Exam 11: Proprietorships,partnerships,and Corporations

A corporation is a legal entity created by the authority of a state government,separate and distinct from its owners.

On March 1, Year 1, Gilmore Incorporated declared a cash dividend on its 1,500 outstanding shares of $50 par value, 6% preferred stock. The dividend will be paid on May 1, Year 1 to the stockholders of record as of April 1, Year 1. -How will the May 1 payment of the dividend affect the elements of the financial statements?

Which of the following best describes how each share of par value stock issued is reported in the Common Stock account?

A corporation must record a liability for cash dividends on the date of record.

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.

Which of the following statements is a reason why a company would buy treasury stock?

Preferred stockholders' claims to a corporation's assets take precedence over the claims of some creditors.

How is the price-earnings ratio calculated?

Kellogg,Inc.purchased 200 shares of its own $20 par value stock for $30 cash per share.Which of the following answers reflects how this purchase of treasury stock would affect the elements of Kellogg's financial statements?

How does the issuance of a common stock dividend normally impact the calculation of a company's price-earnings (P/E)ratio?

The Securities and Exchange Commission (SEC)has the authority to set and enforce auditing,attestation,quality control,and ethics standards for auditors of public companies.

Which of the following entities would have a "Paid-in Capital in Excess" account in the equity section of the balance sheet?