Which of the Following Statements Describes the Corporate Characteristic Termed

question 15

Multiple Choice

Which of the following statements describes the corporate characteristic termed no mutual agency?

• A) The liabilities of the corporation cannot be extended to the personal assets of the shareholder.
• B) Shares of stock can be readily bought and sold by investors on the open market.
• C) Shareholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
• D) Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.

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Definitions:

Accounting Equation

The basic formula of double-entry accounting: Assets equal Liabilities plus Equity.

Accounting Equation

The fundamental equation of double-entry bookkeeping: Assets = Liabilities + Equity, representing the financial position of a business.

Liabilities

Financial obligations or debts owed by a business to another entity, payable in the future.

Owner's Equity

The residual interest or ownership claim in the assets of an entity after deducting its liabilities.