Question

1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.

a) true
b) false
2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.
a) true
b) false
3. When a corporation is formed, organization costs are recorded as an asset.
a) true
b) false
4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.
a) true
b) false
5. The number of issued shares is always greater than or equal to the number of authorized shares.
a) true
b) false
6. A journal entry is required for the authorization of capital stock.
a) true
b) false
7. Publicly held corporations usually issue stock directly to investors.
a) true
b) false
8. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
a) true
b) false
9. The market price of common stock is usually the same as its par value.
a) true
b) false
10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
a) true
b) false

Answer 1

Answer: 1. True

2. False

3. False

4. True

5. False

6. False

7. False

8. True

9. False

10. False

Step-by-step explanation:

1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership is true.

2. This is false. LImited liability is not a disadvantage of a corporation. It is an advantage of a corporation.

3. Thus is false. When a corporation is formed, it should be noted that organization costs are expenses and not recorded as an asset.

4. This is true. Every share of common stock gives provides the stockholder the ownership rights to vote at stockholder meetings, and also share in corporate earnings, as well as keeping same percentage ownership when new shares of stock are issued, and will also share in the assets upon liquidation.

5. False. It should be noted that the number of authorized shares is typically more than greater or equal to the issued shares.

6. False. A journal entry is not required for the authorization of capital stock. It's required for the issuance of the capital stock.

7. Publicly held corporations do not issue stock directly to investors. Rather, this is done indirectly. It is the private corporations that issue their stock directly.

8. This is true. The trading of capital stock on a securities exchange has to do with the transfer of already issued shares from an existing stockholder to another investor.

9. False. The statement that "The market price of common stock is usually the same as its par value" is false. It should be noted that there's no relationship between the common stock market price and its par value.

10. This is false. The retained earnings simply meansis the total amount of the net income that is held by a corporation for use in the future.