Question 1

Treasury stock refers to the shares of stock that have been reacquired by the issuing corporation and that have not been formally canceled.

Accepted Answer

A) True 
 B)False  True

Question 2

Corporations are chartered either with perpetual life or with the provision for renewal if the charter specifies a limit, irrespective of the deaths of any stockholders, or disposal of their stock.

Accepted Answer

A) True 
 B)False  True

Question 3

Match the terms with the definitions.
-Stock that has certain preferences or rights superior to common stock.

Accepted Answer

A) authorized stock 
B) board of directors 
C) bylaws 
D) premium 
E) capital stock subscription
F)preferred stock
G)paid-in capital
H)cumulative preferred stock
I)dividends
J)double taxation
K)outstanding stock
L)no-par stock 
A) authorized stock 
B) board of directors 
C) bylaws 
D) premium 
E) capital stock subscription
F)preferred stock
G)paid-in capital
H)cumulative preferred stock
I)dividends
J)double taxation
K)outstanding stock
L)no-par stock F

Question 4

Stocks that carry certain specified preferences, or first claims, are called

Accepted Answer

A)  common stock. 
B)  treasury stock. 
C)  preferred stock. 
D)  participating stock. 
A)  common stock. 
B)  treasury stock. 
C)  preferred stock. 
D)  participating stock.

Question 5

Unless specifically denied, each share of capital stock of a business corporation gives its owner the right to

Accepted Answer

A)  manage the daily operations of the corporation. 
B)  hire and fire employees. 
C)  set company policy. 
D)  share in the assets if the corporation liquidates. 
A)  manage the daily operations of the corporation. 
B)  hire and fire employees. 
C)  set company policy. 
D)  share in the assets if the corporation liquidates.

Question 6

If shares of stock are sold for less than their par value, the difference is called

Accepted Answer

A)  a discount. 
B)  a gain. 
C)  a premium. 
D)  earnings. 
A)  a discount. 
B)  a gain. 
C)  a premium. 
D)  earnings.

Question 7

Match the terms with the definitions.
-Together with the charter, this provides the general guidelines for conducting the business.

Accepted Answer

A) authorized stock 
B) board of directors 
C) bylaws 
D) premium 
E) capital stock subscription
F)preferred stock
G)paid-in capital
H)cumulative preferred stock
I)dividends
J)double taxation
K)outstanding stock
L)no-par stock 
A) authorized stock 
B) board of directors 
C) bylaws 
D) premium 
E) capital stock subscription
F)preferred stock
G)paid-in capital
H)cumulative preferred stock
I)dividends
J)double taxation
K)outstanding stock
L)no-par stock

Question 8

The Ramos Corporation has 50,000 shares of $5 par common stock and 10,000 shares of $25 par, 5% preferred stock outstanding. Dividends totaling $150,000 are distributed to common and preferred shareholders combined. Compute the dividends to be distributed to preferred and common stockholders in total and per share under the following independent conditions. (Round to the nearest cent if necessary)
a.
The preferred stock is nonparticipating and noncumulative with no dividends distributed last year.
b.
The preferred stock is noncumulative and fully participating after the common stockholders have received dividends per share equal to the preferred stock.
c.
The preferred stock is cumulative and nonparticipating and no dividends were distributed last year.

Accepted Answer

The answer of The Ramos Corporation has 50,000 shares of...

Question 9

Match the terms with the definitions.
-Preferred stock that has a right to share with common stock in dividends in excess of a stated dividend rate.

Accepted Answer

A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency 
A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency

Question 10

A corporation's life is specified in its charter.

Accepted Answer

A) True 
 B)False

Question 11

Match the terms with the definitions.
-Capital stock that has been sold and disbursed.

Accepted Answer

A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency 
A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency

Question 12

The total number of shares the corporate charter permits the corporation to issue is called

Accepted Answer

A)  outstanding stock. 
B)  authorized stock. 
C)  issued stock. 
D)  common stock. 
A)  outstanding stock. 
B)  authorized stock. 
C)  issued stock. 
D)  common stock.

