Question 1

All corporations are subject to extensive government regulation.

Accepted Answer

A) True 
 B)False

Question 2

At the time that Kirby Company issued a 2-for-1 stock split, the company had 5,000 shares of $6 par value common stock outstanding. Stockholders' equity also contained $15,000 of additional paid-in capital and $22,000 of retained earnings. Immediately after the stock split the:

Accepted Answer

A)  balance in the common stock account would amount to $30,000. 
B)  amount of paid-in capital in excess of par-common would be equal to $150,000. 
C)  balance in the retained earnings account would amount to $11,000. 
D)  number of outstanding shares of common stock would be 2,500. 
A)  balance in the common stock account would amount to $30,000. 
B)  amount of paid-in capital in excess of par-common would be equal to $150,000. 
C)  balance in the retained earnings account would amount to $11,000. 
D)  number of outstanding shares of common stock would be 2,500.

Question 3

Which of the following is a disadvantage of a sole proprietorship?

Accepted Answer

A)  Entrenched management. 
B)  Double taxation. 
C)  Unlimited liability. 
D)  Excessive regulation. 
A)  Entrenched management. 
B)  Double taxation. 
C)  Unlimited liability. 
D)  Excessive regulation.

Question 4

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

Accepted Answer

A) True 
 B)False

Question 5

The book value of a share of stock is equal to the market or selling price of the stock.

Accepted Answer

A) True 
 B)False

Question 6

Treasury Stock is reported on the balance sheet between liabilities and equity.

Accepted Answer

A) True 
 B)False

Question 7

Vailes Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Which of the following accurately reflects how the reissue of the treasury stock would affect Vailes's financial statements?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 8

Which of the following statements about the impact of treasury stock on the amounts reported on the balance sheet is correct?

Accepted Answer

A)  The balance in the treasury stock account increases paid-in capital. 
B)  The balance in the treasury stock account reduces paid-in capital. 
C)  The balance in the treasury stock account reduces total stockholders' equity. 
D)  The balance in the treasury stock reduces retained earnings. 
A)  The balance in the treasury stock account increases paid-in capital. 
B)  The balance in the treasury stock account reduces paid-in capital. 
C)  The balance in the treasury stock account reduces total stockholders' equity. 
D)  The balance in the treasury stock reduces retained earnings.

Question 9

One of the common reasons that a company purchases its own stock is to decrease its earnings per share.

Accepted Answer

A) True 
 B)False

Question 10

Indicate whether each of the following statements about stockholders' equity is true or false.
_____ a) The balance in the treasury stock account increases total stockholders' equity.
_____ b) A company may acquire treasury stock in an effort to increase the market price of its stock.
_____ c) The declaration and distribution of a stock dividend reduces retained earnings.
_____ d) A 2-for-1 stock split will probably double the monetary value of each investor's holdings on the date the split takes effect.

Accepted Answer

a) This is false. Treasury stock is a co

Question 11

Which of the following statements about types of business entities is true?

Accepted Answer

A)  For accounting purposes a sole proprietorship is not a separate entity from its owner. 
B)  Ownership in a partnership is represented by having shares of capital stock. 
C)  One advantage of a corporation is ability to raise capital. 
D)  Sole proprietorships are subject to double taxation. 
A)  For accounting purposes a sole proprietorship is not a separate entity from its owner. 
B)  Ownership in a partnership is represented by having shares of capital stock. 
C)  One advantage of a corporation is ability to raise capital. 
D)  Sole proprietorships are subject to double taxation.

Question 12

Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?

Accepted Answer

A)  A corporation. 
B)  A municipality. 
C)  A sole proprietorship. 
D)  A partnership. 
A)  A corporation. 
B)  A municipality. 
C)  A sole proprietorship. 
D)  A partnership.

Question 13

Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share. For this transaction, Common Stock should be increased for $120,000.

Accepted Answer

A) True 
 B)False

Question 14

Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?

Accepted Answer

A)  Increase assets by $1,400,000, increase equity by $1,400,000. 
B)  Increase assets by $480,000, increase equity by $480,000. 
C)  Increase cash flow from investing activities by $480,000. 
D)  None of these answer choices are correct. 
A)  Increase assets by $1,400,000, increase equity by $1,400,000. 
B)  Increase assets by $480,000, increase equity by $480,000. 
C)  Increase cash flow from investing activities by $480,000. 
D)  None of these answer choices are correct.

