Question 1

A company issues no-par value with no stated value stock.Therefore,the company does not have a minimum legal capital amount.

Accepted Answer

A) True 
 B)False

Question 2

The entry to record MidIowa.net selling 800 shares of $6.00 par value common stock at $8.00 would be to:

Accepted Answer

A) debit Cash $6,400; credit Common Stock $4,800; credit Paid-in Capital in Excess of Par Value-Common $1,600. 
B) debit Cash $4,800; credit Common Stock $4,800. 
C) debit Cash $6,400; debit Paid-in Capital in Excess of Par Value-Common $1,600; credit Common Stock $8,000. 
D) None of these answers are correct.

Question 3

In exchange for $1,500 legal services to help set up the new company,Hickory Grove Corporation issued 100 shares of $10 par value stock to its attorney.The entry to record the issuance of the stock would include a:

Accepted Answer

A) credit to Common Stock for $1,000. 
B) debit to Common Stock for $1,000. 
C) credit to Common Stock for $1,500. 
D) debit to Paid-in Capital in Excess of Par Value for $500.

Question 4

Revenue earned by the business was recorded as additional paid-in capital.This error would cause:

Accepted Answer

A) the period's net income to be understated. 
B) the period's net income to be overstated. 
C) the period end assets to be overstated. 
D) None of these are correct.

Question 5

Carmen Corporation issued 200 shares of its $10 par value stock to an attorney.The shares are in full settlement for $8,000 of legal services to help set up the company.Prepare the journal entry for the stock issuance.

Accepted Answer

The answer of Carmen Corporation issued 200 shares of its...

Question 6

In the stockholders' equity section of a balance sheet:

Accepted Answer

A) common stock goes first. 
B) retained earnings goes first. 
C) preferred stock goes first. 
D) all paid-in capital goes first.

Question 7

Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and Common Stock Subscribed of $3,200 on its balance sheet.All the following are true except:

Accepted Answer

A) the amount previously collected on the stock subscriptions is $1,700. 
B) the original stock subscribed totaled $3,200. 
C) Monarch previously issued $1,700 of the subscribed stock. 
D) the remaining amount to be collected from subscribers before the shares will be issued is $1,500.

Question 8

Sunrise Online issued 500 shares of its $10 common stock in exchange for equipment with a fair market value of $7,500.The entry to record the transaction would include a:

Accepted Answer

A) debit to Equipment for $5,000. 
B) debit to Common Stock for $5,000. 
C) credit to Paid-in Capital in Excess of Par Value for $2,500. 
D) credit to Common Stock Subscribed for $5,000.

Question 9

The Logan Company issued 140 shares of its $12 par value stock for $14 per share.The entry to record the receipt of cash and issuance of the stock would include a:

Accepted Answer

A) debit to Cash of $1,680; credit to Common Stock for $1,680. 
B) debit to Cash for $1,960. 
C) credit to Common Stock for $1,960. 
D) debit to Discount on Common Stock for $280

Question 10

Preferred stock is considered to be non-cumulative when:

Accepted Answer

A) preferred stockholders get their yearly dividend and a percent of what is left over,sharing with common stockholders. 
B) preferred stockholders have a right to the current year's dividend,but do not receive holdovers from past years when dividends were not paid. 
C) preferred stockholders have a right to a certain dividend every year. 
D) None of these answers are correct.

Question 11

Officers of the corporation are:

Accepted Answer

A) appointed by the stockholders. 
B) stockholders of the corporation. 
C) appointed by the board of directors. 
D) None of these answers are correct.

Question 12

Journalize the following stock transactions for Rick Corporation.
 $\text {July\quad  22 }$ $\quad $$\text {Issued 10,000 shares of $\$ 5$ par common stock for $\$ 43,000 \mathrm { cash }$.}$
 $\quad $ $\quad $$\text {28}$ $\quad $ $\text { Issued 6, 000 shares of $\$ 5$ par common stock for $\$ 33,000$ cash.}$
 $\quad $ $\quad $$\text {31 }$ $\quad $$\text {Issued 4,000 shares of $\$ 12$ par, $7 \%$ preferred stock for $\$ 53,000$ cash.}$

Accepted Answer

The answer of Journalize the following stock transactions for Rick...

Question 13

Which of the following is not a characteristic of a corporation?

Accepted Answer

A) Ease of formation 
B) No mutual agency 
C) Unlimited life 
D) Limited liability

Question 14

The articles of incorporation are:

Accepted Answer

A) submitted by the incorporators to the IRS for approval. 
B) submitted by the incorporators to the Office of the Secretary of State for approval. 
C) submitted by the incorporators to Securities and Exchange Commission for approval. 
D) submitted by the incorporators to the Governor of the State for approval.

Question 15

Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400.The entry to record the acquisition of the equipment would include a:

Accepted Answer

A) debit to Equipment for $2,000. 
B) debit to Paid-in Capital in Excess of Par for $400. 
C) credit to Common Stock for $2,400. 
D) debit to Equipment for $2,400.

Question 16

The Bean Counter Corporation received subscriptions for 100 shares of its $10 par value common stock at $13 per share.The entry to record receipt of the subscriptions would include a:

Accepted Answer

A) debit to Cash $1,300 and a credit to Common Stock $1,300. 
B) debit to Cash $1,300; a credit to Common Stock $1,000; and a credit to Paid-in Capital in Excess of Par $300. 
C) debit to Common Stock Subscribed $1,300 and a credit to Subscriptions Receivable-Common Stock $1,300. 
D) debit to Subscriptions Receivable-Common Stock $1,300; a credit to Common Stock Subscribed $1,000; and a credit to Paid-in Capital in Excess of Par for $300.

Question 17

Diamonds Forever Corporation received subscriptions for 80 shares of its $100 par value common stock for $120 per share.The entry to record the receipt of the subscriptions would include a:

Accepted Answer

A) debit to Common Stock Subscribed for $9,600. 
B) debit to Subscriptions Receivable-Common Stock for $8,000. 
C) credit to Paid-in Capital in Excess of Par for $1,600. 
D) credit to Common Stock to be Outstanding $8,000.

Question 18

The ownership of the corporation consists of:

Accepted Answer

A) the governing body. 
B) the officers of the corporation. 
C) the stockholders 
D) the board of directors.

Question 19

When a company sells stock at an amount greater then par value,the excess amount is referred to as:

Accepted Answer

A) a discount. 
B) a premium. 
C) a bonus. 
D) Companies cannot sell stock for more than par value.

Question 20

Preemptive rights allow a stockholder to:

Accepted Answer

A) share in profits first. 
B) maintain a proportionate ownership interest in the corporation. 
C) vote their shares at the annual meeting 
D) dispose or sell their stock without notice.

Exam 18: Corporations: Organizations and Stock