Question 1

Under the corporate form of business organization

Accepted Answer

A)  a stockholder is personally liable for the debts of the corporation. 
B)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. 
C)  the corporation's life is stipulated in its charter. 
D)  stockholders wishing to sell their corporation shares must get the approval of other stockholders. 
A)  a stockholder is personally liable for the debts of the corporation. 
B)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. 
C)  the corporation's life is stipulated in its charter. 
D)  stockholders wishing to sell their corporation shares must get the approval of other stockholders.

Question 2

A privately held corporation does not offer its stock for sale to the general public.

Accepted Answer

A) True 
 B)False

Question 3

The cost of a noncash asset acquired in exchange for common stock should be either the fair value of the consideration given up or the consideration received whichever is more clearly determinable.

Accepted Answer

A) True 
 B)False

Question 4

On January 1 2017 Vidalia Company issued 30000 shares of $2 par value common stock for $150000. On March 1 2017 the company purchased 6000 shares of its common stock for $8 per share for the treasury. On June 1 2017 1500 of the treasury shares are sold for $10 per share. On September 1 2017 3000 treasury shares are sold at $6 per share.
Instructions
Journalize the stock transactions of Vidalia Company in 2017.

Accepted Answer

The answer of On January 1 2017 Vidalia Company issued...

Question 5

Each stockholder in a corporation has a separate capital account in the stockholders' equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

On February 1 Westwood Corporation issued 5000 shares of its $20 par value preferred stock for $26 per share.
Instructions
Journalize the transaction.

Accepted Answer

None

Question 7

West Jefferson Corporation has the following stockholders' equity accounts: Preferred Stock
Paid-in Capital in Excess of Par-Preferred Stock
Common Stock
Paid-in Capital in Excess of Stated Value-Common Stock
Paid-in Capital from Treasury Stock-Common
Retained Earnings
Treasury Stock-Common Instructions
Classify each account using the following tabular alignment.

Accepted Answer

The answer of West Jefferson Corporation has the following stockholders'...

Question 8

Which one of the following is not an ownership right of a stockholder in a corporation?

Accepted Answer

A)  To vote in the election of directors 
B)  To declare dividends on the common stock 
C)  To share in assets upon liquidation 
D)  To share in corporate earnings 
A)  To vote in the election of directors 
B)  To declare dividends on the common stock 
C)  To share in assets upon liquidation 
D)  To share in corporate earnings

Question 9

The officer who is generally responsible for maintaining the cash position of the corporation is the

Accepted Answer

A)  controller. 
B)  treasurer. 
C)  cashier. 
D)  internal auditor. 
A)  controller. 
B)  treasurer. 
C)  cashier. 
D)  internal auditor.

Question 10

A corporation has the following account balances: Common stock $1 par value $30000; Paid-in Capital in Excess of Par $650000. Based on this information the

Accepted Answer

A)  legal capital is $680000. 
B)  number of shares issued is 30000. 
C)  number of shares outstanding is 680000. 
D)  average price per share issued is $11.25. 
A)  legal capital is $680000. 
B)  number of shares issued is 30000. 
C)  number of shares outstanding is 680000. 
D)  average price per share issued is $11.25.

Question 11

On September 5 Bete Gas Corporation acquired 2500 shares of its own $1 par common stock for $23 per share. On October 15 1000 shares of the treasury stock is sold for $25 per share.
Instructions
Journalize the purchase and sale of the treasury stock assuming that the company uses the cost method.

Accepted Answer

None

Question 12

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

Accepted Answer

A) True 
 B)False

Question 13

In the financial statements organization costs appears

Accepted Answer

A)  immediately below Retained Earnings in the stockholders' equity section. 
B)  in the income statement. 
C)  as part of paid-in capital in the stockholders' equity section. 
D)  as an intangible asset. 
A)  immediately below Retained Earnings in the stockholders' equity section. 
B)  in the income statement. 
C)  as part of paid-in capital in the stockholders' equity section. 
D)  as an intangible asset.

Question 14

Taylor Corporation issues 20000 shares of $50 par value preferred stock for cash at $90 per share. In the stockholders' equity section the effects of the transaction above will be reported

Accepted Answer

A)  entirely within the capital stock section. 
B)  entirely within the additional paid-in capital section. 
C)  under both the capital stock and additional paid-in capital sections. 
D)  entirely under the retained earnings section. 
A)  entirely within the capital stock section. 
B)  entirely within the additional paid-in capital section. 
C)  under both the capital stock and additional paid-in capital sections. 
D)  entirely under the retained earnings section.

