess of Par Value for $20,000. An increase to Paid-in Capital in Excess of Par Value for $480,000. An increase to Cash for $20,000.

Explanation / Answer

33)

The correct option is B, the liability is limited to the capital invested.

34)

The correct option is A

35)

The corporation is a seprate legal entity and therefor pays income taxes

36)

An increase in common stock for $500,000

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.