Andrea has prepared the following list of statements about corporations.Identify each statement as true or false. 1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership. TrueFalse 2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation. TrueFalse 3. When a corporation is formed, organization costs are recorded as an asset. TrueFalse 4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation. TrueFalse 5. The number of issued shares is always greater than or equal to the number of authorized shares. TrueFalse 6. A journal entry is required for the authorization of capital stock. TrueFalse 7. Publicly held corporations usually issue stock directly to investors. TrueFalse 8. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor. TrueFalse 9. The market price of common stock is usually the same as its par value. TrueFalse 10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Andrea has prepared the following list of statements about corporations.

Identify each statement as true or false.

1.	Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.	TrueFalse
2.	Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.	TrueFalse
3.	When a corporation is formed, organization costs are recorded as an asset.	TrueFalse
4.	Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.	TrueFalse
5.	The number of issued shares is always greater than or equal to the number of authorized shares.	TrueFalse
6.	A journal entry is required for the authorization of capital stock.	TrueFalse
7.	Publicly held corporations usually issue stock directly to investors.	TrueFalse
8.	The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.	TrueFalse
9.	The market price of common stock is usually the same as its par value.	TrueFalse
10.	Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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