1.
Accounting
Which of the following is true of a corporation? OA. The stockholders of a corporation have
unlimited liabilities for the corporation's debts OB. A corporation can be organized publicly, but
it cannot be organized privately. C. A corporation has a limited life D. Acorporation has to pay
income taxes on its business earnings.
Solution
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1d) since every corporation has to pay income taxes on its earnings
2) False. Since common Stockholders are considered owners of the company they are
paid dividend after Preference shareholders
3) b Decrease total equity by 6000(1200*5)
4 c Treasury - common stock would be debited for 11400
5 c 10% (
Net income 21,000.00
Preference dividend 11,600.00
Earning for equity shareholder 9,400.00
Return on common stock (9400/94000) 10%
6 D Treasury Stock
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