Truel False (1pt each) 1. The cost method derives its name from the fact that the Treasury Stock account is maintained at the cost of shares purchased. True False 2. When treasury stock is sold for an amount greater than oost, the dfference should be credited to Gain on Sale of Treasury Stock and reported as other income on the Income Statement. True False 3. Stockholders' liability is generally unlimited; therefore, creditors have recourse to stockholders personal assets as well as corporate assets. True False 4 Retained earnings is net income retained in a corporation and is often referred to as earned capital. False 5. A corporation is bound to a contract entered into by one of its stockholders. True False 6. Issued shares of stock less outstanding shares equals treasury stock. True False 7. The cumulative feature of stock only applies to preferred stock. True False 8 in arrears are not considered a liability because no obligation exists until the Dividends of directors. dividend is declared by the board True False 9. A prior period adjustment always includes a credit to Retained Earnings. True False 10. Three important dates relating to cash dividends are: date of declaration, date of record. and date of payment True False