Question 1

Common stockholders have all the following rights except:

Accepted Answer

A) the right to prior claims of profit over preferred stockholders. 
B) the right to vote. 
C) the right to sell their stock. 
D) the right to share in assets upon liquidation after creditors and preferred stockholders. 
A) the right to prior claims of profit over preferred stockholders. 
B) the right to vote. 
C) the right to sell their stock. 
D) the right to share in assets upon liquidation after creditors and preferred stockholders.

Question 2

One type of preferred stock that provides for the payment of preferred dividends that are in arrears is called:

Accepted Answer

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

Question 3

Nature's Honey Corporation received the final installment of $1,000 on a stock subscription for 20 shares of $100 par value common stock. After recording the cash receipt, the entry to issue the stock would include a:

Accepted Answer

A) debit to Paid-in Capital in Excess of Par for $2,000. 
B) credit to Paid-in Capital in excess of Par for $2,000. 
C) credit to Common Stock for $2,000. 
D) credit to Organization Cost for $2,000. 
A) debit to Paid-in Capital in Excess of Par for $2,000. 
B) credit to Paid-in Capital in excess of Par for $2,000. 
C) credit to Common Stock for $2,000. 
D) credit to Organization Cost for $2,000.

Question 4

Preferred stock that is given a right to share with the common stock in dividends in excess of a stated preferred dividend rate is called:

Accepted Answer

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

Question 5

Journalize the transactions for the stock subscription plan for Rico Company. On February 1, Rico received subscriptions for 50 shares of $9 par value common stock at $16 per share. The buyer will pay two equal installments on March 1 and June 1. Assume all payments are made as scheduled and the company issues the stock after the June 1 collection.

Accepted Answer

The answer of Journalize the transactions for the stock subscription...

Question 6

If only one type of stock is issued, it is:

Accepted Answer

A) no-par preferred stock. 
B) preferred stock. 
C) legal capital. 
D) common stock. 
A) no-par preferred stock. 
B) preferred stock. 
C) legal capital. 
D) common stock.

Question 7

Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400. The entry to record the acquisition of the equipment would include a:

Accepted Answer

A) debit to Equipment for $2,000. 
B) debit to Paid-in Capital in Excess of Par for $400. 
C) credit to Common Stock for $2,400. 
D) debit to Equipment for $2,400. 
A) debit to Equipment for $2,000. 
B) debit to Paid-in Capital in Excess of Par for $400. 
C) credit to Common Stock for $2,400. 
D) debit to Equipment for $2,400.

Question 8

Cumulative preferred stock means that the preferred stockholders have a right to a certain dividend every year.

Accepted Answer

A) True 
 B)False

Question 9

Tory Company received the first installment of $3,200 on a common stock subscription. The entry to record the collection would include a:

Accepted Answer

A) debit to Subscriptions Receivable-Common Stock for $3,200. 
B) credit to Common Stock Subscribed for $2,500. 
C) credit to Common Stock for $2,500. 
D) credit to Subscriptions Receivable-Common Stock for $3,200. 
A) debit to Subscriptions Receivable-Common Stock for $3,200. 
B) credit to Common Stock Subscribed for $2,500. 
C) credit to Common Stock for $2,500. 
D) credit to Subscriptions Receivable-Common Stock for $3,200.

Question 10

A corporation is not required to pay dividends.

Accepted Answer

A) True 
 B)False

Question 11

Diamonds Forever Corporation received subscriptions for 80 shares of its $100 par value common stock for $120 per share. The entry to record the receipt of the subscriptions would include a:

Accepted Answer

A) debit to Common Stock Subscribed for $9,600. 
B) debit to Subscriptions Receivable-Common Stock for $8,000. 
C) credit to Paid-in Capital in Excess of Par for $1,600. 
D) credit to Common Stock to be Outstanding $8,000. 
A) debit to Common Stock Subscribed for $9,600. 
B) debit to Subscriptions Receivable-Common Stock for $8,000. 
C) credit to Paid-in Capital in Excess of Par for $1,600. 
D) credit to Common Stock to be Outstanding $8,000.

Question 12

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 cumulative with no dividends distributed last year.

Accepted Answer

Dividend for Preferred Stock: $50 par ×

Question 13

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.

Accepted Answer

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

Question 14

Sunrise Online issued 500 shares of its $10 common stock in exchange for equipment with a fair market value of $7,500. The entry to record the transaction would include a:

Accepted Answer

A) debit to Equipment for $5,000. 
B) debit to Common Stock for $5,000. 
C) credit to Paid-in Capital in Excess of Par Value for $2,500. 
D) credit to Common Stock Subscribed for $5,000. 
A) debit to Equipment for $5,000. 
B) debit to Common Stock for $5,000. 
C) credit to Paid-in Capital in Excess of Par Value for $2,500. 
D) credit to Common Stock Subscribed for $5,000.

Question 15

An advantage of a corporation would be:

Accepted Answer

A) limited liability for the shareholders. 
B) unlimited life. 
C) double taxation (income of corporation and dividends to shareholders). 
D) both A and B are correct. 
A) limited liability for the shareholders. 
B) unlimited life. 
C) double taxation (income of corporation and dividends to shareholders). 
D) both A and B are correct.

Question 16

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 17

Birch Company issued 200 shares of common stock with a par value of $12 per share in exchange for equipment with a fair market value of $3,000. Record the journal entry for the stock issuance.

Accepted Answer

The answer of Birch Company issued 200 shares of common...

Question 18

The par value of stock represents the legal capital of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

The two main sources of stockholders' equity are investments by stockholders and net income retained in the corporation.

Accepted Answer

A) True 
 B)False

Question 20

Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to:

Accepted Answer

A) Equipment for $12,500. 
B) Debit to Common Stock for $12,500. 
C) Credit to Paid-In Capital in Excess of Par-Common for $1,000. 
D) Credit to Common Stock for $13,500. 
A) Equipment for $12,500. 
B) Debit to Common Stock for $12,500. 
C) Credit to Paid-In Capital in Excess of Par-Common for $1,000. 
D) Credit to Common Stock for $13,500.

Exam 18: Corporations: Organizations and Stock

Common stockholders have all the following rights except:

One type of preferred stock that provides for the payment of preferred dividends that are in arrears is called:

Nature's Honey Corporation received the final installment of $1,000 on a stock subscription for 20 shares of $100 par value common stock. After recording the cash receipt, the entry to issue the stock would include a:

Preferred stock that is given a right to share with the common stock in dividends in excess of a stated preferred dividend rate is called:

If only one type of stock is issued, it is:

Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400. The entry to record the acquisition of the equipment would include a:

Cumulative preferred stock means that the preferred stockholders have a right to a certain dividend every year.

Tory Company received the first installment of $3,200 on a common stock subscription. The entry to record the collection would include a:

A corporation is not required to pay dividends.

Diamonds Forever Corporation received subscriptions for 80 shares of its $100 par value common stock for $120 per share. The entry to record the receipt of the subscriptions would include a:

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.

Sunrise Online issued 500 shares of its $10 common stock in exchange for equipment with a fair market value of $7,500. The entry to record the transaction would include a:

An advantage of a corporation would be:

A major disadvantage of a corporation is the:

Birch Company issued 200 shares of common stock with a par value of $12 per share in exchange for equipment with a fair market value of $3,000. Record the journal entry for the stock issuance.

The par value of stock represents the legal capital of the corporation.

The two main sources of stockholders' equity are investments by stockholders and net income retained in the corporation.

Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to:

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