Accounting & Financial Reporting - Bookkeeping works within following three categories a) Internal Auditor first line of defense against financial fraud I) Ensuring and maintaining the board's independence, Red Flags of Deficiency in Governance to Watch For, A) A strong or dominant CEO "runs the show," soliciting little or no input from others and not tolerating the opposing view 2) Was not made in good faith; Amazon. i) The portion of the authorized stock that has been sold and remains in the hands of stockholders is outstanding stock Limited Liability of Stockholders. b) Be composed solely of independent directors 1. Corporations have certain characteristics that are unique to this form of organization. a) It is less risk than common stock but more risk than debt A corporation is subject to numerous state and federal regulations. E) Knowing where the institution stands and staying abreast of its financial health b) If one of two innocent parties must suffer due to betrayal of trusteither the principal or the third partythe loss should fall on the party who is most at fault. $$ The difference between a closely held corporation and one that is publicly held is based on the size of the ownership group. Be sure to retrieve the 2016 financial statements, not another year. B) Corporations should do a human rights due diligence analysis to examine risks of violations of human rights, i) If you are representing the corporation, then the corporation is your client, not any of the individual directors, officers or shareholders C) The purpose of the doctrine of piercing the corporate veil is to prevent an independent corporation from being used to defeat the ends of justice to perpetuate fraud, to accomplish a crime, or otherwise to evade the law, Piercing the Corporate Veil -- Tort Creditors vs. Contract Creditors, A) Courts make the distinction between contract creditors and tort creditors The communication of thoughts, information, perceptions, and opinions among individuals is a continuous cycle in professional, personal, and business settings. An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business. Flexibility of transferable ownership. b) *Debt/Equity Ratio = Long-term Debt / Total Equity* 3) If the corporation becomes insolvent, and its assets must be liquidated, debt securities will have priority over equity securities As a corporation is owned by stockholders and managed by employees, the sale of stock, death of a stockholder, or inability of an employee to function does not impact the continuous life of the corporation. You can begin building your success by developing these 11 must-have traits of a powerful and successful leader. 1) Cash = money in the till and money in demand deposits in the bank A. (3) Intermingling of funds; i) If you have a good cash flow from operating activities you have a health business These 5 qualities make a logo instantly identifiable, and ensure that when customers look at it, they'll connect with your brand. a business that produces goods used by other businesses or organizations. A) Articles of Incorporation Every statute requires that each corporation have its own articles of incorporation (sometimes called the charter or the certificate of incorporation), which must be filed with state officials and which represents the "constitution" of that corporation, A) Corporations raise money by issuing securities to their investors. A company shareholder is personally liable for the debt of the corporation. Legal status Separate legal entity 8. OutputTCMC25,000$100,000$0.5050,000150,0001.0075,000187,5002.50100,000275,5003.00\begin{array}{rrr} What are 2 characteristics of a corporation? Upon conversion of all the bonds, Bridgewater Corp. recorded the$160,000 premium as a reduction of paid-in capital. ii) Duty of care requires a director to act in the corporations best interest and to exercise reasonable care in overseeing the corporations affairs and in making business decisions B) Represents the difference/surplus between revenues and cost Ownership evidence by shares of stock 3. \text{Total}&\underline{\$129}\\ ii) No one factor is decisive Limited Liability of Stockholders. Relevant. Things you have to give up when you make a particular choice. iii) Officers = Agent/Principal d. The company pays cash dividends to shareholders. Duration of life 3. (3) The fraud or wrong results in an unjust loss or injury to the P. Piercing the Corporate Veil general overview -- advantages, etc. A corporation is owned by stockholders C. All shares of a corporation must be held by a single individual D. Each stockholder has the authority to commit the corporation to a binding contract through his actions. iv) Ratification of Authority Focuses on the principal, if the agent has acted w/out authority but the principal takes no steps to repudiate the authority and accepts the benefits of the authority, than we can say that the principal has ratified the authority, AgencyAction Binding the Corporation Types of Authority Apparent Authority , Perceptions of the third party, not the principal. A) Average Cost Method visualizes inventory as sold at random from a bin a) The ratification only applies to that specific transaction, does not create future authority, 1) The majority of directors should be independent of the company and its management Which is characteristic of a limited liability company ( LLC )? Is Ashford nationally or regionally accredited? 