Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

Accepted Answer

A) True 
 B)False

Question 7

A restriction/appropriation of retained earnings

Accepted Answer

A)  decreases total assets 
B)  increases total retained earnings 
C)  decreases total retained earnings 
D)  has no effect on total retained earnings 
A)  decreases total assets 
B)  increases total retained earnings 
C)  decreases total retained earnings 
D)  has no effect on total retained earnings

Question 8

One of the main disadvantages of the corporate form is the

Accepted Answer

A)  professional management 
B)  double taxation of dividends 
C)  charter 
D)  corporation must issue stock 
A)  professional management 
B)  double taxation of dividends 
C)  charter 
D)  corporation must issue stock

Question 9

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 10

Treasury stock should be reported in the financial statements of a corporation as a(n)

Accepted Answer

A)  investment. 
B)  liability. 
C)  current asset. 
D)  deduction from stockholders's equity. 
A)  investment. 
B)  liability. 
C)  current asset. 
D)  deduction from stockholders's equity.

Question 11

Which of the following is not classified as paid-in capital on the balance sheet?

Accepted Answer

A)  common stock 
B)  common stock distributable 
C)  donated capital 
D)  treasury stock 
A)  common stock 
B)  common stock distributable 
C)  donated capital 
D)  treasury stock

Question 12

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Accepted Answer

A) True 
 B)False

Question 13

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Accepted Answer

A) True 
 B)False

Question 14

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 15

The par value of stock is an arbitrary per share amount defined in many states as legal capital.

Accepted Answer

A) True 
 B)False

Question 16

Prepare entries to record the following:

Accepted Answer

(a)
 @#IMG-DLM&_TB2013_00 (b)

Question 17

Paid-in capital may originate from real estate donated to the corporation.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

(a)
 @#IMG-DLM&_TB2013_00 (b)

Question 19

The entry to record the issuance of common stock at a price above par includes a debit to

Accepted Answer

A)  Organizational Expenses 
B)  Common Stock 
C)  Cash 
D)  Paid-In Capital in Excess of Par-Common Stock 
A)  Organizational Expenses 
B)  Common Stock 
C)  Cash 
D)  Paid-In Capital in Excess of Par-Common Stock

Question 20

Earnings per share

Accepted Answer

A)  is the net income per common share 
B)  must be reported by publicly traded companies 
C)  helps compare companies of different sizes 
D)  all of the above 
A)  is the net income per common share 
B)  must be reported by publicly traded companies 
C)  helps compare companies of different sizes 
D)  all of the above

Exam 13: Corporations: Organization, Stock Transactions, and Dividends

Treasury stock shares are

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

Which of the following statements concerning taxation is accurate?

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

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

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

A restriction/appropriation of retained earnings

One of the main disadvantages of the corporate form is the

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?

Treasury stock should be reported in the financial statements of a corporation as a(n)

Which of the following is not classified as paid-in capital on the balance sheet?

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Characteristics of a corporation include

The par value of stock is an arbitrary per share amount defined in many states as legal capital.

Prepare entries to record the following:

Paid-in capital may originate from real estate donated to the corporation.

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

The entry to record the issuance of common stock at a price above par includes a debit to

Earnings per share

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

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

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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