ACCOUNTING EXAM CH. 10

Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred, over and beyond the investment they have made.

A corporation has limited liability and attracting outside investment is easier relative to sole proprietorships and partnerships.

A corporation is an entity that is (1) legally separate from its owners and (2) not required to pay its own income taxes.

We record treasury stock at the cost of the shares acquired.

Total assets, total liabilities, and total stockholders' equity do not change as a result of a stock dividend.

All publicly held corporations in the United States are regulated by the Securities and Exchange Commission.

Authorized stock is the number of shares that have been sold to investors.

Retained earnings represent the earnings of the corporation that have not been distributed as dividends to stockholders.

Treasury stock is the purchase of a company's own issued stock.

When we resell treasury stock, we report the difference between its cost and the cash received as an increase or a decrease in additional paid-in capital.