1 stockholders equity chapter 12

par value

the legal capital established for a share of stock

all of the following are stockholders equity accounts except: treasury stock preferred stock retained earnings dividends payable

dividends payable

disadvantage of corporate form of business

double taxation government regulation

retained earnings consist of a pool of funds to be distributed to stockholders

false

the board of directors carries out the day-to-day operations of the corporation

false

the declaration of a cash dividend causes an increase in a corporation's liabilities at the date of record

false

advantage of corporate form of business

separate legal entity continuous existence easy transfer of ownership ease of capital generation professional management

no entry is required on the date of record for a cash dividend

true

stock options are often granted by a corporation to management personnel as a means of additional compensation to and motivation of employees

true

stockholders elect the board of directors which appoints the officers of a corporation

true

the cost of treasury stock is deducted from total contributed capital and retained earnings in determining total stockholders equity

true

the liability of a stockholder is usually limited to the stockholder's investment in the corporation

true

the price/earnings ratio is a measure of investors' confidence in a company's future

true

the stockholders equity in a corporation consists of capital contributed by stockholders and retained earnings

true