Question 1

Match the terms with the definitions.
-The distributions of corporate income to the owners.

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 2

Change in ownership through transfer of shares or death of owners ends the life of a corporation.

Accepted Answer

A) True 
 B)False

Question 3

Match the terms with the definitions.
-Preferred stock on which dividend claims do not accrue from year to year.

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 4

Match the terms with the definitions.
-The total number of shares that the corporate charter authorizes a corporation to issue.

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 5

The right of a stockholder to purchase additional shares in proportion to the owner's present holdings, if more shares are issued by the corporation, is known as a preemptive right.

Accepted Answer

A) True 
 B)False

Question 6

Preferred stock on which the unpaid dividends for one year are added to dividends to be received the following year is called cumulative.

Accepted Answer

A) True 
 B)False

Question 7

Preferred stock is stock that gives its owner certain preferences or rights superior to those of common stock.

Accepted Answer

A) True 
 B)False

Question 8

Incorporation fees, attorneys' fees, and promotional expenses are known as organization costs and are expensed in the first two years of operation of the corporation.

Accepted Answer

A) True 
 B)False

Question 9

No-par stock that is assigned a stated value by the board of directors is accounted for in virtually the same way as par value stock.

Accepted Answer

A) True 
 B)False

Question 10

Match the terms with the definitions.
-The right to purchase additional shares in proportion to the owner's present holding, if more shares are issued by the corporation.

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 11

Match the terms with the definitions.
-Preferred stock on which unpaid dividends accumulate from year to year.

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 12

Because corporations are chartered either with perpetual life or with provision for renewal if the charter specifies a limit, irrespective of the deaths of any stockholders or disposal of their stock, corporations are said to have the characteristic of

Accepted Answer

A)  limited liability of owners. 
B)  transferable ownership units. 
C)  taxation of corporate earnings. 
D)  unlimited life. 
A)  limited liability of owners. 
B)  transferable ownership units. 
C)  taxation of corporate earnings. 
D)  unlimited life.

Question 13

It is a common practice to amortize organizational costs over a period of five to ten years.

Accepted Answer

A) True 
 B)False

Question 14

Shares of stock that have been reacquired by the issuing company are called treasury stock and the treasury stock account is debited for the cost.

Accepted Answer

A) True 
 B)False

Question 15

Most preferred stock currently being issued is participating, while it is very unusual to find the cumulative feature in preferred stock today.

Accepted Answer

A) True 
 B)False

Question 16

If stock is issued at a price above par value, the transaction that would be recorded is to

Accepted Answer

A)  debit Cash, credit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par. 
B)  debit Common Stock or Preferred Stock, debit Paid-In Capital in Excess of Par, and credit Cash. 
C)  debit Cash, debit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par. 
D)  debit Paid-In Capital in Excess of Par, credit Common Stock or Preferred Stock, and credit Cash. 
A)  debit Cash, credit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par. 
B)  debit Common Stock or Preferred Stock, debit Paid-In Capital in Excess of Par, and credit Cash. 
C)  debit Cash, debit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par. 
D)  debit Paid-In Capital in Excess of Par, credit Common Stock or Preferred Stock, and credit Cash.

Question 17

If preferred dividends are limited to the stated dividend rate, the stock is said to be

Accepted Answer

A)  participating. 
B)  nonparticipating. 
C)  cumulative. 
D)  noncumulative. 
A)  participating. 
B)  nonparticipating. 
C)  cumulative. 
D)  noncumulative.

Question 18

Match the terms with the definitions.
-group elected by the stockholders to determine corporate policies and to select corporate officers.

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 19

Preferred stock usually has voting rights.

Accepted Answer

A) True 
 B)False

Question 20

If there is only one class of stock outstanding, such stock would be classified as preferred stock.

Accepted Answer

A) True 
 B)False

Exam 20: Corporations: Organization and Capital Stocks

Match the terms with the definitions. -The distributions of corporate income to the owners.

Change in ownership through transfer of shares or death of owners ends the life of a corporation.

Match the terms with the definitions. -Preferred stock on which dividend claims do not accrue from year to year.

Match the terms with the definitions. -The total number of shares that the corporate charter authorizes a corporation to issue.

The right of a stockholder to purchase additional shares in proportion to the owner's present holdings, if more shares are issued by the corporation, is known as a preemptive right.

Preferred stock on which the unpaid dividends for one year are added to dividends to be received the following year is called cumulative.

Preferred stock is stock that gives its owner certain preferences or rights superior to those of common stock.

Incorporation fees, attorneys' fees, and promotional expenses are known as organization costs and are expensed in the first two years of operation of the corporation.

No-par stock that is assigned a stated value by the board of directors is accounted for in virtually the same way as par value stock.

Match the terms with the definitions. -The right to purchase additional shares in proportion to the owner's present holding, if more shares are issued by the corporation.

Match the terms with the definitions. -Preferred stock on which unpaid dividends accumulate from year to year.

Because corporations are chartered either with perpetual life or with provision for renewal if the charter specifies a limit, irrespective of the deaths of any stockholders or disposal of their stock, corporations are said to have the characteristic of

It is a common practice to amortize organizational costs over a period of five to ten years.

Shares of stock that have been reacquired by the issuing company are called treasury stock and the treasury stock account is debited for the cost.

Most preferred stock currently being issued is participating, while it is very unusual to find the cumulative feature in preferred stock today.

If stock is issued at a price above par value, the transaction that would be recorded is to

If preferred dividends are limited to the stated dividend rate, the stock is said to be

Match the terms with the definitions. -group elected by the stockholders to determine corporate policies and to select corporate officers.

Preferred stock usually has voting rights.

If there is only one class of stock outstanding, such stock would be classified as preferred stock.

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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