Question 1

The entry to record the issuance of common stock at a price above par includes a debit to

Accepted Answer

A)   Organizational Expenses
B)   Common Stock
C)   Cash
D)   Paid-In Capital in Excess of Par-Common StockE) A) and B)
F) A) and C)

Question 2

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Accepted Answer

A) True 
 B)False

Question 3

Paid-in capital may originate from real estate donated to the corporation.

Accepted Answer

A) True 
 B)False

Question 4

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) All of the above
F) B) and D)

Question 5

A restriction/appropriation of retained earnings

Accepted Answer

A)   decreases total assets
B)   increases total retained earnings
C)   decreases total retained earnings
D)   has no effect on total retained earningsE) C) and D)
F) All of the above

Question 6

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Accepted Answer

A) True 
 B)False

Question 7

For accounting purposes, stated value is treated the same way as par value.

Accepted Answer

A) True 
 B)False

Question 8

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Accepted Answer

A) True 
 B)False

Question 9

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

Accepted Answer

A) True 
 B)False

Question 10

Prepare entries to record the following:

Accepted Answer

(a)

_TB2013_00 (b)
...

Question 11

The par value of stock is an arbitrary per share amount defined in many states as legal capital.

Accepted Answer

A) True 
 B)False

Question 12

One of the main disadvantages of the corporate form is the

Accepted Answer

A)   professional management
B)   double taxation of dividends
C)   charter
D)   corporation must issue stockE) A) and D)
F) A) and C)

Question 13

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

Accepted Answer

(a)

_TB2013_00 (b)
...

Question 14

Earnings per share

Accepted Answer

A)   is the net income per common share
B)   must be reported by publicly traded companies
C)   helps compare companies of different sizes
D)   all of the aboveE) A) and B)
F) B) and D)

Question 15

Which of the following is not classified as paid-in capital on the balance sheet?

Accepted Answer

A)   common stock
B)   common stock distributable
C)   donated capital
D)   treasury stockE) A) and C)
F) A) and B)

Question 16

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 17

Characteristics of a corporation include

Accepted Answer

A)   shareholders who are mutual agents
B)   direct management by the shareholders (owners) 
C)   its inability to own property
D)   shareholders who have limited liabilityE) All of the above
F) C) and D)

Question 18

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) B) and C)
F) C) and D)

Question 19

Treasury stock should be reported in the financial statements of a corporation as a(n)

Accepted Answer

A)   investment.
B)   liability.
C)   current asset.
D)   deduction from stockholders's equity.E) B) and C)
F) A) and D)

Question 20

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) B) and D)
F) B) and C)

Exam 13: Corporations: Organization, Stock Transactions, and Dividends

Prepare entries to record the following:

Correct Answerverified(a) _TB2013_00 (b)...View AnswerShow Answer

Which of the following is not classified as paid-in capital on the balance sheet?

Correct AnswerverifiedShow Answer

Treasury stock should be reported in the financial statements of a corporation as a(n)

Correct AnswerverifiedShow Answer

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Correct AnswerverifiedShow Answer

Treasury stock shares are

Correct AnswerverifiedShow Answer

The entry to record the issuance of common stock at a price above par includes a debit to

Correct AnswerverifiedShow Answer

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Correct AnswerverifiedShow Answer

Characteristics of a corporation include

Correct AnswerverifiedShow Answer

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Correct AnswerverifiedShow Answer

The par value of stock is an arbitrary per share amount defined in many states as legal capital.

Correct AnswerverifiedShow Answer

One of the main disadvantages of the corporate form is the

Correct AnswerverifiedShow Answer

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Correct AnswerverifiedShow Answer

For accounting purposes, stated value is treated the same way as par value.

Correct AnswerverifiedShow Answer

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

Correct AnswerverifiedShow Answer

Earnings per share

Correct AnswerverifiedShow Answer

Paid-in capital may originate from real estate donated to the corporation.

Correct AnswerverifiedShow Answer

A restriction/appropriation of retained earnings

Correct AnswerverifiedShow Answer

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

Correct Answerverified(a) _TB2013_00 (b)...View AnswerShow Answer

Which of the following statements concerning taxation is accurate?

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

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(a)
_TB2013_00 (b)
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(a)
_TB2013_00 (b)
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