Question 15

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

Accepted Answer

A)  increase by $640,000. 
B)  be unaffected. 
C)  increase by $240,000. 
D)  increase by $400,000. 
A)  increase by $640,000. 
B)  be unaffected. 
C)  increase by $240,000. 
D)  increase by $400,000.

Question 16

A company may retain some or all of the earnings to finance growth and increase its potential for future earnings.

Accepted Answer

A) True 
 B)False

Question 17

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner, and one for the earnings of the business.

Accepted Answer

A) True 
 B)False

Question 18

On January 2, Year 1, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?

Accepted Answer

A)  The common stock account will increase by $220,000. 
B)  The cash account will increase by $200,000. 
C)  Total equity will increase by $200,000. 
D)  The paid-in capital in excess of par value account will increase by $20,000. 
A)  The common stock account will increase by $220,000. 
B)  The cash account will increase by $200,000. 
C)  Total equity will increase by $200,000. 
D)  The paid-in capital in excess of par value account will increase by $20,000.

Question 19

Which of the following would not be a reason for the market price of Carlyle Corporation to increase?

Accepted Answer

A)  Carlyle Corp. has had good earnings in the present period. 
B)  A sustained increase in key interest rates. 
C)  The general condition and future outlook of the economy is good. 
D)  Investors believe Carlyle Corp. will do well in the future. 
A)  Carlyle Corp. has had good earnings in the present period. 
B)  A sustained increase in key interest rates. 
C)  The general condition and future outlook of the economy is good. 
D)  Investors believe Carlyle Corp. will do well in the future.

Question 20

Chandler Company declared and paid a cash dividend. Which of the following choices accurately reflects how this event would affect the company's financial statements?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

All corporations are subject to extensive government regulation.

At the time that Kirby Company issued a 2-for-1 stock split, the company had 5,000 shares of $6 par value common stock outstanding. Stockholders' equity also contained $15,000 of additional paid-in capital and $22,000 of retained earnings. Immediately after the stock split the:

Which of the following is a disadvantage of a sole proprietorship?

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

The book value of a share of stock is equal to the market or selling price of the stock.

Treasury Stock is reported on the balance sheet between liabilities and equity.

Vailes Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Which of the following accurately reflects how the reissue of the treasury stock would affect Vailes's financial statements?

Which of the following statements about the impact of treasury stock on the amounts reported on the balance sheet is correct?

One of the common reasons that a company purchases its own stock is to decrease its earnings per share.

Which of the following statements about types of business entities is true?

Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?

Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share. For this transaction, Common Stock should be increased for $120,000.

Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

A company may retain some or all of the earnings to finance growth and increase its potential for future earnings.

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner, and one for the earnings of the business.

On January 2, Year 1, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?

Which of the following would not be a reason for the market price of Carlyle Corporation to increase?

Chandler Company declared and paid a cash dividend. Which of the following choices accurately reflects how this event would affect the company's financial statements?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 8: Proprietorships, Partnerships, and Corporations

All corporations are subject to extensive government regulation.

At the time that Kirby Company issued a 2-for-1 stock split, the company had 5,000 shares of $6 par value common stock outstanding. Stockholders' equity also contained $15,000 of additional paid-in capital and $22,000 of retained earnings. Immediately after the stock split the:

Which of the following is a disadvantage of a sole proprietorship?

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

The book value of a share of stock is equal to the market or selling price of the stock.

Treasury Stock is reported on the balance sheet between liabilities and equity.

Vailes Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Which of the following accurately reflects how the reissue of the treasury stock would affect Vailes's financial statements?

Which of the following statements about the impact of treasury stock on the amounts reported on the balance sheet is correct?

One of the common reasons that a company purchases its own stock is to decrease its earnings per share.

Which of the following statements about types of business entities is true?

Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?

Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share. For this transaction, Common Stock should be increased for $120,000.

Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

A company may retain some or all of the earnings to finance growth and increase its potential for future earnings.

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner, and one for the earnings of the business.

On January 2, Year 1, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?

Which of the following would not be a reason for the market price of Carlyle Corporation to increase?

Chandler Company declared and paid a cash dividend. Which of the following choices accurately reflects how this event would affect the company's financial statements?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters