Essay Questions
94. Indicate whether each of the following statements is true or false.
_____ a) Double taxation refers to the fact that corporations have to pay both federal and state income taxes.
_____ b) A corporation is a legal entity separate from its owners'.
_____ c) Limited liability is a benefit to both corporations and partnerships, but not to sole proprietorships.
_____ d) Unlike a partnership, a corporation is not terminated when a major stockholder withdraws his or her investment.
_____ e) Corporations are, generally, subject to more governmental regulations than sole proprietorships.
95. Indicate whether each of the following statements about stockholders' equity is true or false.
_____ a) Preferred stockholders generally have a preference to assets when the company is liquidated.
_____ b) Preferred stockholders generally have a preference to dividends.
_____ c) Preferred stock carries voting rights that gives the preferred stockholders greater power in the corporation's decision making process than common stockholders have.
_____ d) Preferred stockholders generally receive a set or fixed amount of dividends.
_____ e) Preferred stock is reported in the liabilities section of a corporation's balance sheet.