Question

aim Auditor .Illinois Stuff Q HMSFILE PPS PPS ou Medicarerates - School NPPES N T 11 Next to the following list of eight characteristics of business organizations, select a brief description of how to corporations Descriptions Characteristic 1. Owner authority and control 2. Ease of formation 3. Transferability of ownership 4. Ability to raise large capital amounts 5. Duration of life 8. Owner liability 7. Legal status 8 Tax status of income

Answer 1

Solution:

	Characteristics	Descriptions
1.	Owner authority and control	Ownership is based on number of shares owned.There is generally one vote per share concept in a corporation.
2.	Ease of formation	Requires government approval and other legal regulations.
3.	Transferability of ownership	It can be readily transferred as shareholders may sell their share to other persons.
4.	Ability to raise large amounts of capital	A corporation has high ability of raising capital. It can do so by issue of shares, bonds etc.
5.	Duration of life	Life of a corporation is unlimited as it runs on going concern assumption.
6.	Owner liability	Owner's liability is limited to the extent of their investment.
7.	Legal status	It is a separate legal entity. This means that it acts under its own name rather than in the name of shareholders.
8.	Tax status of Income	Corporations pay taxes on income and so do the shareholders on cash dividends distributed by a corporation.