Ch.39 Worksheets - Chapter 39 Worksheets Worksheet – The...

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Chapter 39 Worksheets Worksheet – The Nature and Classification of Corporations 1. A corporation is a legal entity: C. Created and recognized by state law in most situations. 2. Today most state corporate statutes are at least partially based on the Revised Model Business Corporation Act (RMBCA). A corporation is an artificial being, existing only in law and neither tangible nor visible. TRUE Owners of corporations may be natural persons or other businesses. TRUE 3. Do corporations enjoy many of the same rights and privileges under state and federal law that U.S. citizens enjoy? D. Yes because they are recognized as “persons”. 4. Retained earnings - The portion of a corporation’s profits that has not been paid out as dividends to shareholders. Dividends - A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held. Holding company – A company whose business activity is holding shares in another company. 5. Individuals and other businesses become owners of corporations by buying one or more shares of stock. One of the key advantages of a corporate form of business is limited liability of its owners. 6. Two actions that a corporation can undertake with respect to profits earned: Pass them on to shareholders as dividends and keep profits as retained earnings. 7. One main disadvantages of the corporate form of business organization is double taxation of distributed corporate profits. 8. Foreign Corporation - In a given state, a corporation that does business in the state without being incorporated therein. In a given state, a corporation that does business in, and is organized under the laws of, that state. Domestic Corporation - In a given state, a corporation that does business in, and is organized under the laws of, that state. Alien Corporation - A designation in the United States for a corporation formed in another country but doing business in the United States. 9. Rena incorporates her business in her home state of Maryland. She wants to expand to sell her wares in Virginia. In Virginia, her company will be considered: A. A foreign corporation and she may have to obtain a certificate of authority. 10. There is no difference between a public corporation and a publicly held corporation. FALSE Most corporate enterprises in the U.S. fall into the category of close corporation. TRUE To make, sell, and distribute candy that Ethan has developed, he incorporates his business and designates his sister and brother as corporate officers. He sells them shares of stock. No shares are offered to the public. The three agree that if any one
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Chapter 39 Worksheets of them decides to leave the business, the others will buy that person's stock. Ethan has chosen a business form known as Close Corporation.
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