ACCOUNTING EXAM CH. 10

Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred, over and beyond the investment they have made.

• True

• False

A corporation has limited liability and attracting outside investment is easier relative to sole proprietorships and partnerships.

• True

• False

A corporation is an entity that is (1) legally separate from its owners and (2) not required to pay its own income taxes.

• True

• False

We record treasury stock at the cost of the shares acquired.

• True

• False

Total assets, total liabilities, and total stockholders' equity do not change as a result of a stock dividend.

• True

• False

All publicly held corporations in the United States are regulated by the Securities and Exchange Commission.

• True

• False

Authorized stock is the number of shares that have been sold to investors.

• True

• False

Retained earnings represent the earnings of the corporation that have not been distributed as dividends to stockholders.

• True

• False

Treasury stock is the purchase of a company's own issued stock.

• True

• False

When we resell treasury stock, we report the difference between its cost and the cash received as an increase or a decrease in additional paid-in capital.

• True

• False