1. Which of the following would NOT be considered a characteristic of a corporation?

a. Right of succession

b. Limited liability of shareholders

c. Mutual agency

d. Separate legal entity

2. The journal entry to record the declaration of a large bonus issue includes:

a. A debit to retained earnings for the market value of the shares to be distributed

b. A credit to share dividends distributable for the fair market value of the share to be distributed

c. A credit to share premium for the difference between the fair market value and the par value of the share to be distributed

d. A debit to retained earnings for the par value of the shares to be distributed