TRUE OR FALSE

$1.$ The initial owners of stock of a newly formed corporation are called directors.

a$.$ True

b$.$ False

$2.$ A deficit is reported in in the stockholder$$s equity section of the balance sheet.

a$.$ True

b$.$ False

$3.$ The main source of paid$-$in$-$capital is from issuing stock.

a$.$ True

b$.$ False

$4.$ The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

a$.$ True

b$.$ False

$5.$ If $50,000$ shares are authorized, $37,000$ shares issued, and $2,000$ shares are reacquired, the number of outstanding shares is $39,000.$

a$.$ True

b$.$ False

$6.$ Preferred stockholders must receive their current year dividends before the common stockholders can receive anu dividends.

a$.$ True

b$.$ False

$7.$ The par value of stock is an arbitrary per share amount defined in many states as legal capital.

a$.$ True

b$.$ False

$8.$ When common stock is issued in exchange for land, the land should be recorded in the accounts at the par amount of the stock issued.

a$.$ True

b$.$ False

$9.$ When a corporation issues stock at a premium, it reports the premium as another income item on the income statement.

a$.$ True

b$.$ False

$10.$ When no$-$par stock is issued, the Common Stock account is credited for the selling price of the stock issued

a$.$ True

b$.$ False

$11.$ A corporation is a separate entity for accounting purposes but not for legal purposes.

a$.$ True

b$.$ False

$12.$ Under the Internal Revenue Code, corporations are required to pay federal income taxes

a$.$ True

b$.$ False

$13.$ Organizational expenses are classified as intangible assets on the balance sheet.

a$.$ True

b$.$ False

$14.$ The balance in retained earnings at the end of the period is created by closing entries.

a$.$ True

b$.$ False

$15.$ The amount of capital paid in by stockholders of the corporation is called legal capital

a$.$ True

b$.$ False

$16.$ A corporation may own property in the corporation name.

a$.$ True

b$.$ False

$17.$ Changes in ownership terminate the life of the corporation.

a$.$ True

b$.$ False

$18.$ A credit balance in the retained earnings account is termed a deficit.

a$.$ True

b$.$ False

$19.$ A stock issued at a price that is greater that par is said to be issued at a discount.

a$.$ True

b$.$ False

$20.$ A stock issued at a price that is below par is said to be issued at a premium.

a$.$ True

b$.$ False