KA2e_SelfStudy_Ch11

KA2e_SelfStudy_Ch11 -...

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File: ch11, Chapter 11: Reporting and Analyzing Stockholders’ Equity Multiple Choice 1. Which of these is not a major advantage of a corporation? a) Separate legal existence. b) Continuous life. c) Government regulations. d) Transferable ownership rights. Ans: c Response A: Separate legal existence is a major advantage of a corporation. Response B: A continuous life is a major advantage of a corporation. Response C: Correct! Response D: Transferable ownership rights is a major advantage of a corporation. 2. A major disadvantage of a corporation is: a) limited liability of stockholders. b) additional taxes. c) transferable ownership rights. d) None of the above. Ans: b Response A: Limited liability of stockholders is a major advantage, not a disadvantage of corporations. Response B: Correct! Response C: Transferable ownership rights is a major advantage, not a disadvantage of corporations. Response D: Because answer b is correct, this answer cannot be correct. 3. Which of these statements is false ? a) Ownership of common stock gives the owner a voting right. b) The stockholders’ equity section begins with paid-in capital. c) The authorization of capital stock does not result in a formal accounting entry. d) Legal capital is intended to protect stockholders. Ans: d Response A: Ownership of common stock does give the owner a voting right. Response B: The stockholders’ equity section begins with paid-in capital, not earned capital. Response C: When capital stock is authorized, no formal accounting entry is required.
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This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch11 -...

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