Question

1-Which of the following controls a corporation?

1. Chief executive officer (CEO)
2. Board of directors
3. Chief financial officer (CFO)
4. None of these choices are correct.

2-All of the following are considered advantages of the corporate form of business EXCEPT

1. limited liability.
2. double taxation.
3. continuous life.
4. separate legal existence.

3- A journal entry to record the issuance of preferred stock at a premium would include a __________ to __________.

1. credit; Cash
2. debit; Paid-In Capital in Excess of Par
3. debit; Preferred Stock
4. credit; Preferred Stock

4-When only one class of stock is issued, it is called __________ stock.

1. common
2. preferred
3. no-par
4. cumulative preferred

5-Changes in retained earnings may be reported in all of the following EXCEPT

1. a separate retained earnings statement.
2. a combined income and retained earnings statement.
3. a statement of stockholders’ equity.
4. a balance sheet.

6-  Which is the argument in favor of super voting shares?

1. The founders can concentrate on the long-term goals of the company without concern for the more short-term goals public shareholders may have.
2. The founders can eliminate or reduce the public shareholders’ ability to hold management accountable.
3. The shareholders will have too much power in voting forward movement of the company.
4. The founders will relinquish control and thus steer the company in a direction that reduces shareholders' revenue.

Answer 1

1) b) Board of Directors ( Board of Directors collectively make decisions and control corporations generally.)

2) b) Double Taxation. ( Double Taxation is major disadvantage as corporation has to pay tax on it's profits and dividend declared therefore it leads to double taxation, on the same money. i.e. profits as dividends are declared from profits.)

3) b) debit; Paid in Capital in Excess of Par. ( The excess amount received over and above the face value will be debited to this account.)

4) a) Common

5) c) a Statement of stockholders' equity.  

6) b) The founders can eliminate or reduce the public shareholders' ability to hold management accountable.