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Cards In This Set
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What is a Corporation?
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A corporation is a business owned by a multitude of people and operated under written permission from the state in which it is located.
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In order to start a corporation, you must first go through ____________, which means registering the business.
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Incorporation
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A corporation must also obtain a _______________ from the state in which it is located. What is its function?
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Certificate of Incorporation. It is the written permission from the state allowing them to start the corporation.
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A corporation is composed of __________ who invest money into the company by buying its shares.
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Stockholders or shareholders is an acceptable answer.
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The amount of stock an investor might purchase is equivalent to the amount of _________ they have invested into the company.
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Money or capital are both acceptable answers.
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An investor will buy stock at a ______ price, but the price of the stock is subject to fluctuate.
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Set
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Why is it risky to purchase stock in a corporation?
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It is risky because the probability of the stock value plumeting is the same as is it rising. You could easily loose it all or make a huge profit.
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By law, a corporation is considered _______ body. This allows the corporation to be sued rather than the people it is composed of.
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One
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__________________ controls the corporation and makes the decisions.
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Board of Directors.
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Who elects the board of directors?
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The stockholders that hold the most stock in the company.
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Owners are only liable up to the amount of __________ they have invested into the corporation.
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Money, or stock they have bought
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Unlike a partnership, ________ can easily be transfered through the sale of stock.
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Ownership
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If the company is sued, no personal property may be taken from the people that compose the corporation. Why?
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Because the company exists seperately from the employees.
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Just because a corporation inherits new owners does not mean that the business must end. It is fairly easy for a corporation to come under new ownership because.....?
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The owners may sell their shares and quit all business with the company.
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Why is Double Taxation a major disadvantage to a corporation?
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Because, not only the owners are taxed on their income from the corporation, but the corporation must also pay taxes.
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