Question 1

Which of the following statements about par value is true?

Accepted Answer

A) Par value dictates the initial price of the stock. 
B) Par value may be revised each time a company issues more shares of stock. 
C) Par value is generally greater than market value. 
D) Par value has little connection to the market value of the stock. 
A) Par value dictates the initial price of the stock. 
B) Par value may be revised each time a company issues more shares of stock. 
C) Par value is generally greater than market value. 
D) Par value has little connection to the market value of the stock.

Question 2

Which of the following terms designates the maximum number of shares of stock that a corporation may issue?

Accepted Answer

A) Number of shares issued 
B) Number of shares authorized 
C) Par value 
D) Number of shares outstanding 
A) Number of shares issued 
B) Number of shares authorized 
C) Par value 
D) Number of shares outstanding

Question 3

Blair Scott started a sole proprietorship by depositing $75,000 cash in a business checking account.During the accounting period,the business borrowed $30,000 from a bank,earned $18,000 of net income,and Scott withdrew $12,000 cash from the business.Based on this information,what is the balance in Scott's capital account at the end of the accounting period?

Accepted Answer

A) $93,000 
B) $111,000 
C) $72,000 
D) $81,000 
A) $93,000 
B) $111,000 
C) $72,000 
D) $81,000

Question 4

Flagler Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account.The par value of Flagler's common stock is $8.How many shares of Flagler stock have been issued?

Accepted Answer

A) 117,500 
B) 200,000 
C) 82,500 
D) The number of shares cannot be determined using the information provided. 
A) 117,500 
B) 200,000 
C) 82,500 
D) The number of shares cannot be determined using the information provided.

Question 5

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 included $15,000 of paid in capital in excess of par value-common and $22,000 of retained earnings.Which of the following statements regarding the impact of the stock split is true?

Accepted Answer

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

Question 6

The class or type of stock that every corporation must have is preferred stock.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following entities would report income tax expense on its income statement?

Accepted Answer

A) Sole proprietorship. 
B) Corporation. 
C) Partnership. 
D) All of these answer choices are correct. 
A) Sole proprietorship. 
B) Corporation. 
C) Partnership. 
D) All of these answer choices are correct.

Question 8

A purchase of treasury stock is an asset use transaction.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not considered an advantage of the corporate form of business organization?

Accepted Answer

A) Ability to raise capital 
B) Continuity of existence 
C) Ease of transferability of ownership 
D) Lack of government regulation 
A) Ability to raise capital 
B) Continuity of existence 
C) Ease of transferability of ownership 
D) Lack of government regulation

Question 10

In a closely held corporation,exchanges of stock are limited to transactions between individuals.

Accepted Answer

A) True 
 B)False

Question 11

A separate capital account is maintained for each partner in a partnership.

Accepted Answer

A) True 
 B)False

Question 12

The earnings of sole proprietorships are taxable to the owners rather than the company itself.

Accepted Answer

A) True 
 B)False

Question 13

Voiles Company reissued 200 shares of its treasury stock.The treasury stock originally cost $25 per share and was reissued for $35 per share.Select the answer that accurately reflects how the reissue of the treasury stock would affect the elements of Voiles' financial statements.

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 14

Chadwick Associates retained $850,000 of net income in the business in Year 1.If $75,000 was appropriated to satisfy the restrictive covenant of a loan agreement,what are the effects of the appropriation on the elements of the financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 15

The stock market crash in 1929 led to the beginning of the extensive regulation of trading stock on stock exchanges.

Accepted Answer

A) True 
 B)False

Question 16

What is the expected impact of a 2-for-1 stock split?

Accepted Answer

A) A decrease in the market price of the stock 
B) Increased protection of the interest of creditors 
C) An increase in the par value of the stock 
D) The absorption of treasury stock 
A) A decrease in the market price of the stock 
B) Increased protection of the interest of creditors 
C) An increase in the par value of the stock 
D) The absorption of treasury stock

Question 17

On February 2,Year 1,Farmer Corporation issued 9,000 shares of no-par stock for $17 per share.Within two hours of the issue,the stock's price jumped on the New York Stock Exchange to $21 per share.Which of the following answers describes the effect of the February 2 transaction on the elements of the financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 18

The most commonly reported measure of a company's value is earnings per share.

