Question 1

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

Accepted Answer

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

Question 2

Capital stock to which the charter has assigned a value per share is called

Accepted Answer

A)  par value stock. 
B)  no-par value stock. 
C)  stated value stock. 
D)  assigned value stock. 
A)  par value stock. 
B)  no-par value stock. 
C)  stated value stock. 
D)  assigned value stock.

Question 3

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 4,000 shares of preferred stock for land with an asking price of $500,000 and a market value of $440,000, which of the following would be the journal entry for Retro to record?

Accepted Answer

The answer of Retro Company is authorized to issue 10,000...

Question 4

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A corporation has the following account balances: Common stock, $1 par value, $40,000; Paid-in Capital in Excess of Par Value, $1,350,000. Based on this information, the

Accepted Answer

A)  legal capital is $1,390,000. 
B)  number of shares issued are 40,000. 
C)  number of shares outstanding are 1,390,000. 
D)  average price per share issued is $3.48. 
A)  legal capital is $1,390,000. 
B)  number of shares issued are 40,000. 
C)  number of shares outstanding are 1,390,000. 
D)  average price per share issued is $3.48.

Question 7

When the selling price of treasury stock is greater than its cost, the company credits the difference to

Accepted Answer

A)  Gain on Sale of Treasury Stock. 
B)  Paid-in Capital from Treasury Stock. 
C)  Paid-in Capital in Excess of Par Value. 
D)  Treasury Stock. 
A)  Gain on Sale of Treasury Stock. 
B)  Paid-in Capital from Treasury Stock. 
C)  Paid-in Capital in Excess of Par Value. 
D)  Treasury Stock.

Question 8

The following stockholders' equity accounts, arranged alphabetically, are in the ledger of Steiner Corporation at December 31, 2010.   
Instructions
Prepare the stockholders' equity section of the balance sheet at December 31, 2010.

Accepted Answer

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

Question 9

The stockholders' equity section of a corporation's balance sheet consists of (1) paid-in capital, (2) retained earnings, and (3) drawings.

Accepted Answer

A) True 
 B)False

Question 10

Horner Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. During 2010, its first year of operation, the company has the following stock transactions.
Jan. 1 Paid the state $2,000 for incorporation fees.
Jan. 15 Issued 500,000 shares of stock at $6 per share.
Jan. 30 Attorneys for the company accepted 500 shares of common stock as payment for legal services rendered in helping the company incorporate. The legal services are estimated to have a value of $7,000.
July 2 Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The stock is currently selling on a national exchange at $8 per share.
Sept. 5 Purchased 15,000 shares of common stock for the treasury at $9 per share.
Dec. 6 Sold 11,000 shares of the treasury stock at $11 per share.
Instructions
Journalize the transactions for Horner Corporation.

Accepted Answer

The answer of Horner Corporation is authorized to issue 1,000,000...

Question 11

Yount Company originally issued 30,000 shares of $5 par common stock for $210,000 on January 3, 2010. Yount purchased 1,500 shares of treasury stock for $13,500 on November 2, 2010. On December 6, 2010, 600 shares of the treasury stock are sold for $6,000.
Instructions
Prepare journal entries to record these stock transactions.

Accepted Answer

The answer of Yount Company originally issued 30,000 shares of...

Question 12

Identify (by letter) each of the following characteristics as being an advantage, a disadvantage, or not applicable to the corporate form of business organization.
A = Advantage
D = Disadvantage
N = Not Applicable
Characteristics
1. Separate legal entity
2. Taxable entity resulting in additional taxes
3. Continuous life
4. Unlimited liability of owners
5. Government regulation
6. Separation of ownership and management
7. Ability to acquire capital
8. Ease of transfer of ownership

Accepted Answer

1. A 5. D

Question 13

Which of the following statements concerning taxation is accurate?

Accepted Answer

A)  Partnerships pay state income taxes but not federal income taxes. 
B)  Corporations pay federal income taxes but not state income taxes. 
C)  Corporations pay federal and state income taxes. 
D)  Only the owners must pay taxes on corporate income. 
A)  Partnerships pay state income taxes but not federal income taxes. 
B)  Corporations pay federal income taxes but not state income taxes. 
C)  Corporations pay federal and state income taxes. 
D)  Only the owners must pay taxes on corporate income.

Question 14

Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Kendrick Corporation was organized on January 2, 2010. During 2010, Kendrick issued 20,000 shares at $24 per share, purchased 3,000 shares of treasury stock at $26 per share, and had net income of $300,000. What is the total amount of stockholders' equity at December 31, 2010?

Accepted Answer

A)  $640,000 
B)  $702,000 
C)  $708,000 
D)  $720,000 
A)  $640,000 
B)  $702,000 
C)  $708,000 
D)  $720,000

Question 17

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.

Accepted Answer

A) True 
 B)False

Question 18

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Accepted Answer

A) True 
 B)False

Question 19

Donnelly Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2010, the company has the following stock transactions.
Jan. 15 Issued 400,000 shares of stock at $7 per share.
Sept. 5 Purchased 30,000 shares of common stock for the treasury at $8 per share.
Instructions
Journalize the transactions for Donnelly Corporation.

Accepted Answer

The answer of Donnelly Corporation is authorized to issue 1,000,000...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 13: Corporations: Organization and Capital Stock Transactions

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

Capital stock to which the charter has assigned a value per share is called

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

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

A corporation has the following account balances: Common stock, $1 par value, $40,000; Paid-in Capital in Excess of Par Value, $1,350,000. Based on this information, the

When the selling price of treasury stock is greater than its cost, the company credits the difference to

The following stockholders' equity accounts, arranged alphabetically, are in the ledger of Steiner Corporation at December 31, 2010. Instructions Prepare the stockholders' equity section of the balance sheet at December 31, 2010.

The stockholders' equity section of a corporation's balance sheet consists of (1) paid-in capital, (2) retained earnings, and (3) drawings.

Which of the following statements concerning taxation is accurate?

Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.

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

Kendrick Corporation was organized on January 2, 2010. During 2010, Kendrick issued 20,000 shares at $24 per share, purchased 3,000 shares of treasury stock at $26 per share, and had net income of $300,000. What is the total amount of stockholders' equity at December 31, 2010?

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

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

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

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