Question 1

Which of the following is not a right or preference associated with preferred stock?

Accepted Answer

A)  The right to vote 
B)  First claim to dividends 
C)  Preference to corporate assets in case of liquidation 
D)  To receive dividends in arrears before common stockholders receive dividends 
A)  The right to vote 
B)  First claim to dividends 
C)  Preference to corporate assets in case of liquidation 
D)  To receive dividends in arrears before common stockholders receive dividends

Question 2

Each of the following is correct regarding treasury stock except that it has been

Accepted Answer

A)  issued. 
B)  fully paid for. 
C)  reacquired. 
D)  retired. 
A)  issued. 
B)  fully paid for. 
C)  reacquired. 
D)  retired.

Question 3

A corporation acts under its own name rather than in the name of its stockholders.

Accepted Answer

A) True 
 B)False

Question 4

Treasury stock is a contra stockholders' equity account.

Accepted Answer

A) True 
 B)False

Question 5

The authorized stock of a corporation

Accepted Answer

A)  only reflects the initial capital needs of the company. 
B)  is indicated in its by-laws. 
C)  is indicated in its charter. 
D)  must be recorded in a formal accounting entry. 
A)  only reflects the initial capital needs of the company. 
B)  is indicated in its by-laws. 
C)  is indicated in its charter. 
D)  must be recorded in a formal accounting entry.

Question 6

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 7

The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is

Accepted Answer

A)  the sole proprietorship. 
B)  the partnership. 
C)  the corporation. 
D)  not known. 
A)  the sole proprietorship. 
B)  the partnership. 
C)  the corporation. 
D)  not known.

Question 8

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

Accepted Answer

A) True 
 B)False

Question 9

Slaton Company originally issued 3,000 shares of $10 par value common stock for $90,000 ($30 per share). Slaton subsequently purchases 300 shares of treasury stock for $27 per share and resells the 300 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a

Accepted Answer

A)  credit to Common Stock for $8,100. 
B)  credit to Treasury Stock for $3,000. 
C)  debit to Paid-In Capital in Excess of Par Value of $9,000. 
D)  credit to Paid-In Capital from Treasury Stock for $600. 
A)  credit to Common Stock for $8,100. 
B)  credit to Treasury Stock for $3,000. 
C)  debit to Paid-In Capital in Excess of Par Value of $9,000. 
D)  credit to Paid-In Capital from Treasury Stock for $600.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Par value of stock represents the __________________ per share that must be retained in the business for the protection of corporate ___________________.

Accepted Answer

legal capi

Question 12

Preferred stockholders have a priority over common stockholders as to

Accepted Answer

A)  dividends only. 
B)  assets in the event of liquidation only. 
C)  voting rights. 
D)  both dividends and assets in the event of liquidation. 
A)  dividends only. 
B)  assets in the event of liquidation only. 
C)  voting rights. 
D)  both dividends and assets in the event of liquidation.

Question 13

Accounting for treasury stock is done by the

Accepted Answer

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

Question 14

Retained earnings is

Accepted Answer

A)  always equal to the amount of cash that the corporation has generated from operations. 
B)  a part of the paid-in capital of the corporation. 
C)  a part of the stockholders' claim on the total assets of the corporation. 
D)  closed at the end of each accounting period. 
A)  always equal to the amount of cash that the corporation has generated from operations. 
B)  a part of the paid-in capital of the corporation. 
C)  a part of the stockholders' claim on the total assets of the corporation. 
D)  closed at the end of each accounting period.

Question 15

Two classifications appearing in the paid-in capital section of the balance sheet are

Accepted Answer

A)  preferred stock and common stock. 
B)  paid-in capital and retained earnings. 
C)  capital stock and additional paid-in capital. 
D)  capital stock and treasury stock. 
A)  preferred stock and common stock. 
B)  paid-in capital and retained earnings. 
C)  capital stock and additional paid-in capital. 
D)  capital stock and treasury stock.

Question 16

The following data is available for BOX Corporation at December 31, 2010:   Based on the data, how many shares of common stock have been issued?

Accepted Answer

A)  15,000 
B)  10,000 
C)  14,960 
D)  9,960 
A)  15,000 
B)  10,000 
C)  14,960 
D)  9,960

Question 17

The following information is available for Stewart Corporation:   
Instructions
Based on the preceding information, calculate each of the following:
(a) Total paid-in capital.
(b) Total stockholders' equity.

Accepted Answer

(a) Total paid-in capital = $2

Question 18

Ephram Company has 3,000 shares of 5%, $100 par non-cumulative preferred stock outstanding at December 31, 2010. No dividends have been paid on this stock for 2009 or 2010. Dividends in arrears at December 31, 2010 total

Accepted Answer

A)  $0. 
B)  $1,500. 
C)  $15,000. 
D)  $30,000. 
A)  $0. 
B)  $1,500. 
C)  $15,000. 
D)  $30,000.

Question 19

Define par value, and discuss its significance in accounting.

Accepted Answer

Par value is an arbitrary amount establi

Question 20

Looper, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2010. There were no dividends declared in 2009. The board of directors declares and pays a $250,000 dividend in 2010. What is the amount of dividends received by the common stockholders in 2010?

Accepted Answer

A)  $0 
B)  $150,000 
C)  $250,000 
D)  $100,000 
A)  $0 
B)  $150,000 
C)  $250,000 
D)  $100,000

Exam 13: Corporations: Organization and Capital Stock Transactions

Which of the following is not a right or preference associated with preferred stock?

Each of the following is correct regarding treasury stock except that it has been

A corporation acts under its own name rather than in the name of its stockholders.

Treasury stock is a contra stockholders' equity account.

The authorized stock of a corporation

Under the corporate form of business organization

The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

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

Par value of stock represents the __________________ per share that must be retained in the business for the protection of corporate ___________________.

Preferred stockholders have a priority over common stockholders as to

Accounting for treasury stock is done by the

Retained earnings is

Two classifications appearing in the paid-in capital section of the balance sheet are

The following data is available for BOX Corporation at December 31, 2010: Based on the data, how many shares of common stock have been issued?

The following information is available for Stewart Corporation: Instructions Based on the preceding information, calculate each of the following: (a) Total paid-in capital. (b) Total stockholders' equity.

Ephram Company has 3,000 shares of 5%, $100 par non-cumulative preferred stock outstanding at December 31, 2010. No dividends have been paid on this stock for 2009 or 2010. Dividends in arrears at December 31, 2010 total

Define par value, and discuss its significance in accounting.

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Par value of stock represents the per share that must be retained in the business for the protection of corporate _.