Exam 28: Forms of Business Organization

When a corporation receives cash or other assets from its owners in a sale of capital stock,it records these investment transactions by crediting Retained Earnings.

In order to form a corporation,the corporation must obtain a charter from:

When closing Income Summary,assuming the corporation had net income for the accounting period,the account Retained Earnings is credited.

Stockholders of an S corporation pay taxes on their share of the corporate net income whether they receive it or not.

The Board of Directors of a corporation:

Regardless of whether partners in a partnership work in the company,each partner is allocated an equal share of profits.

A corporation,like a partnership,must file a corporate income tax return and pay tax on its earnings.

Every stockholder in a corporation will have a drawing account that will be closed to retained earnings during the closing process.

In a sole proprietorship the balance in the Income Summary account is closed to:

When deciding the form of organization of a new business the factors to consider would be all of the following except:

When evaluating the liquidity of a partnership,creditors will likely base their decision on: