ACCOUNTING 202 TRUE-FALSE STATEMENTS

1. A corporation is not an entity which is separate and distinct from its owners.

2. A corporation can be organized for the purpose of making a profit or it may be nonprofit.

3. The Board of Directors repr

esents the company’s management.

4. If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends

received from that corporation.

5. A corporation must be

incorporated in each state in which it does business.

6. A stockholder has the right to vote in the election of the board of directors.

7. Net income and prior period adjustments to co

rrect overstatements of prio

r years’ net income are

reported as additions in the

Retained Earnings Statement.

8. Each of the individual debits and credits to the retained earnings account made during the year should

be included in that period’s

Retained Earnings Statement.

9. The par value of common stock must always be equal to its market value on the date the stock is

issued.

10. When no-par value stock does not have a stated value, the entire proceeds from the issuance of the

stock becomes legal capital.