Question 1

A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately $50.

Accepted Answer

A) True 
 B)False

Question 2

Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied to partnerships.

Accepted Answer

A) True 
 B)False

Question 3

Prepare entries to record the transactions for Maine Corp.:
a- Issued 2,000 shares of $10 par common stock at $72 for cash.
b- Issued 2,500 shares of common stock in exchange for land with a fair market price of $130,000.
c -Purchased 400 shares of treasury stock at $70.
d- Sold the 400 shares of treasury stock purchased in c at $76.

Accepted Answer

The answer of Prepare entries to record the transactions for...

Question 4

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

Question 5

Which of the following statements is not true about a 2-for-1 split?

Accepted Answer

A) Par value per share is reduced to half of what it was before the split. 
B) Total contributed capital increases. 
C) The market price will probably decrease. 
D) A stockholder with ten shares before the split owns twenty shares after the split.

Question 6

A sale of treasury stock may result in a decrease in paid-in capital.All decreases should be charged to Paid-In Capital from Sale of Treasury Stock.

Accepted Answer

A) True 
 B)False

Question 7

The par value of common stock must always be equal to its market value on the date the stock is issued.

Accepted Answer

A) True 
 B)False

Question 8

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

A) decrease total liabilities and stockholders' equity 
B) increase total expenses and total liabilities 
C) increase total assets and stockholders' equity 
D) decrease total assets and stockholders' equity

Question 9

A disadvantage of the corporate form of business entity is

Accepted Answer

A) mutual agency for stockholders 
B) unlimited liability for stockholders 
C) corporations are subject to more governmental regulations 
D) the ease of transfer of ownership

Question 10

Nevada Corporation has 30,000 shares of $25 par 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) 6,000 
C) 150,000 
D) 15,000

Question 11

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.

Accepted Answer

A) True 
 B)False

Question 12

On April 10,a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73.Journalize this transaction.

Accepted Answer

The answer of On April 10,a company acquired land in...

Question 13

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired.What is the number of shares outstanding?

Accepted Answer

A) 10,000 
B) 40,000 
C) 30,000 
D) 50,000

Question 14

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

Question 15

When the board of directors declares a cash or stock dividend,this action decreases retained earnings.

Accepted Answer

A) True 
 B)False

Question 16

If the dividend amount of preferred stock,$50 par value,is quoted as 8%,then the dividends per share would be $4.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

The dates of importance in connection with a cash dividend of $50,000 on a corporation's common stock are
January 15,February 15,and March 15.Journalize the entries required on each date.

Accepted Answer

The answer of The dates of importance in connection with...

Question 19

The amount of capital paid in by the stockholders of the corporation is called legal capital.

Accepted Answer

A) True 
 B)False

Question 20

If a company has preferred stock,the preferred stock dividend is added to net income when computing earnings per common share.

Accepted Answer

A) True 
 B)False

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

A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately $50.

Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied to partnerships.

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

Which of the following statements is not true about a 2-for-1 split?

A sale of treasury stock may result in a decrease in paid-in capital.All decreases should be charged to Paid-In Capital from Sale of Treasury Stock.

The par value of common stock must always be equal to its market value on the date the stock is issued.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

A disadvantage of the corporate form of business entity is

Nevada Corporation has 30,000 shares of $25 par 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

A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.

On April 10,a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73.Journalize this transaction.

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired.What is the number of shares outstanding?

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?

When the board of directors declares a cash or stock dividend,this action decreases retained earnings.

If the dividend amount of preferred stock,$50 par value,is quoted as 8%,then the dividends per share would be $4.

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 dates of importance in connection with a cash dividend of $50,000 on a corporation's common stock are January 15,February 15,and March 15.Journalize the entries required on each date.

The amount of capital paid in by the stockholders of the corporation is called legal capital.

If a company has preferred stock,the preferred stock dividend is added to net income when computing earnings per common share.