Question 1

A corporation has a separate __________________________ apart from its owners.

Accepted Answer

The answer of A corporation has a separate __________________________ apart...

Question 2

In the stockholders' equity section paid-in capital and retained earnings are reported and the specific sources of paid-in capital are identified.

Accepted Answer

A) True 
 B)False

Question 3

Era Company has 6000 shares of 5% $100 par non-cumulative preferred stock outstanding at December 31 2017. No dividends have been paid on this stock for 2016 or 2017. Dividends in arrears at December 31 2017 total

Accepted Answer

A)  $0. 
B)  $3000. 
C)  $30000. 
D)  $60000. 
A)  $0. 
B)  $3000. 
C)  $30000. 
D)  $60000.

Question 4

The Sorrento Skies Corporation issues 16000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $1920000 and a credit or credits to

Accepted Answer

A)  Preferred Stock for $1920000. 
B)  Paid-in Capital from Preferred Stock for $1920000. 
C)  Preferred Stock for $1600000 and Retained Earnings for $320000. 
D)  Preferred Stock for $1600000 and Paid-in Capital in Excess of Par-Preferred Stock for $320000. 
A)  Preferred Stock for $1920000. 
B)  Paid-in Capital from Preferred Stock for $1920000. 
C)  Preferred Stock for $1600000 and Retained Earnings for $320000. 
D)  Preferred Stock for $1600000 and Paid-in Capital in Excess of Par-Preferred Stock for $320000.

Question 5

The par value of a stock

Accepted Answer

A)  is legally significant. 
B)  reflects the most recent market price. 
C)  is selected by the SEC. 
D)  is indicative of the worth of the stock. 
A)  is legally significant. 
B)  reflects the most recent market price. 
C)  is selected by the SEC. 
D)  is indicative of the worth of the stock.

Question 6

If Merril Company issues 9000 shares of $5 par value common stock for $160000 the account

Accepted Answer

A)  Common Stock will be credited for $45000. 
B)  Paid-in Capital in Excess of Par will be credited for $45000. 
C)  Paid-in Capital in Excess of Par will be credited for $160000. 
D)  Cash will be debited for $115000. 
A)  Common Stock will be credited for $45000. 
B)  Paid-in Capital in Excess of Par will be credited for $45000. 
C)  Paid-in Capital in Excess of Par will be credited for $160000. 
D)  Cash will be debited for $115000.

Question 7

When common stock is issued for services or non-cash assets cost should be

Accepted Answer

A)  only the fair value of the consideration given up. 
B)  only the fair value of the consideration received. 
C)  the book value of the common stock issued. 
D)  either the fair value of the consideration given up or the consideration received whichever is more clearly evident. 
A)  only the fair value of the consideration given up. 
B)  only the fair value of the consideration received. 
C)  the book value of the common stock issued. 
D)  either the fair value of the consideration given up or the consideration received whichever is more clearly evident.

Question 8

Preferred stockholders generally do not have the right to vote for the board of directors.

Accepted Answer

A) True 
 B)False

Question 9

Accounting for treasury stock is done by the

Accepted Answer

A)  market method. 
B)  LIFO method. 
C)  cost method. 
D)  lower of cost or market method. 
A)  market method. 
B)  LIFO method. 
C)  cost method. 
D)  lower of cost or market method.

Question 10

Dominica Corporation is authorized to issue 1000000 shares of $1 par value common stock. During 2017 the company has the following stock transactions.
Jan. 15 Issued 400000 shares of stock at $7 per share.
Sept. 5 Purchased 30000 shares of common stock for the treasury at $9 per share.
Instructions
Journalize the transactions for Dominica Corporation.

Accepted Answer

None

Question 11

If stock is issued for a noncash asset the asset should be recorded on the books of the corporation at

Accepted Answer

A)  fair value. 
B)  cost. 
C)  zero. 
D)  a nominal amount. 
A)  fair value. 
B)  cost. 
C)  zero. 
D)  a nominal amount.

Question 12

On May 1 Southern Oil Corporation purchased 2000 shares of its $10 par value common stock at a cash price of $13/share. On July 15 900 shares of the treasury stock were sold for cash at $17/share.
Instructions
Journalize the two transactions.

Accepted Answer

The answer of On May 1 Southern Oil Corporation purchased...

