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Government corporations can be described as which of the following?
A. Social service providers
B. Privately funded
C. Public goods producers
D. Independently run for ap.ex
Answer: D. Independently run private sector companies.
Government corporations are independently run private companies established either by act of Congress or executive order under state incorporation law which provides services to the public and produce revenue that would cover it’s running cost. Corporations are not established to make profit but could generate revenue through the services rendered.
The aims of government corporation is to take care of those areas difficult for government to handle, provide services to masses and also ensure the that the government is operating maximally and efficiently. An example of government corporation is the US Post office, which charges fees for service rendered to the public hence create revenue to meet it’s running cost.
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Government Corporation Definition
A government corporation is defined as an agency or company registered under the government’s ownership,
whose aim is to offer a market-oriented service to the public and generate revenues to fund its operations. It is also
described as the type of company that is owned by the government but operates independently, unlike the corporations
that are owned, managed, and operated fully by the government. They mostly operate in industries with natural monopolies
to aid in the country’s infrastructure and secure natural resources and public benefits.
Government corporations are provided with a charter that gives them operational freedom from other structured
government entities, giving them a different legal and organizational structure. According to the provisions for government corporations,
the entities are not supervised by government agencies. They instead operate separately as per their committees from
the managerial executives. Government corporations are similar to private corporations in that they have the same independence as
private businesses since no agency is tasked with overseeing, directly managing, or supervising them. However,
they differ from private businesses in that they are not privately owned but are owned by the government.
Characteristics of a Government Corporation
Government corporations depict various characteristics. The traits are mostly based on how they are governed, how they operate their monetary revenues, and their location of operation. Below are broader explanations of those characteristics.
- Legal status: Much as government corporations are deemed to have the independence private businesses have, they are subject to state and constitutional laws since they are government agents and are not yet fully privatized. Their operational means do not separate them from their governmental characteristics since the private and public sectors are basically distinct. Therefore, government corporations have their limitations as much as they have their independence as private companies. It assumes government character until it is granted full privatization by Congress. They have perpetual succession, which means they are to be passed on generationally without an ending. Government corporations can sue and be sued as well. This is meant to enable private entities to enter into contracts with government corporations and be sure that if they disagree on a matter or a default on the contractual terms occurs, they can sue them.
- Budget and finance: Budgetary information plays a vital role in the management process of any entity. Fully owned government entities are subjected to budgetary controls and regulations that determine how they operate, how to finance activities, and their revenue sources. However, government corporations are not subject to particular or fixed budget regulations since they operate separately by gaining revenues from the consumption of the products and services they provide to consumers. These provisions are meant to give the corporations an operational methodology as a corporate structure, enabling them to draft their budget from their revenues. This is unlike the fully owned government entities, which submit their financial and audit reports to the President, who goes through them and gives them to the Congress, which then provides provision for capital to the entity in the form of funds. However, government corporations gain revenues from the purchase of services and products from them by consumers, making them liable for their expenses and revenues, which fluctuate based on consumer demand for their products and services. Government corporations are subject to the inspector general’s audit programs or an external auditor determined by the corporation’s inspector general.
- Location and governance: Government corporations’ location and governance are variant and are not subject to specific regulatory measures to determine those factors. The corporations are granted independence to determine their location of operation and governance. However, some corporations operate from executive locations where there are government offices. Additionally, they are not automatically bound to operate under a specific form of governance. Still, most of them operate under the leadership of a board of directors which is usually appointed by shareholders or the government. Others operate under a Chief Executive Officer, cabinet officials, or both government and private officials. Generally, the board of directors is viewed as the most inherent method since it shows independence and is more likely to breed success. In a board of directors’ setup, the corporation is deemed able to breed success through integrity, the quantity and quality of the board members, and coherency amongst them.
Organizations Designed for Government Involvement
Some of the most easily understood government corporations were designed and conceived with government
involvement in mind, usually as a means of providing some service to the public. The Canadian Broadcasting Corporation,
for instance, is one of the largest and most well known companies owned by the Canadian government.
The corporation acts as an independent company insofar as it has freedom to decide which programming to offer and
which staff to hire, but receives the majority of its funding from the national treasury.
The United States also has many examples. The United States Postal Service (USPS), Environmental Protection Agency (EPA),
and Federal Deposit Insurance Corporation (FDIC), for instance, are all government corporations in one form or another.
The USPS and FDIC are owned entirely by the government, but also have the highest level of political independence.
The EPA is a similar corporation, but does not garner quite the same political independence as the other two.
Corporations Resulting from Bailout or Takeover
Sometimes companies that started out as private are taken over by the government, which can turn them into de facto government corporations even though they didn’t start that way. The U.S. bailouts after the economic recession of 2008 are a good example. The government’s funding action meant that companies including Citigroup, American International Group, General Motors, and Chrysler became subsidized in order to resist bankruptcy. The United States government viewed these corporations as vital to the national economy, and provided funding in exchange for a stake in their future.
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