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QUESTIONS 1. Wh at is the meaning of each of the following terms: corporation, articles of inc charter, board of directors, corporate officers, and organization costs? 2. Wh at is meant by the limited liability of a stockholder? Does this characteristic enhanc or reduce a corpo- ration's ability to raise capital? 3. Contrast the federal income taxation of a corporation with that of a sole proprietorship and a parthe partnership Which of the three types of organizations must file a federal income tax return? 4. Define par value stock. What is the significance of a stock's par value? 5. What is the preemptive right of a stockholder? 6. What are the basic differences between preferred stock and common stock? What are the typical features of preferred stock? 7. What features make preferred stock similar to debt? What features make it similar to common stock? 8. What is meant by dividends in arrears? If dividends are two years in arrears on $500,000 of six percent preferred stock and dividends are declared this year, what amount of total dividends must preferred stock- holders receive before any distributions can be made to common stockholders? Distinguish between authorized shares and issued shares. Why might the number of shares issued be more than the number of shares outstanding? 9. 10. What are the different sources of paid-in capital? 11. Define a forward stock split. What is the major reason for a forward stock split? 12. Define treasury stock. Why might a corporation acquire treasury stock? How is treasury stoc k shown on the balance sheet? 13. If a corporation purchases 600 shares of its own common stock at $10 per share and rese $14 per share, where would the $2,400 [($14-$10) 600 shares] increase in capital appear in cial statements? Why is no gain reported? lls the shares at the finan 14. Assume that a corporation has preferred shares outstanding H tockholders