A Corporation Has Which of the Following Set of Characteristics

question 217

Multiple Choice

A corporation has which of the following set of characteristics?

• A) Shared control, tax advantages, increased skills and resources
• B) Simple to set up and maintains control with founder
• C) Easier to transfer ownership and raise funds, no personal liability
• D) Harder to raise funds and gives owner control

Understand the difference between accrual-basis and cash-basis accounting and why GAAP prefers accrual-basis.

Comprehend the purpose of adjusting entries and their role in the accounting cycle.

Identify the various types of adjusting entries and their impact on financial statements.

Recognize the principles of revenue recognition and the matching principle as foundations of accrual accounting.

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Definitions:

Cost Method

An accounting approach used to record investments, where the investment is recorded at its acquisition cost without recognizing interim income or losses.

Long-Term Investment

An asset that a company intends to hold for more than one year for the purpose of generating revenue.

Common Stock

Equity shares of a corporation that provide voting rights and represent a claim on a portion of the company's profits in the form of dividends.

Net Income

The amount of money left over after all expenses and taxes are subtracted from total revenue.