Corporation

    graph TD;
	    A[Total Earnings] --> B{Divided among};
	    B --> C[Preferred Shareholders];
	    B --> D[Common Shareholders];

## A corporation is primarily formed to: - [x] Generate profit for its shareholders - [ ] Provide free coffee to employees - [ ] Limit the number of meetings - [ ] Avoid paying taxes > **Explanation:** Corporations exist mainly to maximize shareholder profit through business activities. ## Who is personally liable for the debts of a corporation? - [ ] The CEO only - [x] The corporation itself - [ ] Shareholders up to their investment - [ ] No one is liable, it's a free-for-all > **Explanation:** The legal entity of the corporation is responsible for its own debts, meaning shareholders generally have limited liability. ## Which type of tax do corporations face on their profits? - [x] Corporate tax - [ ] Sales tax - [ ] Property tax - [ ] Snazzy pajama tax > **Explanation:** Corporations are subject to corporate income tax on their profits, typically a bit less zany than what pajama parties capture! ## What happens to a corporation when its shareholders change? - [ ] It goes out of business - [ ] It becomes an LLC - [x] It continues to exist independently - [ ] It turns into a pumpkin > **Explanation:** A corporation maintains its existence regardless of changes in ownership, keeping it far from pumpkin status! 🎃 ## Which is true about corporate dividends? - [x] They can be paid out in cash or stock - [ ] They are required by law - [ ] They are always reinvested - [ ] Only given during holiday seasons > **Explanation:** Corporations may choose to distribute dividends in various forms, but it’s not a mandatory act like holiday cheer! 🎉 ## What legal protections do shareholders have? - [ ] None - [ ] Plenty, based on the company’s mood - [x] Limited liability and voting rights - [ ] They get to wear fancy hats at meetings > **Explanation:** Shareholders have legal protections including limited liability, but wearing hats isn’t guaranteed! 🎩 ## The ownership in a corporation is represented by: - [ ] Magic beans - [ ] Coupons - [x] Shares of stock - [ ] Friends and family > **Explanation:** Ownership in a corporation is represented by shares of stock; it's a bit more formal than using family recipes! 🍰 ## An S-Corp is designed for: - [ ] Supernatural corporations - [ ] Socially responsible LLCs - [x] Small businesses to avoid double taxation - [ ] Sassy corporations looking for fun > **Explanation:** An S-Corp allows small businesses to pass income directly to shareholders and avoid double taxation, not just for sassy fun! 😉 ## Corporations are known for: - [x] Their ability to raise capital - [ ] Stiff competition in board games - [ ] Best-selling snacks - [ ] Cancelling all good parties > **Explanation:** Corporations excel at raising capital through stock issuance, not so much at hosting fun parties! 🎉 ## What characterized a corporation's perpetual existence? - [ ] It only lasts about a month - [ ] It’s like a trendy new coffee shop - [x] It continues even with changes in ownership - [ ] Depends on whether it feels like trading profits for fun > **Explanation:** Corporations have perpetual existence, thriving beyond any one group's ownership like the best brewed coffee!