RSM100 MIDTERM 1 Q&A 2024

What are the advantages of a corporation - Answer-limited liability, more trustworthy, defer taxes, government incentives Disadvantages of a corporation - Answer-double taxation, slower decision making, more paperwork, harder to dissolve what are common shares - Answer-elect board of directors, leftover money after dividends are distributed what are preferred shares - Answer-paid before common shares, limited dividends what are 5 types of shares - Answer-convertible, redeemable, participating, cumulative, callable convertible share - Answer-a preferred share that can be exchanged for another type of share redeemable share - Answer-shareholder can get a refund participating share - Answer-leftovers after dividends cumulative share - Answer-get paid for years of missed dividends callable share - Answer-company issues refund whenever they want two types of financing to start a business - Answer-debt financing and equity financing debt financing - Answer-funds raised through various forms of borrowing that must be repaid