Question 1

The maximum number of shares of capital stock that a corporation can sell is known as:

Accepted Answer

A)  issued capital stock. 
B)  outstanding capital stock. 
C)  authorized capital stock. 
D)  treasury capital stock. 
A)  issued capital stock. 
B)  outstanding capital stock. 
C)  authorized capital stock. 
D)  treasury capital stock.

Question 2

An intangible asset that records the initial cost of forming the corporation, such as legal and incorporating fees is called:

Accepted Answer

A)  Common Stock. 
B)  Organization cost. 
C)  Preferred Stock. 
D)  Paid-in Capital. 
A)  Common Stock. 
B)  Organization cost. 
C)  Preferred Stock. 
D)  Paid-in Capital.

Question 3

Common Stock is an asset.

Accepted Answer

A) True 
 B)False

Question 4

Cannes Corporation has 120 shares of $107, 7% cumulative nonparticipating preferred stock and 1,200 shares of $16 par value common stock outstanding. The company paid $11,000 cash dividends including one-year dividends in arrears to preferred stockholders. Preferred stockholders received: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Accepted Answer

A)  $899. 
B)  $11,000. 
C)  $10,101. 
D)  $1,798. 
A)  $899. 
B)  $11,000. 
C)  $10,101. 
D)  $1,798.

Question 5

R. Red formed a corporation with an authorization of 20,000 shares of $50 par, 6% non-cumulative preferred stock and 100,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations. Journalize the transactions omitting explanations.
Jan 10 Issued 20,000 shares of common stock at par for cash.
31 Issued 20,000 shares of common stock in exchange for land, buildings, and
equipment with fair market prices of $52,000, $125,000, and $48,000, respectively.
Feb 24 Issued 2,000 shares of preferred stock at $54 for cash.

Accepted Answer

The answer of R. Red formed a corporation with an...

Question 6

1,000 shares of $30 par common stock was exchanged for a piece of land with a fair market value of $30,000. The journal entry to record the transaction would include a:

Accepted Answer

A)  credit to Land for $30,000. 
B)  credit to Common Stock for $15,000. 
C)  credit to Paid-In Capital in Excess of Par Value-Common for $15,000. 
D)  debit to Land for $30,000. 
A)  credit to Land for $30,000. 
B)  credit to Common Stock for $15,000. 
C)  credit to Paid-In Capital in Excess of Par Value-Common for $15,000. 
D)  debit to Land for $30,000.

Question 7

The two major components of the Stockholders' Equity section of the balance sheet are:

Accepted Answer

A)  Paid-in Capital and Retained Earnings. 
B)  Stock and Retained Earnings. 
C)  Stock and Paid-in Capital. 
D)  Authorized Stock and Preferred Stock. 
A)  Paid-in Capital and Retained Earnings. 
B)  Stock and Retained Earnings. 
C)  Stock and Paid-in Capital. 
D)  Authorized Stock and Preferred Stock.

Question 8

An advantage of a corporation is ease of raising capital.

Accepted Answer

A) True 
 B)False

Question 9

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Received first installment on common stock subscription.
Debit ________ Credit ________

Accepted Answer

A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense 
A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense

Question 10

A corporation is required to pay dividends.

Accepted Answer

A) True 
 B)False

Question 11

Yellow Corporation has 270 shares of $100, 9% noncumulative nonparticipating preferred stock and 1,510 shares of $8 par value common stock outstanding. The company paid $7,500 cash dividends to stockholders in the current year. Preferred stockholders received:

Accepted Answer

A)  $4,860. 
B)  $5,070. 
C)  $2,430. 
D)  $7,500. 
A)  $4,860. 
B)  $5,070. 
C)  $2,430. 
D)  $7,500.

Question 12

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Sold preferred stock at a price above the par value.
Debit ________ Credit ________ & ________

Accepted Answer

A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense 
A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense

Question 13

List and discuss the (a) advantages and (b) disadvantages of the corporation form of business.

Accepted Answer

(a) The advantages of a corporation incl

Question 14

Preferred stockholders have what right over common stockholders?

