PAIL ASSIGNMENT- Chapter 11 Explain the following characteristics of a corporation a. Separate legal existence. b. Limited liability of stockholders. c. Transferable ownership rights. 1. 2. A corporation has been defined as an entity separate and distinct from its owners. in what ways is a corporation a separate legal entity? 3. What are the two principal components of stockholders' equity? 4. (a) Wha t are the principal differences between common stock and preferred stock? (b) Preferred stock may be cumulative. Discuss this feature. (c) How are dividends in arrears presented in the financial statements? 5. What three conditions must be met before a cash dividend is paid? (a) What is the purpose of a retained earnings restriction? (b) Identify the possible causes of retained earnings restrictions 6. What criteria must be met before a contingency must be recorded as a liability? How should the contingency be disclosed if the criteria are not met? 7. 8. Explain the straight-line method of amortizing discount and premium on bonds payable