Question 1

The heading Paid-in Capital must appear on the balance sheet along with the heading Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 2

Mike's Motors has 240,000 shares of $5-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $11/share. The amount that will be debited to Retained Earnings on the date of declaration is:

Accepted Answer

A) $120,000. 
B) $384,000. 
C) $264,000. 
D) $132,000. 
A) $120,000. 
B) $384,000. 
C) $264,000. 
D) $132,000.

Question 3

Return on equity is a measure of profitability.

Accepted Answer

A) True 
 B)False

Question 4

Payment of a cash dividend causes a(n):

Accepted Answer

A) increase in liabilities. 
B) decrease in an assets. 
C) increase in Stockholders' Equity. 
D) increase in revenue. 
A) increase in liabilities. 
B) decrease in an assets. 
C) increase in Stockholders' Equity. 
D) increase in revenue.

Question 5

Treasury stock decreases the number of outstanding shares of stock.

Accepted Answer

A) True 
 B)False

Question 6

Taylor Fish Farm's Stockholders' Equity section includes the following information:  
What was the total selling price of the preferred stock?

Accepted Answer

A) $13,000 
B) $15,100 
C) $21,000 
D) $20,100 
A) $13,000 
B) $15,100 
C) $21,000 
D) $20,100

Question 7

Which of the following is NOT an advantage of a corporation?

Accepted Answer

A) Unlimited liability 
B) Ease of raising capital 
C) Ease of transfer ownership 
D) Continuous life 
A) Unlimited liability 
B) Ease of raising capital 
C) Ease of transfer ownership 
D) Continuous life

Question 8

The entry to record selling 700 shares of stated value $50 common stock for $74 per share would be:

Accepted Answer

A) debit Cash $51,800; credit Common Stock $51,800. 
B) debit Cash $35,000; credit Common Stock $35,000. 
C) debit Cash $35,000; debit Paid-in Capital in Excess of Stated Value-$16,800; credit Common Stock $51,800. 
D) debit Cash $51,800; credit Common Stock $35,000; credit Paid-in Capital in Excess of Stated Value-$16,800. 
A) debit Cash $51,800; credit Common Stock $51,800. 
B) debit Cash $35,000; credit Common Stock $35,000. 
C) debit Cash $35,000; debit Paid-in Capital in Excess of Stated Value-$16,800; credit Common Stock $51,800. 
D) debit Cash $51,800; credit Common Stock $35,000; credit Paid-in Capital in Excess of Stated Value-$16,800.

Question 9

The entry to record S&C, Inc. selling 1,500 shares of $9 par common stock for $22 per share would be to:

Accepted Answer

A) debit Cash $33,000; credit Common Stock $33,000. 
B) debit Cash $33,000; credit Common Stock $13,500; credit Paid-In Capital in Excess of Par-Common Stock $19,500. 
C) debit Cash $13,500; credit Common Stock $13,500. 
D) debit Cash $13,500; debit Paid-In Capital in Excess of Par-Common $19,500; credit Common Stock $33,000. 
A) debit Cash $33,000; credit Common Stock $33,000. 
B) debit Cash $33,000; credit Common Stock $13,500; credit Paid-In Capital in Excess of Par-Common Stock $19,500. 
C) debit Cash $13,500; credit Common Stock $13,500. 
D) debit Cash $13,500; debit Paid-In Capital in Excess of Par-Common $19,500; credit Common Stock $33,000.

Question 10

A company issues 55,000 shares of its $5 par common stock for $20 per share. The amount to be debited to Cash is:

Accepted Answer

A) $275,000. 
B) $825,000. 
C) $1,375,000. 
D) $1,100,000. 
A) $275,000. 
B) $825,000. 
C) $1,375,000. 
D) $1,100,000.

Question 11

Before a 3-for-1 stock split, the shares outstanding were 5,000 shares at $48 par. After the split, what was the par value and number of shares?

Accepted Answer

A) 15,000 shares and $48/share 
B) 20,000 shares and $48/share 
C) 15,000 shares and $16/share 
D) 5,000 shares and $768/share 
A) 15,000 shares and $48/share 
B) 20,000 shares and $48/share 
C) 15,000 shares and $16/share 
D) 5,000 shares and $768/share

Question 12

A corporation may declare stock dividends when there is not enough cash to pay a cash dividend.

Accepted Answer

A) True 
 B)False

Question 13

The basic unit of stock is called a(n):

Accepted Answer

A) authorization. 
B) certificate. 
C) share. 
D) ownership record. 
A) authorization. 
B) certificate. 
C) share. 
D) ownership record.

Question 14

One disadvantage to the corporate form of organization is:

Accepted Answer

A) government regulations. 
B) limited liability. 
C) transfer of ownership policies. 
D) ability to raise capital. 
A) government regulations. 
B) limited liability. 
C) transfer of ownership policies. 
D) ability to raise capital.

Question 15

The first step in becoming a corporation is to file a(n)_______ with the state government.

