Responses to Wk1AJ and AC Analyze the advan and disadv argee or disagree and why - Essay Example

DQ1 The term used to describe the peculiarity of paying taxes twice for owners of corporations is called double taxation (Weygandt & Kimmel & Kieso). Another major advantage of the corporate business structure is the ability of corporations to obtain governmental incentives. Many governmental incentive programs are designed for corporations. The reason governments offer more incentives to corporations than to individual businesses is because corporations tend to create more jobs. I recently read an article that stated that Unites States has the second lowest corporate tax rate among industrialized countries worldwide.

Public corporations in the United States are mandated by the Securities Exchange Commission (SEC) to publish financial statements at least once a year. Most public companies release interim financial statements every trimester. The double taxation that occurs in corporations is a disadvantage of the corporate business structure. Another con associated with corporations is greater governmental regulations and interventions. DQ2 I agree with you that one of the advantages of the corporate business structure is that it facilitates the process of raising capital.

Corporations can become public firms and sell its common stocks in the open market. When a company becomes public its stocks are initially sold through a process known as an initial public offering (Investorwords). Another mechanism that can be used by public corporations to raise cash is to sell commercial paper in the form of bonds. A bond is a $1000 face value financial instrument that allows a company to obtain loans in $1000 units from different investors. The interest paid by bond is known as the coupon rate.

If a company does not pay dividends during a fiscal period the double taxation effect does not take place. Another hybrid instrument that can be used by corporations to raise capital is preferred stocks. Work Cited Page Investorwords.com. 201. “IPO.” 10 July 2011. < http://www.investorwords.com/2640/IPO.html> Weygandt, J., Kieso, D., Kimmel, P. 2002. Accounting Principles (6th ed.). New York: John Wiley & Sons.