Question 1

Preferred stock:

Accepted Answer

A)  is usually a more risky investment than common stock. 
B)  gives preference to a corporation's profits and assets. 
C)  usually maintains voting rights. 
D)  None of the above are correct. 
A)  is usually a more risky investment than common stock. 
B)  gives preference to a corporation's profits and assets. 
C)  usually maintains voting rights. 
D)  None of the above are correct.

Question 2

Articles of incorporation contain all of the following except:

Accepted Answer

A)  the purpose of the business. 
B)  the types of stock to be offered. 
C)  the name of the president. 
D)  organizational structure. 
A)  the purpose of the business. 
B)  the types of stock to be offered. 
C)  the name of the president. 
D)  organizational structure.

Question 3

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Issued fully paid common stock.
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 4

Ariel Company sells preferred stock at par value, and records a:

Accepted Answer

A)  debit to Cash and a credit to Common Stock. 
B)  debit to Preferred Stock and a credit to Cash. 
C)  debit to Cash and a credit to Preferred Stock. 
D)  debit to Cash, credit to Preferred Stock and a credit to Paid in Capital in Excess of Par Value-Preferred Stock. 
A)  debit to Cash and a credit to Common Stock. 
B)  debit to Preferred Stock and a credit to Cash. 
C)  debit to Cash and a credit to Preferred Stock. 
D)  debit to Cash, credit to Preferred Stock and a credit to Paid in Capital in Excess of Par Value-Preferred Stock.

Question 5

Preferred stock is considered to be non-participating when:

Accepted Answer

A)  preferred stockholders get their yearly dividend and the remainder goes to common stockholders. 
B)  preferred stockholders have a right to the current year's dividend, but do not receive holdovers from past years when dividends were not paid. 
C)  preferred stockholders have a right to a certain dividend every year. 
D)  None of these answers is correct. 
A)  preferred stockholders get their yearly dividend and the remainder goes to common stockholders. 
B)  preferred stockholders have a right to the current year's dividend, but do not receive holdovers from past years when dividends were not paid. 
C)  preferred stockholders have a right to a certain dividend every year. 
D)  None of these answers is correct.

Question 6

Elsinore Corporation has been issued a charter by the state of New Hampshire. This charter gives Elsinore the authority to issue 10,000 shares of $16 par value preferred stock and 100,000 shares of $6 par value common stock. Journalize the entries listed below.
June 1 Issued 3,000 shares of preferred stock at $20 per share.
4 Issued 10,000 shares of common stock at $10 per share.
13 Issued 8,000 shares of common stock at $12 per share.
21 Issued 500 shares of preferred stock at $25 per share.

Accepted Answer

The answer of Elsinore Corporation has been issued a charter...

Question 7

Prepare the journal entries for Blitz Industries:
April 6 Issued 9,000 shares of $112 par value common stock for $1150,000
April 15 Issued 54,000 shares of 58%, $1525 par value preferred stock for $13200,000
April 23 Issued 5,000 shares of $5 par common stock for $20,000 cash.

Accepted Answer

The answer of Prepare the journal entries for Blitz Industries:
April...

Question 8

The Mars Company issued 150 shares of its $13 par value stock for $21 per share. The entry to record the receipt of cash and issuance of the stock would include a:

Accepted Answer

A)  debit to Cash of $1,950; credit to Common Stock for $1,950. 
B)  debit to Cash for $3,150. 
C)  credit to Common Stock for $3,150. 
D)  debit to Discount on Common Stock for $1,200. 
A)  debit to Cash of $1,950; credit to Common Stock for $1,950. 
B)  debit to Cash for $3,150. 
C)  credit to Common Stock for $3,150. 
D)  debit to Discount on Common Stock for $1,200.

Question 9

For no-par value stock with a stated value:

Accepted Answer

A)  the stated value is like par value, but it is not printed on stock certificates. 
B)  Directors cannot change stated value without approval of the state. 
C)  stated value is the market value. 
D)  All of the above are correct. 
A)  the stated value is like par value, but it is not printed on stock certificates. 
B)  Directors cannot change stated value without approval of the state. 
C)  stated value is the market value. 
D)  All of the above are correct.