Question 13

Under IFRS Revaluation Surplus is part of

Accepted Answer

A)  share premium. 
B)  retained earnings. 
C)  general reserves. 
D)  contributed capital. 
A)  share premium. 
B)  retained earnings. 
C)  general reserves. 
D)  contributed capital.

Question 14

Retained earnings is usually subtracted from paid-in capital to arrive at total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 15

Treasury stock purchased for $35 per share that is reissued at $31 per share results in a Loss on Sale of Treasury Stock being recognized on the income statement.

Accepted Answer

A) True 
 B)False

Question 16

If an investment firm underwrites a stock issue the

Accepted Answer

A)  risk of being unable to sell the shares stays with the issuing corporation. 
B)  corporation obtains cash immediately from the investment firm. 
C)  investment firm has guaranteed profits on the sale of the stock. 
D)  issuance of stock is likely to be directly to creditors. 
A)  risk of being unable to sell the shares stays with the issuing corporation. 
B)  corporation obtains cash immediately from the investment firm. 
C)  investment firm has guaranteed profits on the sale of the stock. 
D)  issuance of stock is likely to be directly to creditors.

Question 17

When preferred stock is cumulative preferred dividends not declared in a period are

Accepted Answer

A)  considered a liability. 
B)  called dividends in arrears. 
C)  distributions of earnings. 
D)  never paid. 
A)  considered a liability. 
B)  called dividends in arrears. 
C)  distributions of earnings. 
D)  never paid.

Question 18

A separate paid-in capital account is used to record each of the following except the issuance of

Accepted Answer

A)  no-par stock. 
B)  par value stock. 
C)  stated value stock. 
D)  treasury stock above cost. 
A)  no-par stock. 
B)  par value stock. 
C)  stated value stock. 
D)  treasury stock above cost.

Question 19

The following stockholders' equity accounts arranged alphabetically are in the ledger of Kalmia Corporation at December 31 2017. $\begin{array}{llr}
  \text {  Common Stock (\$5 stated value)} &\$2,200,000\
 \text {  Paid-in Capital in Excess of Par-Preferred Stock} &280,000\
 \text { Paid-in Capital in Excess of Stated Value-Common Stock } &800,000\
 \text {  Preferred Stock ( $ 8 \%, \$ 100 $ par, noncumulative)} &500,000\
 \text { Retained Earnings } &1,334,000\
 \text {  Treasury Stock Common (10.000 shares)} &120,000\
\end{array}$
 Instructions
Prepare the stockholders' equity section of the balance sheet at December 31 2017.

Accepted Answer

The answer of The following stockholders' equity accounts arranged alphabetically...

Question 20

Dividends in arrears on cumulative preferred stock are considered a liability.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations: Organization and Capital Stock Transactions

A corporation has a separate __________________________ apart from its owners.

In the stockholders' equity section paid-in capital and retained earnings are reported and the specific sources of paid-in capital are identified.

Era Company has 6000 shares of 5% $100 par non-cumulative preferred stock outstanding at December 31 2017. No dividends have been paid on this stock for 2016 or 2017. Dividends in arrears at December 31 2017 total

The Sorrento Skies Corporation issues 16000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $1920000 and a credit or credits to

The par value of a stock

If Merril Company issues 9000 shares of $5 par value common stock for $160000 the account

When common stock is issued for services or non-cash assets cost should be

Preferred stockholders generally do not have the right to vote for the board of directors.

Accounting for treasury stock is done by the

If stock is issued for a noncash asset the asset should be recorded on the books of the corporation at

On May 1 Southern Oil Corporation purchased 2000 shares of its $10 par value common stock at a cash price of $13/share. On July 15 900 shares of the treasury stock were sold for cash at $17/share. Instructions Journalize the two transactions.

Under IFRS Revaluation Surplus is part of

Retained earnings is usually subtracted from paid-in capital to arrive at total stockholders' equity.

Treasury stock purchased for $35 per share that is reissued at $31 per share results in a Loss on Sale of Treasury Stock being recognized on the income statement.

If an investment firm underwrites a stock issue the

When preferred stock is cumulative preferred dividends not declared in a period are

A separate paid-in capital account is used to record each of the following except the issuance of

Dividends in arrears on cumulative preferred stock are considered a liability.

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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