Chapter 8.3, Problem 1R

To determine

To ascertain the significance of corporation, stock, limited liability, articles of incorporation, corporate charter, common stock, dividend, preferred stock, bylaws, franchise.

Explanation of Solution

Corporation is a legally organization formed with the intention of working for profit by individuals, stockholders or shareholders. The incorporation process gives a distinct feature to the business entity which prevents its owners shall be responsible individually in the situation of a lawsuit or legal claim.

The Stocks reflect ownership rights to a part of the company's potential income and assets issuing the stock.

Limited liability can be said to benefit that an organization has. The rule in which the obligations of an owner for the debts of a business are restricted to the matter of the shareholders assets in the corporation.

The incorporation of articles is a paper with basic corporate details filed with the Statement in which the company has its headquarters.

The license to operate that is conferred by the state where it is formed on a company is known as corporate charter.

Common stock refers to ownership interests in a company granting voting rights to the stockholders and a percentage of potential income.

Dividend is a potion of a corporation’s profits paid to its stock holders.

Preferred stock is an equity interest in a company that gives stockholders a share of potential income but no voting rights. Bylaws is a policies defining hoe shares and dividends payable.

Franchise; It is a arrangement under which one business (the franchisor) buys the power to use the franchisor 's name and market its goods to another business (the franchisee).

Economics Concept Introduction

Introduction: profits are the income earned by the entrepreneur for the taking risk. In a corporation, however, the profits are dispersed among thousands of shareholders.