Chapter 13

Question 1

Characteristics of a corporation include

Accepted Answer

shareholders who have limited liability

Question 2

The ability of a corporation to obtain capital is

Accepted Answer

enhanced by limited liability / ease of transferability

Question 3

The authorized stock of a corporation

Accepted Answer

is indicated in its charter

Question 4

Preferred stockholders must receive their dividends before common stockholders can receive any.

Accepted Answer

True

Question 5

The day the board of directors distributes a dividend is called the declaration date.

Accepted Answer

False

Question 6

One of the main disadvantages of the corporate form is the

Accepted Answer

double taxation of dividends

Question 7

Two sources of stockholders' equity are stockholders' investments and retained earnings.

Accepted Answer

True

Question 8

Retained earnings

Accepted Answer

changes are summarized in the retained earnings statement

Question 9

The par value of common stock must always equal its market value on the date of issue.

Accepted Answer

False

Question 10

Which of the following should be disclosed in the equity section of the balance sheet?

Accepted Answer

all of these

Question 11

The declaration & issuance of a stock dividend does not affect total assets, liabilities or equity.

Accepted Answer

True

Question 12

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

declaration date

Question 13

Treasury stock is deducted in determining total stockholders’ equity.

Accepted Answer

True

Question 14

Which is not a reason for a corporation to buy back its own stock?

Accepted Answer

to increase the shares outstanding

Question 15

When a corporation is liquidated, preferred stockholders are paid

Accepted Answer

before the common stockholders

Questions 15