1. Distinguish between paid-in capital and retained earnings of a corporation. Why is such a distinction useful?
a. What are the major transactions and other financial activities that impact the amount of paid-in capital of a corporation?
b. Identify for each major type of transaction or activity whether it increases or decreases the amount of paid-in-capital. (You may find it useful to use a chart to answer questions 1a and 1b)
2. What is the purpose of a stock split? What impact does it have on a company's equity? How does it work?
3. What is treasury stock?
a. Why do corporations purchase their own shares?
b. Is treasury stock an asset?
c. How should it be reported in the balance sheet?
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