Accepted Answer

A)  More risk than common stockholders 
B)  Voting rights 
C)  Prior claim to dividends 
D)  Preemptive rights 
A)  More risk than common stockholders 
B)  Voting rights 
C)  Prior claim to dividends 
D)  Preemptive rights

Question 15

Luxury Motors issued 510 shares of its $8 common stock in exchange for equipment with a fair market value of $8,200. The entry to record the transaction would include a:

Accepted Answer

A)  debit to Equipment for $4,080. 
B)  credit to Common Stock for $4,080. 
C)  debit to Paid-in Capital in Excess of Par Value-Common for $4,120. 
D)  credit to Common Stock Subscribed for $4,080. 
A)  debit to Equipment for $4,080. 
B)  credit to Common Stock for $4,080. 
C)  debit to Paid-in Capital in Excess of Par Value-Common for $4,120. 
D)  credit to Common Stock Subscribed for $4,080.

Question 16

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Sold common stock at a price above par accepting a subscription.
Debit ________ Credit ________ & ________

Accepted Answer

A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense 
A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense

Question 17

Rhubarb Corporation's outstanding stock is 160 shares of $107, 11% cumulative nonparticipating preferred stock and 2,000 shares of $19 par value common stock. Rhubarb paid $2,200 cash dividends during the year. Common stockholders received: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Accepted Answer

A)  $0. 
B)  $38,000. 
C)  $2,200. 
D)  $317. 
A)  $0. 
B)  $38,000. 
C)  $2,200. 
D)  $317.

Question 18

A major disadvantage of a corporation is the:

Accepted Answer

A)  difficulty in transferring ownership. 
B)  limited life. 
C)  difficulty in raising capital. 
D)  double taxation of income to the corporation and of dividends paid to shareholders. 
A)  difficulty in transferring ownership. 
B)  limited life. 
C)  difficulty in raising capital. 
D)  double taxation of income to the corporation and of dividends paid to shareholders.

Question 19

If preferred dividends are limited to the stated rate of dividend, the preferred stock is:

Accepted Answer

A)  non-cumulative. 
B)  cumulative. 
C)  participating. 
D)  nonparticipating. 
A)  non-cumulative. 
B)  cumulative. 
C)  participating. 
D)  nonparticipating.

Question 20

Organization costs are:

Accepted Answer

A)  part of the company's start-up and are listed as expenses. 
B)  listed as an intangible asset on the balance sheet. 
C)  a current asset on the balance sheet. 
D)  a liability on the balance sheet. 
A)  part of the company's start-up and are listed as expenses. 
B)  listed as an intangible asset on the balance sheet. 
C)  a current asset on the balance sheet. 
D)  a liability on the balance sheet.

Exam 18: Corporations: Organizations and Stock

The maximum number of shares of capital stock that a corporation can sell is known as:

An intangible asset that records the initial cost of forming the corporation, such as legal and incorporating fees is called:

Common Stock is an asset.

1,000 shares of $30 par common stock was exchanged for a piece of land with a fair market value of $30,000. The journal entry to record the transaction would include a:

The two major components of the Stockholders' Equity section of the balance sheet are:

An advantage of a corporation is ease of raising capital.

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Received first installment on common stock subscription. Debit ________ Credit ________

A corporation is required to pay dividends.

Yellow Corporation has 270 shares of $100, 9% noncumulative nonparticipating preferred stock and 1,510 shares of $8 par value common stock outstanding. The company paid $7,500 cash dividends to stockholders in the current year. Preferred stockholders received:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold preferred stock at a price above the par value. Debit ________ Credit ________ & ________

List and discuss the (a) advantages and (b) disadvantages of the corporation form of business.

Preferred stockholders have what right over common stockholders?

Luxury Motors issued 510 shares of its $8 common stock in exchange for equipment with a fair market value of $8,200. The entry to record the transaction would include a:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold common stock at a price above par accepting a subscription. Debit ________ Credit ________ & ________

A major disadvantage of a corporation is the:

If preferred dividends are limited to the stated rate of dividend, the preferred stock is:

Organization costs are:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Received first installment on common stock subscription. Debit Credit

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold preferred stock at a price above the par value. Debit Credit &

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold common stock at a price above par accepting a subscription. Debit Credit &