Question 1

Retained earnings are a component of contributed capital.

Accepted Answer

A) True 
 B)False

Question 2

Corporations are subject to more government control and regulation than are other forms of business.

Accepted Answer

A) True 
 B)False

Question 3

Match between columns
                        Premises: Par value per share
Total stockholders' equity
Balance of Common Stock account
Total number of shares outstanding
Total retained earnings
Assets
Total contributed capital

Accepted Answer

The Answer of increase and no effect and decrease is...

Question 4

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

Accepted Answer

Limited liability can be considered both

Question 5

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

Accepted Answer

A) credited to a liability account. 
B) debited to the Retained Earnings account. 
C) debited to an account titled Discount on Capital Stock. 
D) credited to the Retained Earnings account. 
A) credited to a liability account. 
B) debited to the Retained Earnings account. 
C) debited to an account titled Discount on Capital Stock. 
D) credited to the Retained Earnings account.

Question 6

A stock dividend increases the total amount of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 7

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Accepted Answer

A) True 
 B)False

Question 8

The sale of treasury stock cannot result in

Accepted Answer

A) an increase in Retained Earnings. 
B) the crediting of Paid-in Capital,Treasury Stock. 
C) the debiting of Paid-in Capital,Treasury Stock. 
D) an increase in total stockholders' equity. 
A) an increase in Retained Earnings. 
B) the crediting of Paid-in Capital,Treasury Stock. 
C) the debiting of Paid-in Capital,Treasury Stock. 
D) an increase in total stockholders' equity.

Question 9

Dividends in arrears must be paid when a corporation calls in its preferred stock.

Accepted Answer

A) True 
 B)False

Question 10

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Accepted Answer

A) True 
 B)False

Question 11

Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

Accepted Answer

A) $225.40. 
B) $120.40. 
C) $232.40 
D) $253.40. 
A) $225.40. 
B) $120.40. 
C) $232.40 
D) $253.40.

Question 12

Which of the following items will not be disclosed on a statement of stockholders' equity?

Accepted Answer

A) Conversion of preferred stock into common stock 
B) Results of discontinued operations 
C) Purchase of treasury stock 
D) Declaration of a stock dividend 
A) Conversion of preferred stock into common stock 
B) Results of discontinued operations 
C) Purchase of treasury stock 
D) Declaration of a stock dividend

Question 13

A disadvantage of the corporate form of business is

Accepted Answer

A) centralized authority and responsibility. 
B) its status as a separate legal entity. 
C) government regulation. 
D) continuous existence. 
A) centralized authority and responsibility. 
B) its status as a separate legal entity. 
C) government regulation. 
D) continuous existence.

Question 14

Use this information to answer the following question. Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.The following transactions occurred during the year:
Mar. 17 Declared a 10 percent stock dividend to stockholders of record on March 20. Market value of the stock was $22 on March 17.
Mar. 30 Distributed the stock dividend.
-The entry to record the transaction of March 17 is:

Accepted Answer

A) Stock Dividends 198,000 Common Stock Distributable 90,000
Additional Paid-in Capital 108,000 
B) Common Stock Distributable 90,000 Common Stock 90,000 
C) Common Stock Distributable 198,000 Common Stock 90,000
Retained Earnings 108,000 
D) Stock Dividends 198,000 Cash 198,000 
A) Stock Dividends 198,000 Common Stock Distributable 90,000
Additional Paid-in Capital 108,000 
B) Common Stock Distributable 90,000 Common Stock 90,000 
C) Common Stock Distributable 198,000 Common Stock 90,000
Retained Earnings 108,000 
D) Stock Dividends 198,000 Cash 198,000

Question 15

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Accepted Answer

A) True 
 B)False

Question 16

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Accepted Answer

A) True 
 B)False

Question 17

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 3,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5.
-The entry to record the sale of the treasury shares on March 2,20x5 is

Accepted Answer

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

Question 18

Define outstanding stock.

Accepted Answer

Outstanding stock is stock tha

Question 19

Start-up and organization costs include all of the following except

Accepted Answer

A) goodwill. 
B) cost of printing stock certificates. 
C) attorney's fees. 
D) state incorporation fees. 
A) goodwill. 
B) cost of printing stock certificates. 
C) attorney's fees. 
D) state incorporation fees.

Question 20

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Corporations

Retained earnings are a component of contributed capital.

Corporations are subject to more government control and regulation than are other forms of business.

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

A stock dividend increases the total amount of stockholders' equity.

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

The sale of treasury stock cannot result in

Dividends in arrears must be paid when a corporation calls in its preferred stock.

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Which of the following items will not be disclosed on a statement of stockholders' equity?

A disadvantage of the corporate form of business is

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Define outstanding stock.

Start-up and organization costs include all of the following except

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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