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Accounting 2 Ch.13 True/False

A corporation is an entity separate and distinct from its owners.
True
As a legal entity, a corporation has most of the rights and privileges of a person.
True
Most of the largest U.S. corporations are privately held corporations.
False
Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.
True
The net income of a corporation is not taxed as a separate entity.
False
Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.
False
The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders.
False
The board of directors of a corporation legally owns the corporation.
False
The chief accounting officer of a corporation is the controller.
True
Corporations are subject to fewer state and federal regulations than partnerships or proprietorships.
False
Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.
True
Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.
False
When a corporation is formed, organization costs are recorded as an asset.
False
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.
True
The number of issued shares is always greater than or equal to the number of authorized shares.
False
A journal entry is required for the authorization of capital stock.
False
Publicly held corporations usually issue stock directly to investors.
False
The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
True
The market price of common stock is usually the same as its par value.
False
Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
False

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