MUHASEBE II - Deneme Sınavı - 11

That corporations may be subject to double taxation is a disadvantage of corporation.

Shareholders have limited liability in corporations.

Preemption:Shareholders have the right to maintain their proportionate ownership in corporations.

Liquidation: When a corporation goes out, shareholders may receive their proportion- ate share of any asset that still remains.

Preferred share is a special share that provides its owner some advantages more than a common share does.

Issue price is the amount that is received from issuing shares.

Most common types of entities are sole proprietorships, partnerships, and corporations.

Proprietorship is an entity owned by a single owner. This type of entity is the smallest and simplest one among the different types of entities.

Partnership is an entity owned by two or more owners.

Proprietorship is an entity owned by a single owner.

A corporation is a legal entity which is organized under state law and owned by shareholders. Thus, the owners in a corporation are called shareholders.

Life of a corporation is indefinite but life of sole proprietorship and partnership ends with death or choice of proprietor.

Owners of a corporation are not personally responsible from the corporation’s liabilities.

Sole proprietorship and partnership are not separate taxable entities.

Double taxation is a disadvantage of a corporation but others are advantages.

Shareholders’ rights in corporations are vote, dividend, liquidation preemption and receiving information.

In compliance with accounting perspective, types of entities are based on their ownership, taxation, life, the personal liability of the owners particularly.

The second type of entity is a partnership which has at least two or more owners. In a partnership, the owners are called as partners. Partnerships are organized as small or medium size entities.

Similar to proprietorship, the cancellation of the partnership may be caused either by one of the partners’ death or choice of cancelling it and the partners are personally liable for the partnership’s liabilities. Surely, based on the entity concept the accounting process of a partnership is separate from the personal records of the partners. Partnerships are not separate taxable entities. The correct answer is E.

The first one is proprietorship which is owned by a single owner. This type of entity is the smallest and simplest one among the different types of entities. Proprietorship is an entity owned by a single owner. The owner of proprietorship is called as proprietor and his or her equity can be seen as only one item in owner’s equity section of the balance sheet.

Proprietor is the owner of a sole proprietorship. The expiration of a proprietorship is caused either by the proprietor’s death or his/her choice of ending it. Also, the proprietor is personally liable for the proprietorship’s liabilities. However, the accounting process of the proprietorship is separate from the personal records of the proprietor. Another important characteristic is about taxation.

A proprietorship is not a separate taxable entity. The proprietor pays tax on the income of proprietorship. The correct answer is D.