Question 1

Preferred stockholders have what right over common stockholders?

Accepted Answer

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

Question 2

Alpha Corporation's has 1,500 shares of $40 par, 7% cumulative preferred stock and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders will receive:

Accepted Answer

A) $0. 
B) $220. 
C) $1,600. 
D) $5,800. 
A) $0. 
B) $220. 
C) $1,600. 
D) $5,800.

Question 3

Prepare the journal entries for Mayhem Manufacturing:
July 21 Issued 6,000 shares of $10 par common stock for $65,000.
July 29 Issued 3,000 shares of 7%, $30 par preferred stock for equipment with a fair market value of $93,000.

Accepted Answer

The answer of Prepare the journal entries for Mayhem Manufacturing:
July...

Question 4

Retained Earnings is the account in which a corporation's net income and net losses are placed.

Accepted Answer

A) True 
 B)False

Question 5

Double taxation is said to be a disadvantage of a corporation.

Accepted Answer

A) True 
 B)False

Question 6

Mack Corporation has been issued a charter by the state of New Hampshire. This charter gives Mack the authority to issue 20,000 shares of $25 par value preferred stock and 100,000 shares of $10 par value common stock. Journalize the entries listed below.

Accepted Answer

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

Question 7

The Zonga Corporation Stockholders' Equity section includes the following:   Total paid-in capital is:

Accepted Answer

A) $83,730. 
B) $76,380. 
C) $70,000. 
D) $77,350. 
A) $83,730. 
B) $76,380. 
C) $70,000. 
D) $77,350.

Question 8

Describe a stock subscription plan.

Accepted Answer

In a stock subscription plan, buyers ple

Question 9

No entry was recorded for the exchange of stock for land. This error would cause:

Accepted Answer

A) the period end stockholders' equity to be understated. 
B) the period end stockholders' equity to be overstated. 
C) the period's net income to be understated. 
D) Both A and C are correct. 
A) the period end stockholders' equity to be understated. 
B) the period end stockholders' equity to be overstated. 
C) the period's net income to be understated. 
D) Both A and C are correct.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The entry to record selling 300 shares of no-par common stock with a stated value of $60 for $70 would be to:

Accepted Answer

A) debit Cash $21,000; credit Common Stock $21,000. 
B) debit Cash $18,000; credit Common Stock $18,000. 
C) debit Cash $21,000; credit Common Stock $18,000; debit Paid-in Capital in Excess of Par Value-Common $3,000. 
D) debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Value-Common $3,000. 
A) debit Cash $21,000; credit Common Stock $21,000. 
B) debit Cash $18,000; credit Common Stock $18,000. 
C) debit Cash $21,000; credit Common Stock $18,000; debit Paid-in Capital in Excess of Par Value-Common $3,000. 
D) debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Value-Common $3,000.

Question 12

Preferred stock is considered to be non-cumulative when:

Accepted Answer

A) preferred stockholders get their yearly dividend and a percent of what is left over, sharing with 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 are correct. 
A) preferred stockholders get their yearly dividend and a percent of what is left over, sharing with 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 are correct.

Question 13

RH Corporation Stockholders' Equity section includes the following information:   Total paid-in capital is:

Accepted Answer

A) $48,000. 
B) $55,000. 
C) $27,000. 
D) $21,000. 
A) $48,000. 
B) $55,000. 
C) $27,000. 
D) $21,000.

Question 14

An amount determined by the corporation directors and assigned to no-par value stock is:

Accepted Answer

A) par value. 
B) stated value. 
C) book value. 
D) market value. 
A) par value. 
B) stated value. 
C) book value. 
D) market value.

Question 15

Which of the following is a characteristic of a corporation?

Accepted Answer

A) The stockholders have limited liability. 
B) When stockholders sell their shares, the corporation is dissolved. 
C) A corporation cannot own property in its name. 
D) Cash dividends to the stockholders are non-taxable. 
A) The stockholders have limited liability. 
B) When stockholders sell their shares, the corporation is dissolved. 
C) A corporation cannot own property in its name. 
D) Cash dividends to the stockholders are non-taxable.

Question 16

Carmen Corporation issued 200 shares of its $10 par value stock to an attorney. The shares are in full settlement for $8,000 of legal services to help set up the company. Prepare the journal entry for the stock issuance.

Accepted Answer

The answer of Carmen Corporation issued 200 shares of its...

Question 17

Revenue earned by the business was recorded as additional paid-in capital. This error would cause:

Accepted Answer

A) the period's net income to be understated. 
B) the period's net income to be overstated. 
C) the period end assets to be overstated. 
D) None of these are correct. 
A) the period's net income to be understated. 
B) the period's net income to be overstated. 
C) the period end assets to be overstated. 
D) None of these are correct.

Question 18

A form issued by the corporation that shows the name of the stockholder and the number of shares owned is called a(n):

Accepted Answer

A) article of incorporation. 
B) charter. 
C) proxy. 
D) stock certificate. 
A) article of incorporation. 
B) charter. 
C) proxy. 
D) stock certificate.

Question 19

The TM Stockholders' Equity section includes the following:   What was the total amount common stock was sold for?

Accepted Answer

A) $7,700 
B) $13,700 
C) $11,500 
D) $9,950 
A) $7,700 
B) $13,700 
C) $11,500 
D) $9,950

Question 20

Most preferred stock currently being issued is participating, while it is very unusual to find cumulative preferred stock.

Accepted Answer

A) True 
 B)False

Exam 18: Corporations: Organizations and Stock

Preferred stockholders have what right over common stockholders?

Alpha Corporation's has 1,500 shares of $40 par, 7% cumulative preferred stock and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders will receive:

Prepare the journal entries for Mayhem Manufacturing: July 21 Issued 6,000 shares of $10 par common stock for $65,000. July 29 Issued 3,000 shares of 7%, $30 par preferred stock for equipment with a fair market value of $93,000.

Retained Earnings is the account in which a corporation's net income and net losses are placed.

Double taxation is said to be a disadvantage of a corporation.

Mack Corporation has been issued a charter by the state of New Hampshire. This charter gives Mack the authority to issue 20,000 shares of $25 par value preferred stock and 100,000 shares of $10 par value common stock. Journalize the entries listed below.

The Zonga Corporation Stockholders' Equity section includes the following: Total paid-in capital is:

Describe a stock subscription plan.

No entry was recorded for the exchange of stock for land. This error would cause:

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

The entry to record selling 300 shares of no-par common stock with a stated value of $60 for $70 would be to:

Preferred stock is considered to be non-cumulative when:

RH Corporation Stockholders' Equity section includes the following information: Total paid-in capital is:

An amount determined by the corporation directors and assigned to no-par value stock is:

Which of the following is a characteristic of a corporation?

Carmen Corporation issued 200 shares of its $10 par value stock to an attorney. The shares are in full settlement for $8,000 of legal services to help set up the company. Prepare the journal entry for the stock issuance.

Revenue earned by the business was recorded as additional paid-in capital. This error would cause:

A form issued by the corporation that shows the name of the stockholder and the number of shares owned is called a(n):

The TM Stockholders' Equity section includes the following: What was the total amount common stock was sold for?

Most preferred stock currently being issued is participating, while it is very unusual to find cumulative preferred stock.

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: the Conclusion of the Payroll Process

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, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters