MGSC30H3 Midterm: Midterm Notes

Which of the following statements is true of a corporation?

 

a)Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation.

b)Shares of stock cannot be readily bought and sold by investors on the open market.

c)The liabilities of the corporation can be paid by the personal assets of the shareholders.

d)Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from the sale of stock.

A disadvantage of the corporate form of business entity is:

a. mutual agency for stockholders.

b. unlimited liability for stockholders.

c. corporations are subject to more governmental regulations.

d. the ease of transfer of ownership.