College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN: 9781305666160
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
Question
Chapter 20, Problem 1TF
To determine

Identify whether the given statement is true or false.

Expert Solution & Answer
Check Mark

Answer to Problem 1TF

The given statement “Corporations do more dollar volume of business than sole proprietorships and partnerships combined” is true.

Explanation of Solution

Corporation:

Corporation is the form of organization that has legal existence that is owned and controlled as a single organization which is Separate from its owners.

Corporate form of business offers certain advantages while comparing to sole proprietorship and partnerships and they are listed as follows:

Limited liability of owners:

The liability of the corporation is limited to the extent of the face value of shares. Thus, the members of the corporation are not asked to contribute more than the face value of shares which are held by them in order to pay the liabilities of the Corporation.

No Mutual agency:

Each owner has the right to act as agents and can engage in contracts for the business in a mutual agency. But, in a corporation individual owners do not have the power to negotiate contracts unless the other owners grant for it.

Transferable ownership units:

In a corporation, capital stock is divided into shares which represent the ownership rights of its member. The ownership of shares can be transferred from one person to another person without any conditions and without troubling the normal activities of corporation.

Indefinite life:

The existence of the Corporation remains unaffected even if there is any insolvency, death, retirement among the members. Thus, the corporation has indefinite life and it continues to operate its business irrespective of any circumstances.

Ease of raising capital:

Corporation acquires capital by selling its additional shares of stock because transferable ownership units and limited liability act as an attractive characteristic for people to make investment in corporation.

Corporation plays a vital role in the economy. The goods and services sold by Corporations are more in total than sole proprietorship and partnership combined together. Therefore, according to the above explanation the given statement “Corporations do more dollar volume of business than sole proprietorships and partnerships combined” is true.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Which of the following statements is true? A. the organizational form that is the easies to raise capital is the corporation B. corporations make up the largest proportion of businesses in the U.S C. sole proprietorships are protected by limited liability D. owners of corporations are not protected by limited liability
Identifying advantages and disadvantages of a corporation Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage. Ownership and management are separated. The entity has a continuous life. Transfer of ownership is easy. Stockholders’ liability is limited. Exposure to double taxation is evident. The entity can raise more money than a partnership or sole proprietorship. Government regulation is expensive.
The corporation is the most effective form of business organization because the corporation has: Select one: a) easier access to financial capital through selling bonds and stocks b) an unlimited liability toward the stock owners c) the problem of double taxation with respect to the corporate income d) a lot of skilled and semi-skilled labourers e) more freedom of action with respect to management

Chapter 20 Solutions

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Ch. 20 - Prob. 1CECh. 20 - Genous Company has 20,000 shares of common stock...Ch. 20 - Prepare general journal entries for the following...Ch. 20 - Prepare the stockholders equity section of the...Ch. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Prob. 3RQCh. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - If a corporation issues only one class of stock,...Ch. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - How is common stock subscriptions receivable...Ch. 20 - Prob. 10RQCh. 20 - Prob. 11RQCh. 20 - ORGANIZATION COSTS BB Electric decided to...Ch. 20 - DIVIDEND ALLOCATIONS Situation 1 Nguyen Company...Ch. 20 - STOCK ISSUANCE (PAR, NO-PAR, AND STATED VALUE) The...Ch. 20 - Prob. 4SEACh. 20 - STOCKHOLDERS EQUITY SECTION After closing its...Ch. 20 - PAR AND NO-PAR, COMMON AND PREFERRED STOCK...Ch. 20 - STATED VALUE, COMMON AND PREFERRED STOCK, AND...Ch. 20 - STOCK SUBSCRIPTIONS Juneau Associates had the...Ch. 20 - STOCK SUBSCRIPTIONS AND TREASURY STOCK Nash Roth...Ch. 20 - STOCKHOLDERS EQUITY SECTION After closing its...Ch. 20 - Prob. 1SEBCh. 20 - Prob. 2SEBCh. 20 - STOCK ISSUANCE (PAR, NO-PAR, AND STATED VALUE) The...Ch. 20 - STOCK ISSUANCE (NONCASH ASSETS, SUBSCRIPTIONS, AND...Ch. 20 - STOCKHOLDERS EQUITY SECTION After closing its...Ch. 20 - PAR AND NO-PAR, COMMON AND PREFERRED STOCK Valdez...Ch. 20 - STATED VALUE, COMMON AND PREFERRED STOCK, AND...Ch. 20 - STOCK SUBSCRIPTIONS Athletics West had the...Ch. 20 - Prob. 9SPBCh. 20 - STOCKHOLDERS EQUITY SECTION After closing its...Ch. 20 - Prob. 1MYWCh. 20 - Prob. 1ECCh. 20 - Stockholders equity accounts and other related...Ch. 20 - Prepare general journal entries for the following...
Knowledge Booster
Similar questions
  • Andrea has prepared the following list of statements about corporations.Identify each statement as true or false. 1.   Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.    TrueFalse 2.   Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.    TrueFalse 3.   When a corporation is formed, organization costs are recorded as an asset.    TrueFalse 4.   Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.    TrueFalse 5.   The number of issued shares is always greater than or equal to the number of authorized shares.    TrueFalse 6.   A journal entry is required for the authorization of capital stock.    TrueFalse 7.…
    Which of the following is the primary element that distinguishes accounting for corporations from accounting for partnerships? a. The corporation draws a sharper distinction in accounting for sources of capital. b. The entity theory relates primarily to the other forms of business organization. c. In a corporation, retained earnings may be reduced only by the declaration of dividends. d. Generally accepted accounting principles apply to corporations but have relatively little applicability to other forms of business organizations.
    Businesses can be classified into the following forms: sole proprietorship, partnership, corporation, limited liability company (LLC), and limited liability partnership (LLP). Different forms of businesses have different characteristics. Which of the following characteristics would apply to a limited liability company and a limited liability partnership? Check all that apply. LLPs are not suitable for professional firms such as accounting, law, and architecture   Limited financial liability   Taxed as a partnership   Have corporate ownership structure   Owned by single individual   Owners have limited liability and right to vote
    • SEE MORE QUESTIONS
    Recommended textbooks for you
  • EBK CONTEMPORARY FINANCIAL MANAGEMENT
    Finance
    ISBN:9781337514835
    Author:MOYER
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    Principles of Accounting Volume 1
    Accounting
    ISBN:9781947172685
    Author:OpenStax
    Publisher:OpenStax College
    SWFT Individual Income Taxes
    Accounting
    ISBN:9780357391365
    Author:YOUNG
    Publisher:Cengage
  • College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
    Entrepreneurial Finance
    Finance
    ISBN:9781337635653
    Author:Leach
    Publisher:Cengage
    Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning
  • EBK CONTEMPORARY FINANCIAL MANAGEMENT
    Finance
    ISBN:9781337514835
    Author:MOYER
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    Principles of Accounting Volume 1
    Accounting
    ISBN:9781947172685
    Author:OpenStax
    Publisher:OpenStax College
    SWFT Individual Income Taxes
    Accounting
    ISBN:9780357391365
    Author:YOUNG
    Publisher:Cengage
    College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
    Entrepreneurial Finance
    Finance
    ISBN:9781337635653
    Author:Leach
    Publisher:Cengage
    Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning