Question 1

The excess of sales price of treasury stock over its cost should be credited to

Accepted Answer

A)  Treasury Stock Receivable 
B)  Premium on Capital Stock 
C)  Paid-In Capital from Sale of Treasury Stock 
D)  Income from Sale of Treasury Stock 
A)  Treasury Stock Receivable 
B)  Premium on Capital Stock 
C)  Paid-In Capital from Sale of Treasury Stock 
D)  Income from Sale of Treasury Stock

Question 2

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Accepted Answer

A)  decrease retained earnings, increase common stock, and increase paid-in capital 
B)  increase retained earnings, decrease common stock, and decrease paid-in capital 
C)  increase retained earnings, decrease common stock, and increase paid-in capital 
D)  decrease retained earnings, increase common stock, and decrease paid-in capital 
A)  decrease retained earnings, increase common stock, and increase paid-in capital 
B)  increase retained earnings, decrease common stock, and decrease paid-in capital 
C)  increase retained earnings, decrease common stock, and increase paid-in capital 
D)  decrease retained earnings, increase common stock, and decrease paid-in capital

Question 3

The initial owners of stock of a newly formed corporation are called directors.

Accepted Answer

A) True 
 B)False

Question 4

The excess of issue price over par of common stock is termed a(n)

Accepted Answer

A)  discount 
B)  income 
C)  deficit 
D)  premium 
A)  discount 
B)  income 
C)  deficit 
D)  premium

Question 5

Organizational expenses are classified as intangible assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

The main source of paid-in-capital is from issuing stock.

Accepted Answer

A) True 
 B)False

Question 7

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

Accepted Answer

A) True 
 B)False

Question 8

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Accepted Answer

A) True 
 B)False

Question 9

On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25. On May 5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash. On May 25, Maranda issued for cash 15,000 shares of 4%, $50 par preferred stock at $55.
Journalize the entries to record the April 10, May 5, and May 25 transactions.

Accepted Answer

The answer of On April 10, Maranda Corporation issued for...

Question 10

Treasury stock shares are

Accepted Answer

A)  shares held by the U.S. Treasury Department 
B)  part of the total outstanding shares but not part of the total issued shares of a corporation 
C)  unissued shares that are held by the treasurer of the corporation 
D)  issued shares that have been reacquired by a corporation 
A)  shares held by the U.S. Treasury Department 
B)  part of the total outstanding shares but not part of the total issued shares of a corporation 
C)  unissued shares that are held by the treasurer of the corporation 
D)  issued shares that have been reacquired by a corporation

Question 11

When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a

Accepted Answer

A)  debit to Cash for $90,000 
B)  credit to Common Stock for $207,000 
C)  credit to Paid in Capital in Excess of Par for $117,000 
D)  debit to Common Stock for $90,000 
A)  debit to Cash for $90,000 
B)  credit to Common Stock for $207,000 
C)  credit to Paid in Capital in Excess of Par for $117,000 
D)  debit to Common Stock for $90,000

Question 12

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Accepted Answer

A)  $80,000 
B)  $10,000 
C)  $90,000 
D)  $100,000 
A)  $80,000 
B)  $10,000 
C)  $90,000 
D)  $100,000

Question 13

Which of the following is not true of a corporation?

Accepted Answer

A)  It may enter into binding legal contracts in its own name. 
B)  It may sue and be sued. 
C)  The acts of its owners bind the corporation. 
D)  It may buy, own, and sell property. 
A)  It may enter into binding legal contracts in its own name. 
B)  It may sue and be sued. 
C)  The acts of its owners bind the corporation. 
D)  It may buy, own, and sell property.

Question 14

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Accepted Answer

A) True 
 B)False

Question 15

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

Accepted Answer

A)  income will be increased by $500 
B)  stockholders' equity will be increased by $3,500 
C)  stockholders' equity will be increased by $500 
D)  stockholders' equity will not change 
A)  income will be increased by $500 
B)  stockholders' equity will be increased by $3,500 
C)  stockholders' equity will be increased by $500 
D)  stockholders' equity will not change

Question 16

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Accepted Answer

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

Question 17

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account

Accepted Answer

A)  Common Stock will be credited for $75,000. 
B)  Paid-in Capital in excess of Par Value will be credited for $5,000. 
C)  Paid-in Capital in excess of Par Value will be credited for $70,000. 
D)  Cash will be debited for $70,000. 
A)  Common Stock will be credited for $75,000. 
B)  Paid-in Capital in excess of Par Value will be credited for $5,000. 
C)  Paid-in Capital in excess of Par Value will be credited for $70,000. 
D)  Cash will be debited for $70,000.

Question 18

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements concerning taxation is accurate?

Accepted Answer

A)  Corporations pay federal income taxes but not state income taxes. 
B)  Corporations pay federal and state income taxes. 
C)  Only the owners must pay taxes on corporate income. 
D)  Corporations pay income taxes but their owners do not. 
A)  Corporations pay federal income taxes but not state income taxes. 
B)  Corporations pay federal and state income taxes. 
C)  Only the owners must pay taxes on corporate income. 
D)  Corporations pay income taxes but their owners do not.

Question 20

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

Accepted Answer

A)  60,000 
B)  10,000 
C)  300,000 
D)  30,000 
A)  60,000 
B)  10,000 
C)  300,000 
D)  30,000

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

The excess of sales price of treasury stock over its cost should be credited to

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

The initial owners of stock of a newly formed corporation are called directors.

The excess of issue price over par of common stock is termed a(n)

Organizational expenses are classified as intangible assets on the balance sheet.

The main source of paid-in-capital is from issuing stock.

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported in the income statement.

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Treasury stock shares are

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Which of the following is not true of a corporation?

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these two transactions combined

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account

Cash dividends become a liability to a corporation on the date of record.

Which of the following statements concerning taxation is accurate?

A corporation has 60,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the number of shares outstanding will be:

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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