Business Studies

What is Corporation? Types, Advantages and Disadvantages of Corporations

len Alfred Ajibola - Wed, 06th May, 2020 @ 3:28 PM

Topics in Business Studies

Business Structure: What is a business structure? Advantages and Disadvantages of franchise What is a franchise? Types of franchise What is Corporation? Types, Advantages and Disadvantages of Corporations What is Limited Liability Company? Its Advantages and Disadvantages Partnership in Business: Types, Advantages and Disadvantages Business Studies: What is Business Studies and Business? Management: Elements of Management What is Management? Importance of Management Advantages and Disadvantages of Air Transport Advantages and Disadvantages of Rail Transport Methods of Payment: Cheque - What is a Cheque? Cheque: Types of Cheque Cheque: Characteristics of Cheque Advantages and Disadvantages of Cheque Advertising and Types of Advertising Advantages and Disadvantages of Road Transport Advantages and Disadvantages of Water Transport Consumer Protection - Agencies of Consumer Protection Consumer Right and Protection

Academic Questions in Business Studies

Please check out our Test Your Knowledge page to see all Questions and Answers

An accounting system focused primarily on a balanced debit and credit side is termed _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principle of accounting system

  • F. Balanced accounting system

With regards to money, which of the following statement is incorrect?

  • A. Money is crucial for the survival of every human being

  • B. Money is completely advantageous

  • C. Money is defined as anything that is generally accepted as a medium of exchange

  • D. Monopoly is said to exist when money and wealth exists in the hands of a few

  • E. Excess money in an economy can lead to inflation

  • F. When a person receives money that isn't commensurate with the job he or she had done, then that's underemployment

Which of the following statement is wrong with regards to business?

  • A. Business involves the exchange of something for another thing or money

  • B. Business is an economic activity

  • C. In business, profit goes beyond money

  • D. Businesses do not have social responsibilities to their customers

  • E. The exchange of services is an aspect of business

  • F. Businesses can be affected by government policies

Consumer _____ are the laws and methods put in place by various agencies so that consumers can enjoy maximum satisfaction on the goods they buy and services rendered to them.

  • A. Protection
  • B. Policy
  • C. Rights
  • D. Defence
  • E. Guide
  • F. Safety

Which of the following is not a characteristics of business?

  • A. The buyer and seller must always come into a contract agreement

  • B. Risk from unforseen circumstances is involved

  • C. They are subject to policies made by the government

  • D. All business transaction is aimed at making profit

  • E. It requires a discontinuous transaction between the buyer and the seller

  • F. Investments are required to begin a business

Which of the following is not a Right of Consumer Protection?

  • A. Right to Education
  • B. Right to Choose
  • C. Right to Safety
  • D. Right to the Good things of Life
  • E. Right to be Assured
  • F. Right to Compel

Which of the following is NOT a government agency of consumer protection?

  • A. Ministry of Sports
  • B. Ministry of Commerce
  • C. Consumer Protection Council
  • D. Ministry of Health
  • E. Ministry of Environment
  • F. National Drug Law Enforcement Agent

Define Consumer Protection.



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What is a Corporation?

A corporation is a business structure and legal entity whereby a group of people (called investors) buy shares as an evidence of being a member of the corporation.

To simply put it, the corporation is a business structure owned by shareholders and managed by a Board of Directors.

The shareholders own shares and stocks in the company (corporation).

Please read on an introduction to business structure here.

Note: The corporation can be profit or nonprofit oriented.

The nonprofit or not-for-profit corporation will always have a specific goal outside making profit. These goals are usually of benefit to a certain group of people in the society; for instance, the widows, less privileged and physically challenged. These may all be beneficiaries of a nonprofit corporation like the religious corporation. Other nonprofit corporation may focus more on education and human empowerment.

You can read on pressure group and types of pressure group here.

The nonprofit corporation is typically seen in Non Governmental Organizations (NGOs) that render humanitarian and empowerment services to the less privileged in the society. These nonprofit corporations must be legally recognized by the state where they are present.

Please read on sole proprietorship here.

Note: A nonprofit corporation does not pay income tax to the state or federal government on the money it generates while carrying out various services. It is important to state that the money generated from an NGO must be used for community services. It should not be siphoned by its founding members for their respective personal interests.

You can read on community service and it's benefits here.

In a profit oriented corporation, its main goal is to make profit and such profits (and possible liabilities) goes beyond a single individual. In this case, it covers all the shareholders who own shares, buy shares, as well as sell shares.

Please read on limited liability company, its advantages and disadvantages here.

Types of Corporation

Corporations usually exist in two types or forms. These are:

  1. C Corporation
  2. S Corporation

The C Corporation is the more common form of corporation. It can be owned by an unlimited number of shareholders; and they exist as the large, publicly traded companies present in various cities around the world.

Note: The C Corporation cost more in its formation and typically, there is a double taxation on the business profits.

You can read on the concept and types of cost here.

The S Corporation shares most of the features of a C Corporation. However, it employs a better tax structure for the shareholders when compared to the C Corp.

The owners making up an S Corporation are limited to a maximum of 100 shareholders. In addition, the types of shareholders are limited in the S Corporation.

Please read on partnerships, types advantages and disadvantages.

Advantages of a Corporation

  1. Liability is limited to the amount invested by the shareholders.
  2. Easy transfer of ownership via the selling of shares and stocks.
  3. Capital can be easily raised through the sale of stocks and bonds.
  4. A corporation continues to exist after the death of its owners (shareholders).
  5. There is no double taxation in an S Corporation.
  6. The shareholders can receive tax-free benefits. For instance, a deduction of tax from their retirement and insurance plans is nullified.
  7. The C Corporation has an unlimited number of investors.

You can read on the advantages and disadvantages of a franchise business structure here.

Disdvantages of a Corporation

  1. Shareholders may pay tax twice on their income and dividends. This is termed double taxation.
    You can read on the double entry system here.
  2. The investors may have very little knowledge on how the corporation is managed.
  3. Forming a corporation can be quite rigorous and expensive.
  4. States will typically charge an annual franchise fee for corporations.
    Please read on franchise and types of franchise here.
  5. Only one class of stock is allowed in an S corporation.
  6. The maximum number of shareholders in an S corporation is 100.
  7. There are limitations in the type of stock in an S corporation.
  8. The tax filing process for a corporation can be complex.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.

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Amazing facts in Business Studies

The world's 100 richest people earned enough money in 2012 to end global poverty four times over

NOTABLE POINTS IN Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government Agencies

  2. Independent Agencies

  3. Legislation

Please read on consumer protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the government agencies of consumer protection:

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the government agencies of consumer protection here