The account Retained Earnings is:

1.net profit accumulated by the corporation.

2.reported as an expense in the income statement.

3.a subdivision of paid-in capital.

4.the amount paid as dividend

Which of the following statement is true?

1.Board of directors take everyday's operating decision for the company.

2.The company is under no legal obligation to pay dividend to the common stockholders every year.

3.As owners, preferred stockholders can elect board of directors.

4.Common stockholders get preference in terms of dividend receipt.

Which of the following statement is false?

1.Ownership of preferred stock gives the owner a voting right.

2.The stockholders’ equity section begins with paid-in capital.

3.Preferred stockholders get preference in terms of dividend receipt.

4.The authorization of capital stock does not result in a formal accounting entry (journal entry).