3. Distinguish between common and preferred stock.

4. Why is the distinction between paid-in capital and retained earnings important?

18. Indicate how each of the following accounts should be classified in the stockholders equity section.

(a) Common Stock

(b) Retained Earnings

(c) Paid-in Capital in Excess of Par Value

(d) Treasury Stock

(e) Paid-in Capital from Treasury Stock

(f) Paid-in Capital in Excess of Stated Value

(g) Preferred Stock

19. What factors influence the dividend policy of a company?

21. Dividends are sometimes said to have been paid out of retained earnings. What is the error, if any, in that statement?