Question 10

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Sold common stock at a price less than 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 11

The difference between what stockholders invest and the stated value placed on stock by the board of directors is called:

Accepted Answer

A)  Paid-in Capital in Excess of Par Value-Common. 
B)  Paid-in Capital in Excess of Stated Value-Common. 
C)  Common Stock Stated Value. 
D)  Preferred Stock. 
A)  Paid-in Capital in Excess of Par Value-Common. 
B)  Paid-in Capital in Excess of Stated Value-Common. 
C)  Common Stock Stated Value. 
D)  Preferred Stock.

Question 12

A common shareholder's right to purchase an equivalent percentage of new stock is his/her participating right.

Accepted Answer

A) True 
 B)False

Question 13

Yellow Corporation has 250 shares of $140, 9% noncumulative nonparticipating preferred stock and 1,470 shares of $8 par value common stock outstanding. The company paid $7,500 cash dividends to stockholders in the current year. Common stockholders received:

Accepted Answer

A)  $3,150. 
B)  $6,300. 
C)  $4,350. 
D)  $7,500. 
A)  $3,150. 
B)  $6,300. 
C)  $4,350. 
D)  $7,500.

Question 14

Colder Industries has 30,000 shares of $10 par common stock and 8,500 shares of $50 par, 6% preferred stock outstanding. Total dividends available are $80,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is nonparticipating and non-cumulative with no dividends distributed last year.

Accepted Answer

Preferred Stock: $50

Question 15

With a limited liability corporation, stockholders:

Accepted Answer

A)  are relieved from personal liability for obligations of the corporation. 
B)  can only lose their investment amount in the business. 
C)  are personally liable for the obligations of the corporation. 
D)  Both A and B are correct. 
A)  are relieved from personal liability for obligations of the corporation. 
B)  can only lose their investment amount in the business. 
C)  are personally liable for the obligations of the corporation. 
D)  Both A and B are correct.

Question 16

Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par, 5% preferred stock outstanding. Total dividends available are $162,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is participating and non-cumulative with no dividends distributed last year.

Accepted Answer

Dividend for Preferred Stock: $50 par ×

Question 17

A cumulative preferred stockholder must be paid dividends in arrears before any dividends are paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 18

Number of preferred shares times market value per share times dividend rate is the formula used to determine the dividends to be paid.

Accepted Answer

A) True 
 B)False

Question 19

A company issues no-par value with no stated value stock. Therefore, the company has a minimum legal capital amount.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a characteristic of a corporation?

Accepted Answer

A)  Ease of raising capital 
B)  No mutual agency 
C)  Unlimited life 
D)  All of the above are correct. 
A)  Ease of raising capital 
B)  No mutual agency 
C)  Unlimited life 
D)  All of the above are correct.

Exam 18: Corporations: Organizations and Stock

Preferred stock:

Articles of incorporation contain all of the following except:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Issued fully paid common stock. Debit ________ Credit ________

Ariel Company sells preferred stock at par value, and records a:

Preferred stock is considered to be non-participating when:

Prepare the journal entries for Blitz Industries: April 6 Issued 9,000 shares of $112 par value common stock for $1150,000 April 15 Issued 54,000 shares of 58%, $1525 par value preferred stock for $13200,000 April 23 Issued 5,000 shares of $5 par common stock for $20,000 cash.

The Mars Company issued 150 shares of its $13 par value stock for $21 per share. The entry to record the receipt of cash and issuance of the stock would include a:

For no-par value stock with a stated value:

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

The difference between what stockholders invest and the stated value placed on stock by the board of directors is called:

A common shareholder's right to purchase an equivalent percentage of new stock is his/her participating right.

Yellow Corporation has 250 shares of $140, 9% noncumulative nonparticipating preferred stock and 1,470 shares of $8 par value common stock outstanding. The company paid $7,500 cash dividends to stockholders in the current year. Common stockholders received:

With a limited liability corporation, stockholders:

A cumulative preferred stockholder must be paid dividends in arrears before any dividends are paid to common stockholders.

Number of preferred shares times market value per share times dividend rate is the formula used to determine the dividends to be paid.

A company issues no-par value with no stated value stock. Therefore, the company has a minimum legal capital amount.

Which of the following is a characteristic of a corporation?

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. -Issued fully paid common stock. 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 less than the par value. Debit & Credit