Corporate Accounting Quiz

1. Retained earnings represent the cumulative net income of a corporation that has not been distributed as dividends.

• True

• False

2. Retained earnings are reported in the equity section of the balance sheet.

• True

• False

3. Stockholders have the right to vote in the election of the board of directors.

• True

• False

4. A corporation can declare dividends even if it has no retained earnings.

• True

• False

5. Cash dividends reduce retained earnings when declared.

• True

• False

6. Stock dividends decrease total stockholders’ equity.

• True

• False

7. Stockholders are personally liable for the debts of the corporation.

• True

• False

8. Stockholders have the right to receive dividends once they are declared by the board.

• True

• False

9. Winding up of a corporation refers to the process of liquidating assets and settling obligations before closure.

• True

• False

10. Upon dissolution, corporate assets are first used to pay creditors before distributing to stockholders.

• True

• False