Question 15

Yohnalasse Corporation has the following stockholders' equity accounts on January 1 2017: $\begin{array}{llr}
  \text { Common Stock, $ \$ 10 $ par value } &\$1,500,000\
 \text {  Paid-in Capital in Excess of $ \mathrm{Par} $ } &200,000\
 \text { Retained Earnings.  } & \underline{500,000}\
 \text { Total Stockholders' Equity } & \underline{ \underline{\$2,200,000}}\
\end{array}$
 The company uses the cost method to account for treasury stock transactions. During 2017 the following treasury stock transactions occurred: $$\begin{array} { l l l } 
\text { April } & 1 & \text { Purchased } 10,000 \text { shares at } \$ 18 \text { per share. } \
\text { August } & 1 & \text { Sold 4,000 shares at } \$ 22 \text { per share. } \
\text { October } & 1 & \text { Sold } 4,000 \text { shares at } \$ 15 \text { per share. }
\end{array}$$ Instructions
(a) Journalize the treasury stock transactions for 2017.
(b) Prepare the Stockholders' Equity section of the balance sheet for Yohnalasse Corporation at December 31 2014. Assume net income was $110000 for 2017.

Accepted Answer

The answer of Yohnalasse Corporation has the following stockholders' equity...

Question 16

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. 
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 17

If stock is issued for less than par value the account

Accepted Answer

A)  Paid-In Capital in Excess of Par is credited. 
B)  Paid-In Capital in Excess of Par is debited if a debit balance exists in the account. 
C)  Paid-In Capital in Excess of Par is debited if a credit balance exists in the account. 
D)  Retained Earnings is credited. 
A)  Paid-In Capital in Excess of Par is credited. 
B)  Paid-In Capital in Excess of Par is debited if a debit balance exists in the account. 
C)  Paid-In Capital in Excess of Par is debited if a credit balance exists in the account. 
D)  Retained Earnings is credited.

Question 18

G. Jones Corporation was organized on January 1 2017 with authorized capital of 1000000 shares of $10 par value common stock. During 2017 Jones issued 40000 shares at $12 per share purchased 4000 shares of treasury stock at $13 per share and sold 4000 shares of treasury stock at $14 per share. What is the amount of additional paid-in capital at December 31 2017?

Accepted Answer

A)  $0 
B)  $4000 
C)  $80000 
D)  $84000 
A)  $0 
B)  $4000 
C)  $80000 
D)  $84000

Question 19

The chief accounting officer in a company is known as the

Accepted Answer

A)  controller. 
B)  treasurer. 
C)  vice-president. 
D)  president. 
A)  controller. 
B)  treasurer. 
C)  vice-president. 
D)  president.

Question 20

The purchase of treasury stock

Accepted Answer

A)  decreases common stock authorized. 
B)  decreases common stock issued. 
C)  decreases common stock outstanding. 
D)  has no effect on common stock outstanding. 
A)  decreases common stock authorized. 
B)  decreases common stock issued. 
C)  decreases common stock outstanding. 
D)  has no effect on common stock outstanding.

Exam 13: Corporations: Organization and Capital Stock Transactions

Under the corporate form of business organization

A privately held corporation does not offer its stock for sale to the general public.

The cost of a noncash asset acquired in exchange for common stock should be either the fair value of the consideration given up or the consideration received whichever is more clearly determinable.

Each stockholder in a corporation has a separate capital account in the stockholders' equity section of the balance sheet.

On February 1 Westwood Corporation issued 5000 shares of its $20 par value preferred stock for $26 per share. Instructions Journalize the transaction.

Which one of the following is not an ownership right of a stockholder in a corporation?

The officer who is generally responsible for maintaining the cash position of the corporation is the

A corporation has the following account balances: Common stock $1 par value $30000; Paid-in Capital in Excess of Par $650000. Based on this information the

On September 5 Bete Gas Corporation acquired 2500 shares of its own $1 par common stock for $23 per share. On October 15 1000 shares of the treasury stock is sold for $25 per share. Instructions Journalize the purchase and sale of the treasury stock assuming that the company uses the cost method.

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

In the financial statements organization costs appears

Taylor Corporation issues 20000 shares of $50 par value preferred stock for cash at $90 per share. In the stockholders' equity section the effects of the transaction above will be reported

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

If stock is issued for less than par value the account

The chief accounting officer in a company is known as the

The purchase of treasury stock

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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