Accepted Answer

A) True 
 B)False

Question 19

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 the corporation form is the 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 the corporation form is the ability to raise capital. 
D) Sole proprietorships are subject to double taxation.

Question 20

At the end of the accounting period,Houston Company had $12,000 of common stock,paid-in capital in excess of par value-common of $11,000,retained earnings of $12,000,and $4,000 of treasury stock.What is the total amount of stockholders' equity?

Accepted Answer

A) $37,000 
B) $39,000 
C) $19,000 
D) $31,000 
A) $37,000 
B) $39,000 
C) $19,000 
D) $31,000

Which of the following statements about par value is true?

Which of the following terms designates the maximum number of shares of stock that a corporation may issue?

Flagler Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account.The par value of Flagler's common stock is $8.How many shares of Flagler stock have been issued?

The class or type of stock that every corporation must have is preferred stock.

Which of the following entities would report income tax expense on its income statement?

A purchase of treasury stock is an asset use transaction.

Which of the following is not considered an advantage of the corporate form of business organization?

In a closely held corporation,exchanges of stock are limited to transactions between individuals.

A separate capital account is maintained for each partner in a partnership.

The earnings of sole proprietorships are taxable to the owners rather than the company itself.

Voiles Company reissued 200 shares of its treasury stock.The treasury stock originally cost $25 per share and was reissued for $35 per share.Select the answer that accurately reflects how the reissue of the treasury stock would affect the elements of Voiles' financial statements.

Chadwick Associates retained $850,000 of net income in the business in Year 1.If $75,000 was appropriated to satisfy the restrictive covenant of a loan agreement,what are the effects of the appropriation on the elements of the financial statements?

The stock market crash in 1929 led to the beginning of the extensive regulation of trading stock on stock exchanges.

What is the expected impact of a 2-for-1 stock split?

The most commonly reported measure of a company's value is earnings per share.

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

At the end of the accounting period,Houston Company had $12,000 of common stock,paid-in capital in excess of par value-common of $11,000,retained earnings of $12,000,and $4,000 of treasury stock.What is the total amount of stockholders' equity?

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Statement of Cash Flows

Financial Statement Analysis

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Exam 11: Proprietorships,partnerships,and Corporations

Which of the following statements about par value is true?

Which of the following terms designates the maximum number of shares of stock that a corporation may issue?

Flagler Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account.The par value of Flagler's common stock is $8.How many shares of Flagler stock have been issued?

The class or type of stock that every corporation must have is preferred stock.

Which of the following entities would report income tax expense on its income statement?

A purchase of treasury stock is an asset use transaction.

Which of the following is not considered an advantage of the corporate form of business organization?

In a closely held corporation,exchanges of stock are limited to transactions between individuals.

A separate capital account is maintained for each partner in a partnership.

The earnings of sole proprietorships are taxable to the owners rather than the company itself.

Voiles Company reissued 200 shares of its treasury stock.The treasury stock originally cost $25 per share and was reissued for $35 per share.Select the answer that accurately reflects how the reissue of the treasury stock would affect the elements of Voiles' financial statements.

Chadwick Associates retained $850,000 of net income in the business in Year 1.If $75,000 was appropriated to satisfy the restrictive covenant of a loan agreement,what are the effects of the appropriation on the elements of the financial statements?

The stock market crash in 1929 led to the beginning of the extensive regulation of trading stock on stock exchanges.

What is the expected impact of a 2-for-1 stock split?

The most commonly reported measure of a company's value is earnings per share.

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

At the end of the accounting period,Houston Company had $12,000 of common stock,paid-in capital in excess of par value-common of $11,000,retained earnings of $12,000,and $4,000 of treasury stock.What is the total amount of stockholders' equity?

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Statement of Cash Flows

Financial Statement Analysis

Filters