Question 1

Which of the following is not true of a corporation?

Accepted Answer

A)   It may enter into binding legal contracts in its own name.
B)   It may sue and be sued.
C)   The acts of its owners bind the corporation.
D)   It may buy, own, and sell property.E) None of the above
F) A) and B)

Question 2

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Accepted Answer

A)   decrease retained earnings, increase common stock, and increase paid-in capital
B)   increase retained earnings, decrease common stock, and decrease paid-in capital
C)   increase retained earnings, decrease common stock, and increase paid-in capital
D)   decrease retained earnings, increase common stock, and decrease paid-in capitalE) C) and D)
F) A) and B)

Question 3

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Accepted Answer

A) True 
 B)False

Question 4

The excess of sales price of treasury stock over its cost should be credited to

Accepted Answer

A)   Treasury Stock Receivable
B)   Premium on Capital Stock
C)   Paid-In Capital from Sale of Treasury Stock
D)   Income from Sale of Treasury StockE) A) and D)
F) B) and D)

Question 5

Which of the following statements concerning taxation is accurate?

Accepted Answer

A)   Corporations pay federal income taxes but not state income taxes.
B)   Corporations pay federal and state income taxes.
C)   Only the owners must pay taxes on corporate income.
D)   Corporations pay income taxes but their owners do not.E) A) and C)
F) All of the above

Question 6

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 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?

Accepted Answer

A)   $80,000
B)   $10,000
C)   $90,000
D)   $100,000E) A) and B)
F) A) and C)

Question 7

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Accepted Answer

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Question 8

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

Accepted Answer

A)   60,000
B)   10,000
C)   300,000
D)   30,000E) A) and B)
F) All of the above

Question 9

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account

Accepted Answer

A)   Common Stock will be credited for $75,000.
B)   Paid-in Capital in excess of Par Value will be credited for $5,000.
C)   Paid-in Capital in excess of Par Value will be credited for $70,000.
D)   Cash will be debited for $70,000.E) None of the above
F) A) and C)

Question 10

When Bayou 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 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a

Accepted Answer

A)   debit to Cash for $90,000
B)   credit to Common Stock for $207,000
C)   credit to Paid in Capital in Excess of Par for $117,000
D)   debit to Common Stock for $90,000E) A) and D)
F) A) and C)

Question 11

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Accepted Answer

A) True 
 B)False

Question 12

The excess of issue price over par of common stock is termed a(n)

Accepted Answer

A)   discount
B)   income
C)   deficit
D)   premiumE) A) and B)
F) A) and C)

Question 13

On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25. On May 5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash. On May 25, Maranda issued for cash 15,000 shares of 4%, $50 par preferred stock at $55.
Journalize the entries to record the April 10, May 5, and May 25 transactions.

Accepted Answer

The answer of On April 10, Maranda Corporation issued for...

Question 14

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 15

Treasury stock shares are

Accepted Answer

A)   shares held by the U.S. Treasury Department
B)   part of the total outstanding shares but not part of the total issued shares of a corporation
C)   unissued shares that are held by the treasurer of the corporation
D)   issued shares that have been reacquired by a corporationE) A) and C)
F) B) and C)

Question 16

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

Accepted Answer

A)   income will be increased by $500
B)   stockholders' equity will be increased by $3,500
C)   stockholders' equity will be increased by $500
D)   stockholders' equity will not changeE) A) and D)
F) A) and C)

Question 17

The main source of paid-in-capital is from issuing stock.

Accepted Answer

A) True 
 B)False

Question 18

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Accepted Answer

A) True 
 B)False

Question 19

The initial owners of stock of a newly formed corporation are called directors.

Accepted Answer

A) True 
 B)False

Question 20

Organizational expenses are classified as intangible assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Exam 11: Corporations: Organization, Stock Transactions, and Dividends

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Correct Answer
verified

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 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?

Correct Answer
verified

Treasury stock shares are

Correct Answer
verified

The excess of sales price of treasury stock over its cost should be credited to

Correct Answer
verified

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Correct Answer
verified

The main source of paid-in-capital is from issuing stock.

Correct Answer
verified

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Correct Answer
verified

Cash dividends become a liability to a corporation on the date of record.

Correct Answer
verified

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Correct Answer
verified

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account

Correct Answer
verified

Correct Answer
verified

The initial owners of stock of a newly formed corporation are called directors.

Correct Answer
verified

Organizational expenses are classified as intangible assets on the balance sheet.

Correct Answer
verified

Correct Answer
verified

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

Correct Answer
verified

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

Correct Answer
verified

Which of the following is not true of a corporation?

Correct Answer
verified

The excess of issue price over par of common stock is termed a(n)

Correct Answer
verified

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Correct Answer
verified
(a)
(b)
...
View Answer

Which of the following statements concerning taxation is accurate?

Correct Answer
verified

Exam 11: Corporations: Organization, Stock Transactions, and Dividends

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Correct AnswerverifiedShow Answer

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 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?

Correct AnswerverifiedShow Answer

Treasury stock shares are

Correct AnswerverifiedShow Answer

The excess of sales price of treasury stock over its cost should be credited to

Correct AnswerverifiedShow Answer

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Correct AnswerverifiedShow Answer

The main source of paid-in-capital is from issuing stock.

Correct AnswerverifiedShow Answer

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Correct AnswerverifiedShow Answer

Cash dividends become a liability to a corporation on the date of record.

Correct AnswerverifiedShow Answer

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Correct AnswerverifiedShow Answer

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The initial owners of stock of a newly formed corporation are called directors.

Correct AnswerverifiedShow Answer

Organizational expenses are classified as intangible assets on the balance sheet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

Correct AnswerverifiedShow Answer

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

Correct AnswerverifiedShow Answer

Which of the following is not true of a corporation?

Correct AnswerverifiedShow Answer

The excess of issue price over par of common stock is termed a(n)

Correct AnswerverifiedShow Answer

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Correct Answerverified(a) (b)...View AnswerShow Answer

Which of the following statements concerning taxation is accurate?

Correct AnswerverifiedShow Answer

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(a)
(b)
...
View Answer

Correct Answer
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