(L.O. 1) Which of the following is not a characteristic of a corporation?
Approach and Explanation: Mentally review the list of the most important characteristics of a corporation. Compare the answer selections with that list. The list includes: (1) separate legal existence, (2) limited liability of stockholders, (3) transferable ownership rights, (4) ability to acquire capital, (5) continuous life, and (6) corporation 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. A corporation may buy, own, and sell property, borrow money, and enter into legally binding contracts in its own name. It may also sue or be sued, and it pays its own taxes. (Solution = d.)
(L.O. 1) Which of the following is true with regard to a corporation?
Explanation: Retained earnings is net income retained in a corporation. A corporation with net income of $52,000 will close the Income Summary account by the following closing entry:
Thus, revenues (reflected ...