1. What is the most important difference between a corporation and all other organizational forms?
Ans : A Corporation is a Legal Entity separate from its owners. Its owners have no individual liability for losses or encumbrances of the corporation.

2. What does the phrase limited liability mean in a corporate content?
Limited Liability mean that Shareholders’ liability is limited to their investment in the company’s stock. Company’s debt & losses are of the company and shareholders are not affected by it. 3. Which organizational forms give their owners limited liability?
Corporations & limited Liability companies have limited liability for their stakeholders/owners. In partnership companies, Limited Liability Partnership form provide Limited Liability for its partners. 4. What are the main advantages and disadvantages of organizing a firm as a corporation?
Advantages are that Firm as a Corporation has Limited liability, infinite life and has liquidity.
Disadvantages are that the Firm as a Corporation faces Double taxation, separation of ownership and control. 5. Explain the difference between an S corporation and a C corporation.
S corporations do not pay corporate taxes but income passed to its shareholders is taxable. S corporations have a limit on No of shareholders which is 75. S Corp cannot have corporate or foreign stockholders.

C corporations pay corporate income taxes.

6. You are a shareholder in a C corporation. The corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 40% and the personal tax rate on (both dividend and non-dividend) income is 30%. How much is left for you after all taxes are paid?
As we have seen, C corporation pays Corporate taxes. Corp Tax rat eis 40%.
So After taxes, C Corp has $2*(1-40%)