When a stock dividend is declared, the market value of the stock is transferred from Retained Eamings into other stockholder equity accounts (reclassify retained earnings to the stock accounts). True False 18. Stock splits are always in a 2 for 1 ratio. True False 19. A corporation is formed in accordance with state law. True False 20. Preferred stock is generally non-voting. True False 1. The advantages of corporations going public include all of the following except. A. Professional management B. Transferability of ownership. C. Limited shareholder liability. D. Ability to remove assets. 2. A primary disadvantage of the corporate form of organization is: A. Unlimited personal liability for business debts. B. Ownership is difficult to transfer. C. Corporate earnings are subject to double taxation. D. Corporation may continue its operations without disruption despite retirement of individual stockholders. 3. Which of the following apply to publically traded corporations? A. There is an organized market for buying and selling the company's shares. B. The company must prepare and issue its financial statements in conformity with generally accepted accounting principles. C. The company must have its financial statements audited by an independent firm of CPAs. D. The company's financial information must be submitted to the Securities and Exchange Commission. F. All of the above. 4. In a corporation's organization chart, who has/have the highest position? A. Stockholders. B. Board of directors. C. CEO. D. President 5. Shares that have been sold and are in the hands of stockholders are called. A. Outstanding B. Issued C. Treasury. D. Underwritten. 6. The entry to record the issuance of common stock at a price above its par value includes. A. A credit to Cash. B. A credit to a liability account for the difference between the price paid by the stockholders and the par value of the stock. C. A credit to Additional Paid-in Capital: Common Stock D. A debit to Common Stock