Question 1

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is not considered a disadvantage of the corporate form of organization?

Accepted Answer

A)  Additional taxes
B)  Government regulations
C)  Limited liability of stockholders
D)  Separation of ownership and management

Question 3

If preferred stock is cumulative, the

Accepted Answer

A)  preferred dividends not declared in a given year are called dividends in arrears.
B)  preferred stockholders and the common stockholders receive equal dividends.
C)  preferred stockholders and the common stockholders receive the same total dollar amount of dividends.
D)  common stockholders will share in the preferred dividends.

Question 4

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Accepted Answer

A)  Legal Expense for $10,000.
B)  Legal Expense for $30,000.
C)  Organization Expense for $10,000.
D)  Organization Expense for $30,000.

Question 5

A major difference between IFRS and GAAP relates to the

Accepted Answer

A)  Retained Earnings account.
B)  Revaluation Surplus account.
C)  Share Capital account.
D)  Share Premium account.

Question 6

The term residual claim refers to a stockholders' right to

Accepted Answer

A)  receive dividends.
B)  share in assets upon liquidation.
C)  acquire additional shares when offered.
D)  exercise a proxy vote.

Question 7

Which of the following would not be true of a privately held corporation?

Accepted Answer

A)  It is sometimes called a closely held corporation.
B)  Its shares are regularly traded on the New York Stock Exchange.
C)  It does not offer its shares for sale to the general public.
D)  It is usually smaller than a publicly held company.

Question 8

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 9

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

Accepted Answer

A)  $6 per share
B)  $600 in total
C)  $6,000 in total
D)  $.06 per share

Question 10

Corporations generally issue stock dividends in order to

Accepted Answer

A)  increase the market price per share.
B)  exceed stockholders' dividend expectations.
C)  increase the marketability of the stock.
D)  decrease the amount of capital in the corporation.

Question 11

Under IFRS, the term reserves relates to each of the following except

Accepted Answer

A)  asset revaluations.
B)  contributed (paid-in)  capital.
C)  fair value differences.
D)  retained earnings.

Question 12

Treasury Stock is a(n)

Accepted Answer

A)  contra asset account.
B)  retained earnings account.
C)  asset account.
D)  contra stockholders' equity account.

Question 13

Which of the following statements about a cash dividend is incorrect?

Accepted Answer

A)  The legality of a cash dividend depends on state corporation laws.
B)  The legality of a dividend does not indicate a company's ability to pay a dividend.
C)  Dividends are not a liability until declared.
D)  Shareholders usually vote to determine the amount of income to be distributed in the form of a dividend.

Question 14

The return on common stockholders' equity is computed by dividing

Accepted Answer

A)  net income by ending common stockholders' equity.
B)  net income by average common stockholders' equity.
C)  net income minus preferred dividends by ending common stockholders' equity.
D)  net income minus preferred dividends by average common stockholders' equity.

Question 15

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Accepted Answer

A) True 
 B)False

Question 16

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

Dividends in arrears on cumulative preferred stock

Accepted Answer

A)  are shown in stockholders' equity of the balance sheet.
B)  must be paid before common stockholders can receive a dividend.
C)  should be recorded as a current liability until they are paid.
D)  enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

Question 18

The retained earnings statement

Accepted Answer

A)  is the owners' equity statement for a corporation.
B)  will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year.
C)  will not reflect net losses.
D)  will, in some cases, fail to reconcile the beginning and ending retained earnings balances.

Question 19

Paid-in capital from treasury stock would appear on a balance sheet under the category

Accepted Answer

A)  capital stock.
B)  treasury stock.
C)  additional paid-in capital.
D)  contra to stockholders' equity.

Question 20

Sandoz Corporation was organized on January 1, 2015, with authorized capital of 500,000 shares of $10 par value common stock. During 2015, Sandoz issued 30,000 shares at $12 per share, purchased 3,000 shares of treasury stock at $13 per share, and sold 3,000 shares of treasury stock at $14 per share. What is the amount of additional paid-in capital at December 31, 2015?

Accepted Answer

A)  $0
B)  $3,000
C)  $60,000
D)  $63,000

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

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

Correct Answer
verified

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

Correct Answer
verified

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Correct Answer
verified

Correct Answer
verified

A major difference between IFRS and GAAP relates to the

Correct Answer
verified

Treasury Stock is a(n)

Correct Answer
verified

Dividends in arrears on cumulative preferred stock

Correct Answer
verified

Corporations generally issue stock dividends in order to

Correct Answer
verified

The return on common stockholders' equity is computed by dividing

Correct Answer
verified

Which of the following statements is not considered a disadvantage of the corporate form of organization?

Correct Answer
verified

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Correct Answer
verified

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Correct Answer
verified

Retained earnings that are restricted are unavailable for dividends.

Correct Answer
verified

Paid-in capital from treasury stock would appear on a balance sheet under the category

Correct Answer
verified

Which of the following would not be true of a privately held corporation?

Correct Answer
verified

Which of the following statements about a cash dividend is incorrect?

Correct Answer
verified

Under IFRS, the term reserves relates to each of the following except

Correct Answer
verified

The retained earnings statement

Correct Answer
verified

The term residual claim refers to a stockholders' right to

Correct Answer
verified

If preferred stock is cumulative, the

Correct Answer
verified

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

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

Correct AnswerverifiedShow Answer

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

Correct AnswerverifiedShow Answer

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A major difference between IFRS and GAAP relates to the

Correct AnswerverifiedShow Answer

Treasury Stock is a(n)

Correct AnswerverifiedShow Answer

Dividends in arrears on cumulative preferred stock

Correct AnswerverifiedShow Answer

Corporations generally issue stock dividends in order to

Correct AnswerverifiedShow Answer

The return on common stockholders' equity is computed by dividing

Correct AnswerverifiedShow Answer

Which of the following statements is not considered a disadvantage of the corporate form of organization?

Correct AnswerverifiedShow Answer

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Correct AnswerverifiedShow Answer

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Correct AnswerverifiedShow Answer

Retained earnings that are restricted are unavailable for dividends.

Correct AnswerverifiedShow Answer

Paid-in capital from treasury stock would appear on a balance sheet under the category

Correct AnswerverifiedShow Answer

Which of the following would not be true of a privately held corporation?

Correct AnswerverifiedShow Answer

Which of the following statements about a cash dividend is incorrect?

Correct AnswerverifiedShow Answer

Under IFRS, the term reserves relates to each of the following except

Correct AnswerverifiedShow Answer

The retained earnings statement

Correct AnswerverifiedShow Answer

The term residual claim refers to a stockholders' right to

Correct AnswerverifiedShow Answer

If preferred stock is cumulative, the

Correct AnswerverifiedShow Answer

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