Do It! Review 11-1 Indicate whether each of the following statements is true or

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Do It! Review 11-1

Indicate whether each of the following statements is true or false.

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1. The corporation is an entity separate and distinct from its owners. FalseTrue 2. The liability of stockholders is normally limited to their investment in the corporation. FalseTrue 3. The relative lack of government regulation is an advantage of the corporate form of business. TrueFalse 4. There is no journal entry to record the authorization of capital stock. TrueFalse 5. No-par value stock is quite rare today. TrueFalse

Explanation / Answer

1. The corporation is an entity separate and distinct from its owners.

True

Note : Corporatation has an seperate legal entiity i.e different from its owner .

2. The liability of stockholders is normally limited to their investment in the corporation.   

True

Note : Generally The liability of stockholders is limited by shares only, but in exceptional case liability may be unlimited.

3. The relative lack of government regulation is an advantage of the corporate form of business.

True

Note : if there is relative lack of government regulation than it would advantage of the corporate form of business for running business smoothly, as government regulation restrict corporation to perform what he insist.

4. There is no journal entry to record the authorization of capital stock.

True

Note : There is no entry to record the authorization of capital stock, only issued authorised capital stock would be recorded.

5. No-par value stock is quite rare today.

True

Note : To get listed it is neccessary to have Par Value therefore No-par value stock is quite rare today

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