1) CEO and CFO must personally certify that the financial statements are in fact accurate, Accounting & Financial Reporting - Retained Earnings, A) The cumulative amount the company has retained from its products a) Somewhat analogous to apparent authority, can be said that inherent authority is a type of apparent authority A person who buys stock in a corporation is called a stockholder and receives a stock certificate indicating the number of shares of the company she/he has purchased. The liability of stockholders is limited to the amount each has invested in the corporation. What are the Characteristics of Corporations? The answer is:- The following are characteristics of a corporation except for c. limited life The explanation is as below:- The characteristics of a Corporation are as below: 1. Corporations have a number of distinguishing characteristics. caveat emptor. often referred to as a closely held corporation, usually has only a few stockholders, and does not offer its stock for sale to the general public. At its most basic level, what is corporations about? Separation of owners and entity (no mutual agency). By setting up a PAC only those who support the politician can give money F) Meetings are characterized by little or no discussion, or board members go out of their way to avoid conflict, resulting in rubber stamping 2) Capital Gains Corporate Authority -- Directors, you are not independent if You are not independent if Dividends. b. Professional management. 3) Any independent internal audit function (even if part-time) should be in place and report directly to the audit committee - d.$90 per unit. - b.$55 per unit B) Special Meetings Can be called pursuant to articles that are set forth in the bylaws, needs to give notice & some general information about what the meeting will be about Some of the pros and cons of forming an LLC can be summarized as follows: LLC Pros : Members have limited liability. 2) Note that these outside auditors are hired by management are in a position that their performance will decide whether they are hired next year and so on, creating its own issues Certain industries, such as banks, financial institutions, and gaming, are also subject to regulations from other governmental agencies. Stockholders consist of founders and key investors; not publicly traded; individuals act as s/h and assume the position of directors and officers typically. It is a team of people, including suppliers of money and labor, who work together to earn a return on their investment. Relative ease of transferring ownership rights. Its charter may limit the corporation's life although the corporation may continue if the charter is extended. traits, like being honest, respectful, responsible, caring, fair. vi) Majority decision making, i) Partnership w/ general & limited partners Characteristics of a corporation include a. Legal status 5. service business. The stockholder wishing to transfer (sell) stock does not require the approval of the other stockholders to sell the stock. 2) Balance sheet value (or book value) = Cost less allowance for depreciation, Accounting & Financial Reporting - Intangible Assets , Such as patents or trademarkshave no physical existence, but often have substantial value Ability to increase capital by selling stocks. B) First in, first out Method visualizes inventory as flowing through a pipeline a. A) This limited liability means that a corporation's creditors can look only to the corporation's assets for payment for their claims These characteristics are noted below. By contrast, any investor with the necessary funds can buy stock in a publicly held firm . Goal setter 6. b) Until shares are first sold to stockholders they are authorized, but unissued What are the 4 attributes of corporation? The companys inventory turnover and days inventory outstanding (DIO); accounts receivable turnover and days sales outstanding (DSO), accounts payable turnover and days payable outstanding (DPO), and the number of days in its cash conversion cycle. C) Actively helping plan the long-term direction and goals for the institution 9) Management and the board of directors should have formal succession plans in place that are reviewed annually d) If they are repurchased by the corporation they become authorized and issued, but not outstanding, Before a corporation that has issued all the shares authorized by the articles of incorporation can issue more stock, it must amend the articles of incorporation to authorize additional shares This gives a corporation a larger pool of resources because it is not limited to the resources of a small number of individuals. v) Personal liability Exxon Mobil. A) Closed Corporation Held by a small group of people and not publicly traded. Characteristics of Entrepreneurs 1.Risk taker 2. b) Action is brought against the corporation for failure to bring an action in law against some third party, most often an alleged careless or unfaithful manager, who is also a defendant in the suit Members can assign their economic rights in the LLC. iv) Default: Member-managed To be recognized as a corporation, a business must file an application that includes the corporation's articles of incorporation (charter) with the State, pay an incorporation fee, and be approved by the State. How do I look up my California corporation number? 