learning objective 13 1 1 a corporation is a separate legal entity and is organized 4306620

learning objective 13 1 1 a corporation is a separate legal entity and is organized 4306620

Learning Objective 13-1

1) A corporation is a separate legal entity and is organized independently of its owners.

2) Stockholders of a corporation are not personally liable for the corporation's debt.

3) All classes and types of a corporation's stock carry the same degrees of risk for the stockholder.

4) Preferred stockholders receive a dividend preference over common stockholders.

5) Paid-in capital is externally generated capital and results from transactions with outsiders.

6) Stated value stock is no-par stock that has been assigned an amount similar to par value.

7) Retained earnings represent amounts received from stockholders of a corporation in exchange for stock.

8) Which of the following is true of a corporation?

A) A corporation can be organized publicly, but it cannot be organized privately.

B) A corporation has to pay income taxes on its business earnings.

C) A corporation has a limited life.

D) The stockholders of a corporation have unlimited liabilities for the corporation's debts.

9) Which of the following explains the term “lack of mutual agency” of a corporation?

A) The liabilities of the corporation cannot be extended to the personal assets of the stockholder.

B) Shares of stock can be readily bought and sold by investors on the open market.

C) Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation.

D) Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.

10) Which of the following statements is true of a corporation?

A) The liabilities of a corporation can be paid by the personal assets of the shareholders.

B) Corporate shares of stock cannot be readily bought and sold by investors on the open market.

C) Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation.

D) Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.

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