1. What is treasury stock, and where is it positioned on a balance sheet? Do gains and losses arise on treasury stock transactions? Why? Can retained earnings be increased or decreased as a result of treasury stock transactions?
2. Differentiate between a stock split and a stock dividend, and the related accounting significance of each. What is a stock dividend? What are the reasons for issuing stock dividends?
3. Define the essence of the corporate form of entity. Describe the process by which a corporation is formed, and how business operations commence. Cite and explain the advantages of the corporate form of organization. What is a prospectus? Cite and explain the disadvantages of the corporate form of organization. Generally describe the regulatory environment for issuing stock to the public?