Question 1

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

Accepted Answer

A)  treasury stock
B)  issued stock
C)  outstanding stock
D)  authorized stockE) None of the above
F) B) and C)

Question 2

When Wisconsin Corporation was formed on January 1,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 8,500 shares of stock at a price of $16 per share. The entry to record the above transaction would include a

Accepted Answer

A)  debit to Cash for $85,000
B)  credit to Common Stock for $136,000
C)  credit to Paid in Capital in Excess of Par for $51,000
D)  debit to Common Stock for $85,000E) A) and B)
F) None of the above

Question 3

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 4

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The primary purpose of a stock split is to

Accepted Answer

A)  increase paid-in capital
B)  reduce the market price of the stock per share
C)  increase the market price of the stock per share
D)  increase retained earningsE) All of the above
F) B) and C)

Question 7

Those most responsible for the major policy decisions of a corporation are the

Accepted Answer

A)  management
B)  board of directors
C)  employees
D)  stockholdersE) A) and B)
F) None of the above

Question 8

A large retained earnings account means that there is cash available to pay dividends.

Accepted Answer

A) True 
 B)False

Question 9

When a corporation completes a 3-for-1 stock split

Accepted Answer

A)  the ownership interest of current stockholders is decreased
B)  the market price per share of the stock is decreased
C)  the par value per share is decreased
D)  the market price per share of the stock and the par value per share is decreasedE) B) and D)
F) B) and C)

Question 10

Twenty percent of all businesses in the United States are corporations,and they account for 80% of the total business dollars generated.

Accepted Answer

A) True 
 B)False

Question 11

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

Accepted Answer

A)  $7.00
B)  $112.00
C)  $37.50
D)  $600.00E) B) and C)
F) A) and B)

Question 12

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)  excess of issue price over par
D)  treasury stockE) B) and D)
F) None of the above

Question 13

When a stock dividend is declared,which of the following accounts is credited?

Accepted Answer

A)  Common Sock
B)  Dividend Payable
C)  Stock Dividends Distributable
D)  Retained EarningsE) None of the above
F) C) and D)

Question 14

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Accepted Answer

A) True 
 B)False

Question 15

Under the corporate form of business organization,

Accepted Answer

A)  ownership rights are easily transferred
B)  a stockholder is personally liable for the debts of the corporation
C)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation
D)  stockholders wishing to sell their corporate shares must get the approval of other stockholdersE) A) and B)
F) B) and D)

Question 16

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share.The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Accepted Answer

A)  Preferred Stock for $750,000
B)  Preferred Stock for $500,000 and Paid­In Capital in Excess of Par-Preferred Stock for $250,000
C)  Preferred Stock for $500,000 and Retained Earnings for $250,000
D)  Paid-In Capital from Preferred Stock for $750,000E) A) and B)
F) A) and C)

Question 17

Nexis Corp.issues 1,000 shares of $15 par value common stock at $22 per share.When the transaction is recorded,credits are made to:

Accepted Answer

A)  Common Stock,$15,000,and Paid-In Capital in Excess of Par,$7,000
B)  Common Stock,$22,000,and Retained Earnings,$15,000
C)  Common Stock,$7,000,and Paid-In Capital in Excess of Stated Value,$15,000
D)  Common Stock,$22,000E) B) and C)
F) C) and D)

Question 18

One of the main disadvantages of the corporate form is the

Accepted Answer

A)  professional management
B)  double taxation of dividends
C)  charter
D)  requirement to stockE) C) and D)
F) All of the above

Question 19

If common stock is issued for an amount greater than par value,the excess should be credited to

Accepted Answer

A)  Retained Earnings
B)  Cash
C)  Legal Capital
D)  Paid-In Capital in Excess of ParE) A) and C)
F) None of the above

Question 20

Par value

Accepted Answer

A)  is the monetary value assigned per share in the corporate charter
B)  represents what a share of stock is worth
C)  represents the original selling price for a share of stock
D)  is established for a share of stock after it is issuedE) B) and D)
F) B) and C)

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

Correct Answer
verified

The primary purpose of a stock split is to

Correct Answer
verified

Par value

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

A large retained earnings account means that there is cash available to pay dividends.

Correct Answer
verified

When a corporation completes a 3-for-1 stock split

Correct Answer
verified

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

Correct Answer
verified

When a stock dividend is declared,which of the following accounts is credited?

Correct Answer
verified

Those most responsible for the major policy decisions of a corporation are the

Correct Answer
verified

Nexis Corp.issues 1,000 shares of $15 par value common stock at $22 per share.When the transaction is recorded,credits are made to:

Correct Answer
verified

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

Correct Answer
verified

One of the main disadvantages of the corporate form is the

Correct Answer
verified

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share.The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Correct Answer
verified

Twenty percent of all businesses in the United States are corporations,and they account for 80% of the total business dollars generated.

Correct Answer
verified

Under the corporate form of business organization,

Correct Answer
verified

The issuance of common stock affects both paid-in capital and retained earnings.

Correct Answer
verified

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Correct Answer
verified

If common stock is issued for an amount greater than par value,the excess should be credited to

Correct Answer
verified

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

The primary purpose of a stock split is to

Correct AnswerverifiedShow Answer

Par value

Correct AnswerverifiedShow Answer

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

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

A large retained earnings account means that there is cash available to pay dividends.

Correct AnswerverifiedShow Answer

When a corporation completes a 3-for-1 stock split

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a stock dividend is declared,which of the following accounts is credited?

Correct AnswerverifiedShow Answer

Those most responsible for the major policy decisions of a corporation are the

Correct AnswerverifiedShow Answer

Nexis Corp.issues 1,000 shares of $15 par value common stock at $22 per share.When the transaction is recorded,credits are made to:

Correct AnswerverifiedShow Answer

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately

Correct AnswerverifiedShow Answer

One of the main disadvantages of the corporate form is the

Correct AnswerverifiedShow Answer

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share.The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Correct AnswerverifiedShow Answer

Twenty percent of all businesses in the United States are corporations,and they account for 80% of the total business dollars generated.

Correct AnswerverifiedShow Answer

Under the corporate form of business organization,

Correct AnswerverifiedShow Answer

The issuance of common stock affects both paid-in capital and retained earnings.

Correct AnswerverifiedShow Answer

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Correct AnswerverifiedShow Answer

If common stock is issued for an amount greater than par value,the excess should be credited to

Correct AnswerverifiedShow Answer

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

Correct AnswerverifiedShow Answer

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