1. Explain each of the following terms that apply to corporations:

a. separate legal entity

b. limited stockholder liability

c. income tax liability

d. government regulation

2. At what level of government are corporations created?

3. What are organizational Expenses? Give a few examples.

4. There are two main sources of stockholders' equity. What are they?

5. What is retained earnings? Where do retained earnings come from. Is retained earnings the same thing as cash?

6. All corporations issue common stock. Name the four rights of the common stockholder.

7. Preferred stock has a fixed (unvarying) dividend. There are two ways that this dividend may be described; what are they?

8. What is cumulative preferred stock?

9. Johnson Corporation issues 1,000 shares of $10 par common stock and receives $15 per share. How would this transaction be recorded?

10. If common stock is issued at a premium, as in question 7, is the excess considered net income for the corporation? Explain.