Accepted Answer

A) business plan 
B) bank statement 
C) corporate charter 
D) list of board members 
A) business plan 
B) bank statement 
C) corporate charter 
D) list of board members

Question 16

A stock dividend increases the stockholder's percent of stock held.

Accepted Answer

A) True 
 B)False

Question 17

Which is NOT included in paid-in capital?

Accepted Answer

A) Preferred Stock 
B) Common Stock 
C) Cash 
D) Additional Paid-in Capital 
A) Preferred Stock 
B) Common Stock 
C) Cash 
D) Additional Paid-in Capital

Question 18

Common Stock is most often listed after Additional Paid-in Capital in the Stockholders' Equity section of the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 19

Which is NOT a value placed on a certificate for a share of the company's stock?

Accepted Answer

A) Par 
B) Stated value 
C) No par 
D) Market value 
A) Par 
B) Stated value 
C) No par 
D) Market value

Question 20

NW Stone Supply issued 50 shares of $14 par common stock in exchange for a piece of equipment with a current market value of $1,000. Which of the following is NOT part of the journal entry for this transaction?

Accepted Answer

A) Debiting equipment for $700 
B) Crediting Common Stock for $700 
C) Debiting equipment for $1,000 
D) Crediting paid-in capital in excess of par-common for $300 
A) Debiting equipment for $700 
B) Crediting Common Stock for $700 
C) Debiting equipment for $1,000 
D) Crediting paid-in capital in excess of par-common for $300

The heading Paid-in Capital must appear on the balance sheet along with the heading Retained Earnings.

Mike's Motors has 240,000 shares of $5-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $11/share. The amount that will be debited to Retained Earnings on the date of declaration is:

Return on equity is a measure of profitability.

Payment of a cash dividend causes a(n):

Treasury stock decreases the number of outstanding shares of stock.

Taylor Fish Farm's Stockholders' Equity section includes the following information: What was the total selling price of the preferred stock?

Which of the following is NOT an advantage of a corporation?

The entry to record selling 700 shares of stated value $50 common stock for $74 per share would be:

The entry to record S&C, Inc. selling 1,500 shares of $9 par common stock for $22 per share would be to:

A company issues 55,000 shares of its $5 par common stock for $20 per share. The amount to be debited to Cash is:

Before a 3-for-1 stock split, the shares outstanding were 5,000 shares at $48 par. After the split, what was the par value and number of shares?

A corporation may declare stock dividends when there is not enough cash to pay a cash dividend.

The basic unit of stock is called a(n):

One disadvantage to the corporate form of organization is:

The first step in becoming a corporation is to file a(n)_______ with the state government.

A stock dividend increases the stockholder's percent of stock held.

Which is NOT included in paid-in capital?

Common Stock is most often listed after Additional Paid-in Capital in the Stockholders' Equity section of the Balance Sheet.

Which is NOT a value placed on a certificate for a share of the company's stock?

NW Stone Supply issued 50 shares of $14 par common stock in exchange for a piece of equipment with a current market value of $1,000. Which of the following is NOT part of the journal entry for this transaction?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

The Statement of Cash Flows

Financial Statement Analysis

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Exam 10: Corporations: Paid-In Capital and Retained Earnings

The heading Paid-in Capital must appear on the balance sheet along with the heading Retained Earnings.

Mike's Motors has 240,000 shares of $5-par common stock outstanding. They have declared a 10% stock dividend. The current market price of the common stock is $11/share. The amount that will be debited to Retained Earnings on the date of declaration is:

Return on equity is a measure of profitability.

Payment of a cash dividend causes a(n):

Treasury stock decreases the number of outstanding shares of stock.

Taylor Fish Farm's Stockholders' Equity section includes the following information: What was the total selling price of the preferred stock?

Which of the following is NOT an advantage of a corporation?

The entry to record selling 700 shares of stated value $50 common stock for $74 per share would be:

The entry to record S&C, Inc. selling 1,500 shares of $9 par common stock for $22 per share would be to:

A company issues 55,000 shares of its $5 par common stock for $20 per share. The amount to be debited to Cash is:

Before a 3-for-1 stock split, the shares outstanding were 5,000 shares at $48 par. After the split, what was the par value and number of shares?

A corporation may declare stock dividends when there is not enough cash to pay a cash dividend.

The basic unit of stock is called a(n):

One disadvantage to the corporate form of organization is:

The first step in becoming a corporation is to file a(n)_______ with the state government.

A stock dividend increases the stockholder's percent of stock held.

Which is NOT included in paid-in capital?

Common Stock is most often listed after Additional Paid-in Capital in the Stockholders' Equity section of the Balance Sheet.

Which is NOT a value placed on a certificate for a share of the company's stock?

NW Stone Supply issued 50 shares of $14 par common stock in exchange for a piece of equipment with a current market value of $1,000. Which of the following is NOT part of the journal entry for this transaction?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

The Statement of Cash Flows

Financial Statement Analysis

Filters