True or False? Corporations

1_____ Shareholders equity for a corporation consists of contributed capital and retained earnings.

2_____ The owner of a corporation is called a director.

3_____ The payment of business profits to the owners of a corporate business is known as drawings.

4_____ A dividend is a distribution of retained earnings.

5_____ The shareholders provide all of the financing for a corporation

6_____ One of the advantages of investing in preferred shares is that you will always be paid your dividend.

7_____ The members of the Board of Directors are elected by the owners of the corporation: that is, by the common and preferred shareholders.

8_____ Both interest to the creditors and dividends to the preferred shareholders must be paid each year.

9_____ A corporation is discontinued if the only shareholder dies.

10_____ The market price of common shares is shown on the balance sheet.

11_____ If a corporation goes bankrupt, the common shareholders are required to pay the creditors from their own resources.

12_____ In a year of huge profits, the preferred shareholders can expect higher than normal dividends.

13_____ The balance in retained earnings represents the cumulative earnings of a company since its inception, less the total dividends paid out.

14_____ The main goal of a responsible financial manager is high profits.