Question 13

After closing its books on December 31, 20--, Hilltop Corporation stockholders' equity accounts have the following balances. Complete the stockholders' equity section of the balance sheet. $\begin{array}{lr}
\text { Paid-in capital in excess of par-preferred stock } & \$ 45,000 \
\text { Paid-in capital in excess of par-common stock } & 19,000 \
\text { Paid-in capital from sale of treasury stock } & 32,000 \
\text { Retained earnings } & 111,000
\end{array}$ ​

Accepted Answer

The answer of After closing its books on December 31,...

Question 14

All of the following are characteristics of the stockholders' equity presentation on the balance sheet EXCEPT

Accepted Answer

A)  stockholders' equity is separated by source. 
B)  paid-in capital is separated by source. 
C)  preferred stock is listed before common stock. 
D)  retained earnings is listed before all paid-in capital. 
A)  stockholders' equity is separated by source. 
B)  paid-in capital is separated by source. 
C)  preferred stock is listed before common stock. 
D)  retained earnings is listed before all paid-in capital.

Question 15

Match the terms with the definitions.
-Legal document which includes the name of the corporation, the location of the principal office, the purpose of the business, the description of the capital stock, and the names and addresses of the incorporators.

Accepted Answer

A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency 
A) preemptive right 
B) participating preferred stock 
C) par value 
D) capital stock 
E) organization costs
F)charter
G)common stock
H)nonparticipating preferred stock
I)noncumulative preferred stock
J)no-par stock
K)incorporators
L)issued stock
M)market value
N)mutual agency

Question 16

The account that represents the accumulated earnings of the corporation that have not been paid out to stockholders as dividends is called Paid In Capital in Excess of Par.

Accepted Answer

A) True 
 B)False

Question 17

Paid-in capital from sale of treasury stock could appear as an addition or deduction on the stockholders' equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

When preferred stock has a dividend preference, it is usually stated as a dollar amount per share or as a percentage of par value.

Accepted Answer

A) True 
 B)False

Question 19

Dividends are equivalent to withdrawals in a sole proprietorship or partnership.

Accepted Answer

A) True 
 B)False

Question 20

The ability of any stockholder to transfer stock to another person without the knowledge or the consent of the other stockholders and without disturbing the normal activities of the corporation is called

Accepted Answer

A)  unlimited life. 
B)  suitability for large scale operations. 
C)  taxation of corporate earnings. 
D)  transferable ownership units. 
A)  unlimited life. 
B)  suitability for large scale operations. 
C)  taxation of corporate earnings. 
D)  transferable ownership units.

Exam 20: Corporations: Organization and Capital Stocks

Treasury stock refers to the shares of stock that have been reacquired by the issuing corporation and that have not been formally canceled.

Corporations are chartered either with perpetual life or with the provision for renewal if the charter specifies a limit, irrespective of the deaths of any stockholders, or disposal of their stock.

Match the terms with the definitions. -Stock that has certain preferences or rights superior to common stock.

Stocks that carry certain specified preferences, or first claims, are called

Unless specifically denied, each share of capital stock of a business corporation gives its owner the right to

If shares of stock are sold for less than their par value, the difference is called

Match the terms with the definitions. -Together with the charter, this provides the general guidelines for conducting the business.

Match the terms with the definitions. -Preferred stock that has a right to share with common stock in dividends in excess of a stated dividend rate.

A corporation's life is specified in its charter.

Match the terms with the definitions. -Capital stock that has been sold and disbursed.

The total number of shares the corporate charter permits the corporation to issue is called

All of the following are characteristics of the stockholders' equity presentation on the balance sheet EXCEPT

Match the terms with the definitions. -Legal document which includes the name of the corporation, the location of the principal office, the purpose of the business, the description of the capital stock, and the names and addresses of the incorporators.

The account that represents the accumulated earnings of the corporation that have not been paid out to stockholders as dividends is called Paid In Capital in Excess of Par.

Paid-in capital from sale of treasury stock could appear as an addition or deduction on the stockholders' equity section of the balance sheet.

When preferred stock has a dividend preference, it is usually stated as a dollar amount per share or as a percentage of par value.

Dividends are equivalent to withdrawals in a sole proprietorship or partnership.

The ability of any stockholder to transfer stock to another person without the knowledge or the consent of the other stockholders and without disturbing the normal activities of the corporation is called

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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