|
When Bunyan Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,000 shares of stock at a price of $22.00 per share. The entry to record the above transaction would include a debit to Common Stock for $80,000 credit to Common Stock for $176,000 credit to Paid in Capital in Excess of Par- for $96,000 debit to Cash for $80,000 |
credit to Paid in Capital in Excess of Par- for $96,000 |
|
A corporation issues 2,000 shares of common stock for $ 32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for $20,000 $32,000 $12,000 $2,000 |
$20,000 |
|
Which of the following is not a right possessed by common stockholders of a corporation? the right to vote in the election of the board of directors the right to receive a minimum amount of dividends the right to sell their stock to anyone they choose the right to share in assets upon liquidation |
the right to receive a minimum amount of dividends |
|
The term deficit is used to refer to a debit balance in which of the following accounts of a corporation? Retained Earnings Treasury Stock Organizational Expenses Common Stock |
Retained Earnings |
|
Which one of the following is not necessary in order for a corporation to pay a cash dividend? Sufficient Retained earnings Sufficient cash Formal action of the board of directors Declared dividends |
Declared dividends |
|
The ability of a corporation to obtain capital is less than a partnership. about the same as a partnership. restricted because of the limited life of the corporation. enhanced because of limited liability and ease of share transferability. |
enhanced because of limited liability and ease of share transferability. |
|
Characteristics of a corporation include its inability to own property shareholders who are mutual agents direct management by the shareholders (owners) shareholders who have limited liability |
shareholders who have limited liability |
|
Which of the following accounts below is reported in the paid-in capital/stockholders’ equity section of the corporate balance sheet? Cash Stock Dividends Organizational Expenses Preferred Stock |
Preferred Stock |
|
The par value per share of common stock represents the minimum selling price of the stock established by the articles of incorporation. the minimum amount the stockholder will receive when the corporation is liquidated an arbitrary amount established in the articles of incorporation the amount of dividends per share to be received each year |
an arbitrary amount established in the articles of incorporation |
|
Alliance Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to: Common Stock $10,000 and Retained Earnings $4,000. Common Stock $14,000. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. |
Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000 |
|
Treasury stock should be reported in the financial statements of a corporation as a(n) liability. deduction from total paid-in capital and retained earnings. deduction from total paid-in capital. investment. |
deduction from total paid-in capital and retained earnings. |
|
In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported? other expense on income statement other income on income statement stockholders’ equity on balance sheet intangible asset on balance sheet |
stockholders’ equity on balance sheet |
|
Those most responsible for the major policy decisions of a corporation are the management. board of directors. employees. stockholders. |
board of directors. |
|
One of the main disadvantages of the corporate form is the professional management double taxation of dividends charter corporation must issue stock |
double taxation of dividends |
|
Under the corporate form of business organization ownership rights are easily transferred. a stockholder is personally liable for the debts of the corporation. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. stockholders wishing to sell their corporation shares must get the approval of other stockholders. |
ownership rights are easily transferred. |
|
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared? $100,000 $5,000 $45,000 $50,000 |
$45,000 |
|
The authorized stock of a corporation must be recorded in a formal accounting entry. only reflects the initial capital needs of the company. is indicated in its by-laws. is indicated in its charter. |
is indicated in its charter. |
|
Which one of the following would not be considered an advantage of the corporate form of organization? Government regulation Separate legal existence Continuous life Limited liability of stockholders |
Government regulation |
|
A disadvantage of the corporate form of business entity is mutual agency for stockholders unlimited liability for stockholders corporations are subject to more governmental regulations the ease of transfer of ownership |
corporations are subject to more governmental regulations |
|
n which section of the balance sheet would Treasury Stock be reported? Fixed assets Stockholders’ equity Intangible assets Long-term liabilities |
Stockholders’ equity |
|
What is the total stockholders’ equity based on the following data? Question options: |
$835,000 |
|
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? 5,000 35,000 45,000 55,000 |
35,000 |
|
If Larger Company issues 1,000 shares of $5 par value common stock for $70,000, the account Paid-in Capital in excess of Par Value will be credited for $5,000. Cash will be debited for $65,000. Common Stock will be credited for $70,000. Paid-in Capital in excess of Par Value will be credited for $65,000. |
Paid-in Capital in excess of Par Value will be credited for $65,000. |
|
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? $35,000 $10,000 $70,000 $80,000 |
$70,000 |
|
Par value is the monetary value assigned per share in the corporate charter. represents what a share of stock is worth. represents the original selling price for a share of stock. is established for a share of stock after it is issued. |
is the monetary value assigned per share in the corporate charter. |
|
The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to Organizational Expenses Goodwill Common Stock Cash |
