WGU D362 Corporate Finance section1 WITH 100% CORRECT VERIFIED Q&As
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Course
WGU D362
Institution
WGU D362
WGU D362 Corporate Finance section1 WITH 100% CORRECT VERIFIED Q&As
Last year, a company filed an income tax return and paid taxes on its net income. From this net income, the company paid cash dividends to its shareholders, who were required to pay taxes on the dividends they received.
Which typ...
WGU D362 Corporate Finance section1
WITH 100% CORRECT VERIFIED Q&As
Last year, a company filed an income tax return and paid taxes on its net income. From
this net income, the company paid cash dividends to its shareholders, who were
required to pay taxes on the dividends they received.
Which type of business organization is this company?
S-corporation
A
Partnership
C-corporation
VI
Limited liability company (LLC) - ANS A major disadvantage of a C-corporation is that
it must pay taxes on the income it earns. If the corporation pays a cash dividend, the
stockholders must also pay taxes on the dividends they receive. Thus, the owners of
TU
C-corporations are subject to double taxation—first at the corporate level and then at
the personal level when they receive dividends.
What are two key characteristics of an S-corporation? Choose two answers.
IS
Costlier to establish than a sole proprietorship or a partnership
Unlimited number of stockholders
Limited liability of owners
OM
Double taxation - ANS "Costlier to establish than a sole proprietorship or a
partnership" is correct. Starting a corporation is costlier than starting a sole
proprietorship. For example, it requires writing articles of incorporation and by-laws that
conform to the laws of the state of incorporation.
"Limited liability of owners" is correct. A major advantage of a corporation is that
NA
stockholders have limited liability for debts and other obligations. Owners of
corporations have limited liability because corporations are legal persons that take
actions in their own names, not in the names of individual owners.
JP
What are two key characteristics of a C-corporation? Choose two answers.
Inexpensive formation
Access to capital
Unlimited liability of owners
Double taxation - ANS "Access to capital" is correct. Shares in a corporation can be
sold to raise capital from investors who are not involved in the business. This can
greatly increase the amount of capital that can be raised to fund the business.
"Double taxation" is correct. A major disadvantage of a C-corporation is that it must pay
taxes on the income it earns. If the corporation pays a cash dividend, the stockholders
, must also pay taxes on the dividends they receive. Thus, the owners of C-corporations
are subject to double taxation—first at the corporate level and then at the personal level
when they receive dividends.
A new corporation is being formed, and reporting standards are being considered.
Who reports directly to the owners in this business structure?
Board of directors
Chief financial officer (CFO)
Audit committee
Chief executive officer (CEO) - ANS Correct:The board of directors is elected by the
A
shareholders and is responsible to them, not to management.
VI
Who is responsible for preparing a company's financial statements?
The internal auditor
The controller
TU
The treasurer
The external auditor - ANS Answer
Correct:In addition to maintaining the firm's financial and cost accounting systems,
preparing taxes, and working closely with the firm's external auditors, the controller is
IS
responsible for preparing the financial statements.
Which type of business organization is subject to paying taxes on its income, while its
OM
stockholders are also taxed on the dividends?
Partnership
Sole proprietorship
C-corporation
Limited liability corporation (LLC) - ANS Correct:
NA
A major disadvantage of a C-corporation is that it must pay taxes on the income it
earns. If the corporation pays a cash dividend, the stockholders must also pay taxes on
the dividends they receive. Thus, the owners of C-corporations are subject to being
taxed twice—first at the corporate level and then at the personal level when they receive
dividends.
JP
Who is responsible for managing a company's insurance portfolio?
The controller
The treasurer
The internal auditor
The risk manager - ANS Correct:
The risk manager is responsible for monitoring and managing the firm's risk exposure in
financial and commodity markets and the firm's relationships with insurance providers.
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