Question 1

When a corporation completes a 3-for-1 stock split

Accepted Answer

A)  the ownership interest of current stockholders is decreased 
B)  the market price per share of the stock is decreased 
C)  the par value per share is decreased 
D)  b and c 
A)  the ownership interest of current stockholders is decreased 
B)  the market price per share of the stock is decreased 
C)  the par value per share is decreased 
D)  b and c

Question 2

On January 1, 20xx, Swenson 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 $20.00 per share. On February 1, 20xx, Swenson purchased 4,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a

Accepted Answer

A)  credit to Treasury Stock for $96,000. 
B)  debit to Treasury Stock for $96,000. 
C)  debit to a loss account for $120,000 
D)  credit to a gain account for $120,000. 
A)  credit to Treasury Stock for $96,000. 
B)  debit to Treasury Stock for $96,000. 
C)  debit to a loss account for $120,000 
D)  credit to a gain account for $120,000.

Question 3

Which of the following is not a prerequisite to paying a cash dividend?

Accepted Answer

A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings 
A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings

Question 4

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 5

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Accepted Answer

A)  $ 60,000 
B)  $ 20,000 
C)  $120,000 
D)  $100,000 
A)  $ 60,000 
B)  $ 20,000 
C)  $120,000 
D)  $100,000

Question 6

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

Accepted Answer

A)  the financial condition, earnings record, and dividend record of the corporation 
B)  investor expectations of the corporation's earning power 
C)  how high the par value is 
D)  general business and economic conditions and prospects 
A)  the financial condition, earnings record, and dividend record of the corporation 
B)  investor expectations of the corporation's earning power 
C)  how high the par value is 
D)  general business and economic conditions and prospects

Question 7

Which of the following is not characteristic of a corporation?

Accepted Answer

A)  The financial loss that a stockholder may suffer from owning stock in a public company is limited. 
B)  Cash dividends paid by a corporation are deductible as expenses by the corporation. 
C)  A corporation can own property in its name. 
D)  Corporations are required to file federal income tax returns. 
A)  The financial loss that a stockholder may suffer from owning stock in a public company is limited. 
B)  Cash dividends paid by a corporation are deductible as expenses by the corporation. 
C)  A corporation can own property in its name. 
D)  Corporations are required to file federal income tax returns.

Question 8

Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Prepare entries to record the following:

Accepted Answer

(a)
 @#IMG-DLM& (b)

Question 10

For accounting purposes, stated value is treated the same way as par value.

Accepted Answer

A) True 
 B)False

Question 11

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 12

A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.

Accepted Answer

The answer of A corporation, which had 18,000 shares of...

Question 13

Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:
   Determine the dividends per share for preferred and common stock for each year.

Accepted Answer

The answer of Sabas Company has 40,000 shares of $100...

Question 14

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Characteristics of a corporation include

Accepted Answer

A)  shareholders who are mutual agents 
B)  direct management by the shareholders (owners) 
C)  its inability to own property 
D)  shareholders who have limited liability 
A)  shareholders who are mutual agents 
B)  direct management by the shareholders (owners) 
C)  its inability to own property 
D)  shareholders who have limited liability

Question 16

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

Accepted Answer

A) True 
 B)False

Question 17

Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends.

Accepted Answer

A) True 
 B)False

Question 18

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

Accepted Answer

A) True 
 B)False

Question 19

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

Accepted Answer

A)  35,000 
B)  70,000 
C)  25,000 
D)  30,000 
A)  35,000 
B)  70,000 
C)  25,000 
D)  30,000

Question 20

Under the corporate form of business organization

Accepted Answer

A)  ownership rights are easily transferred. 
B)  a stockholder is personally liable for the debts of the corporation. 
C)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. 
D)  stockholders wishing to sell their corporation shares must get the approval of other stockholders. 
A)  ownership rights are easily transferred. 
B)  a stockholder is personally liable for the debts of the corporation. 
C)  stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. 
D)  stockholders wishing to sell their corporation shares must get the approval of other stockholders.

Exam 11: Corporations: Organization, Stock Transactions, and Dividends

When a corporation completes a 3-for-1 stock split

Which of the following is not a prerequisite to paying a cash dividend?

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

Which of the following is not characteristic of a corporation?

Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement.

Prepare entries to record the following:

For accounting purposes, stated value is treated the same way as par value.

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.

Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for each year.

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

Characteristics of a corporation include

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends.

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

Under the corporate form of business organization

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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