Identify which of the following statements are true for the corporate form of organization. (You may select more than one answer.)

a) Ownership rights cannot be easily transferred.
b) Ownership rights cannot be easily transferred.
c) Owners have unlimited liability for corporate debts.
d) Capital is more easily accumulated than with most other forms of organization.
e) Corporate income that is distributed to shareholders is usually taxed twice.
f) It is a separate legal entity. It has a limited life.
g) Owners are not agents of the corporation.

a) Ownership rights cannot be easily transferred. - True

b) Ownership rights cannot be easily transferred.  - False

c) Owners have unlimited liability for corporate debts.  - False

d) Capital is more easily accumulated than with most other forms of organization.  - True

e) Corporate income that is distributed to shareholders is usually taxed twice.  - True

f) It is a separate legal entity. It has a limited life.  - False

g) Owners are not agents of the corporation. - True

Explanation:

A corporation is an organization established by the issuance (and purchase) of shares. It is identified as a separate legal entity from the owners and the liabilities of the owners is limited to the amount invested (in form of shares or stock). Ownership rights can easily be transferred through various means. One of such means is the sale of shares or stock in the secondary market.

The company pays company income tax on income earned while the shareholders (owners) also paid tax on dividend income. It has an unlimited life and is expected to continue to perpetuity.

The board of directors, managers of the company are the agents of the corporation acting on behalf of the owners.

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