True or False? Directions: Read each statement carefully then indicate whether it is true or false. Write True or False in the space provided.

1. A corporation is a legal entity separate from its owners. 2. Corporations are subject to substantially more regulations and laws than are proprietorships and partnerships.

3. Organizational expenses of a corporation often include legal fees and promoter fees.

4. The only way that a shareholder can affect the management of a corporation is to get elected to the corporations board of directors.

5. Common shareholders are entitled to a portion of every dividend distribution.

6. Stock is attractive to investors because stockholders are not liable for the corporations actions and debts and because stock is easily transferred.

7. Retained Earnings are part of the stockholders claims on the companys net assets.

8. Appropriating Retained Earnings increases total equity.

9. The ability of a business to cover long-term liabilities is solvency.

10. The ability of a business to cover short-term liabilities is liquidity.