Common Stock |
|
Which of the following is not characteristic of a corporation? Corporations are required to file federal income tax returns. Cash dividends paid by a corporation are deductible as expenses by the corporation. The financial loss that a stockholder may suffer from owning stock in a public company is limited. A corporation can own property in its name. |
Cash dividends paid by a corporation are deductible as expenses by the corporation. |
|
If common stock is issued for an amount greater than par value, the excess should be credited to Retained Earnings. Cash. Legal Capital. Paid-in Capital in Excess of Par Value. |
Paid-in Capital in Excess of Par Value. |
|
treasury stock shares are unissued shares that are held by the treasurer of the corporation issued shares that are held by the treasurer of the corporation shares held by the U.S. Treasury Department part of the total outstanding shares but not part of the total issued shares of a corporation |
issued shares that are held by the treasurer of the corporation |
|
The liability for a dividend is recorded on which of the following dates? the date of record the date of payment the date of announcement the date of declaration |
the date of declaration |
|
How is treasury stock shown on the balance sheet? as a decrease in stockholders’ equity as an increase in stockholders’ equity treasury stock is not shown on the balance sheet as an asset |
as a decrease in stockholders’ equity |
|
The entry to record the issuance of common stock at a price above par includes a debit to Organizational Expenses Common Stock Cash Paid-In Capital in Excess of Par-Common Stock |
Cash |
|
New Corp. issues 1,000 shares of $10 par value common stock at $15 per share. When the transaction is recorded, credits are made to: Common Stock $15,000. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $5,000. Common Stock $10,000 and Retained Earnings $5,000. Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $5,000. |
Common Stock $10,000 and Paid-in Capital in Excess of Par Value $5,000. |
|
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 50,000 shares were originally issued and10,000 were subsequently reacquired. What is the number of shares outstanding? 10,000 40,000 50,000 60,000 |
40,000 |
|
Which of the following is not a prerequisite to paying a cash dividend? sufficient retained earnings formal action by the board of directors sufficient cash market value in excess of par value per share |
market value in excess of par value per share |
|
Retained earnings changes are summarized in the retained earnings statement is the same as contributed capital over time will have a direct relationship with the amount of cash on hand if the corporation is profitable cannot have a debit balance |
changes are summarized in the retained earnings statement |
|
Which of the following is not true of a corporation? It may enter into binding legal contracts in its own name. It may sue and be sued. The acts of its owners bind the corporation. It may buy, own, and sell property. |
The acts of its owners bind the corporation. |
|
Which of the following statements concerning taxation is accurate? Corporations pay federal income taxes but not state income taxes. Corporations pay federal and state income taxes. Only the owners must pay taxes on corporate income. Corporations pay income taxes but their owners do not. |
Corporations pay federal and state income taxes. |
|
Stockholders’ equity is usually equal to cash on hand includes paid-in capital and liabilities includes retained earnings and paid-in capital is shown on the income statement |
includes retained earnings and paid-in capital |
|
Which one of the following is not necessary in order for a corporation to pay a cash dividend? Declared dividends Sufficient Retained earnings Sufficient cash Formal action of the board of directors |
Declared dividends |
|
Stockholders’ equity |
includes retained earnings and paid-in capital. |
|
The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called |
authorized stock |
|
If preferred stock has dividends in arrears, the preferred stock must be |
cumulative |
|
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? |
35,000 |
|
The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors? |
how high the par value |
|
Hurd Company acquired a building valued at $160,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Hurd Company? |
$150,000 |
|
The Snow Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to |
Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $100,000. |
|
On January 1, 20xx, Sunshine Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Sunshine purchased 2,000 shares of treasury stock for $23 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a |
debit to Treasury Stock for $46,000. |
|
The date on which a cash dividend becomes a binding legal obligation is on the |
declaration date. |
|
Which of the following is the appropriate general journal entry to record the declaration of a cash dividends? |
Cash Dividends Cash Dividends Payable |
|
The liability for a dividend is recorded on which of the following dates? |
the date of declaration |
|
When a stock dividend is declared, which of the following accounts is credited? |
Stock Dividends Distributable |
|
Which statement below is not a reason for a corporation to buy back its own stock. |
to increase the shares outstanding |
|
How is treasury stock shown on the balance sheet? |
as a decrease in stockholders’ equity |
|
The excess of sales price of treasury stock over its cost should be credited to |
Paid-In Capital from Sale of Treasury Stock |
|
What is the total stockholders’ equity based on the following account balances? a. $640,000 |
$610,000 |
|
Treasury stock that had been purchased for $5,400 last month was reissued this month for $7,500. The journal entry to record the reissuance would include a credit to |
Paid-In Capital from Treasury Stock for $2,100 |
|
A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale? |
$0 |
Share This
Flashcard