8 Which is a disadvantage of a corporate structure? a market where stocks and bonds are traded. What are 2 characteristics of a corporation? ii) Bookkeeping works within following three categories Tip. iii) BJR creates a presumption that, "in making a business decision, the directors of a corporation acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interest of the company Stock of a privately held company is not traded on an exchange and there are usually only a small number of stockholders. 1? Within 90 days of filing, the initial statement of information is due and costs $25. Influential leaders have a wide collection of skills, including self-confidence, reliability and honesty. Microsoft. Corporations are distinguished by the subchapter in chapter 1 of the IRS code that governs their tax structure. One that can be called on when needed, the next best choice you could have taken (Because there are never enough resources to produce all the goods and services people want there must be trade-offs. ii) When looking to who can speak on behalf of the corporation you look to the chain of command, California ApproachPseudo Foreign Affairs (to internal affairs), i) California holds the view that if the most important interest in the company are operated in Californiaif 50 percent of the company is run in the statethen California state law will apply, i) Association of two or more people iv) Managers = Agent, AgencyAction Binding the Corporation Types of Authority, i) Actual Authority Principal specifies expressly what the agent is authorized to do, through words or conduct ii) Formed by filing articles of incorporation with the state The five main characteristics of a corporation are limited liability, shareholder ownership, double taxation, continuing lifespan and, in most cases, professional management. As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. The same is true for any lawsuits or insurance claims against the company. c. c) At least three of them have to be financially literate C) Most important is cash flow from operating activities b) Long-term liabilities Debts due more than one year from the balance sheet date, Accounting & Financial Reporting - Equity, Equity (sometimes referred to as net worth) represents the accounting value of the interests of the firm's owners Identify the two types of relevant costs. Advantage of Corporations. Members of Gen Zloosely, people born from 1995 to 2010are true digital natives: from earliest youth, they have been exposed to the internet, to social networks, and to mobile systems. 2. ii) Where the corporate form is used as a shield behind which injustice is sought to be done by those who have control of it that equity penetrates the corporate veil, A) 141 says that the business and affairs of every corporation shall be managed by the board unless otherwise provided in the code, or in the certificate of incorporation \end{array} and any corresponding bookmarks? iii) Perpetual life Example #1 Amazon. 3) Ability to have influence as to who is put on the ballet as a nominee 1 What are the characteristics of a corporation quizlet? provide goods and services to business and individual. 1) Land, equipment, machinery, office equipment a) General partners have comparable liability to the liability they have in a general partnership, but a limited partners liability is limited to the capital she has contributed to the partnership John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Calculus for Business, Economics, Life Sciences and Social Sciences, Karl E. Byleen, Michael R. Ziegler, Michae Ziegler, Raymond A. Barnett, Elliot Aronson, Robin M. Akert, Samuel R. Sommers, Timothy D. Wilson. iii) General partners manage and have personal liability Removing #book# There may be thousands, even millions, of stockholders in a public company. --owned by shareholders. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. Corporate managment. \end{array} b) Outside Auditors ii) Formed by operating agreement and filing articles of organization ii) Formed by partnership agreement One of the main disadvantages of the corporate form is the a. Wild, Ken W. Shaw, Financial Accounting: Information for Decisions, Just-in-time manufacturing philosophy reduces all of the following except It can be easier for a corporation to acquire debt and equity, since it is not constrained by the financial resources of a few owners. Which is a characteristic of a generally accepted accounting principles? Is Mutual Agency a characteristic of a corporation? Can adapt to changes Industrial businesses Example #6 ? People pool their money together to buy a variety of stocks. Business entities are legal organizations that exist by virtue of state law. $50 per unit Ability to raise large capital amounts 2. A corporation is subject to numerous state and federal regulations. Withdrawal or death of an owner does not cause termination. So, the minimum grand total for forming a California corporation is $125. Next to the following list of eight characteristics of business organizations, select a brief description of how each characteristic applies to corporations. 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