Question 1

Corporations can be either public or limited.

Accepted Answer

A) True 
 B)False

Question 2

Income tax expense is recorded with the operating expenses on the income statement for a corporation.

Accepted Answer

A) True 
 B)False

Question 3

The liability for preferred dividends declared is recorded on the date of record.

Accepted Answer

A) True 
 B)False

Question 4

Preferred shares are seen by some investors as being less risky and having a greater dividend rate than common shares.

Accepted Answer

A) True 
 B)False

Question 5

The largest number of shares specified by a corporation are known as

Accepted Answer

A) Convertible 
B) Authorized 
C) Issued 
D) Outstanding 
E) Non-convertible 
A) Convertible 
B) Authorized 
C) Issued 
D) Outstanding 
E) Non-convertible

Question 6

The use of preferred shares to increase return to common shareholders is an example of financial leverage.

Accepted Answer

A) True 
 B)False

Question 7

When issuing shares,the initial investment is credited to Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 8

Shares are attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

Accepted Answer

A) True 
 B)False

Question 9

The payment of a dividend will reduce the following two accounts

Accepted Answer

A) Common shares and cash 
B) Cash and dividends payable 
C) Equity and retained earnings 
D) Retained earnings and dividends payable 
E) Equity and cash 
A) Common shares and cash 
B) Cash and dividends payable 
C) Equity and retained earnings 
D) Retained earnings and dividends payable 
E) Equity and cash

Question 10

The category of equity for a corporation which represents the cumulative profits less losses and dividends is called

Accepted Answer

A) Contributed capital 
B) Preferred shares 
C) Retained earnings 
D) Financial leverage 
E) The income statement 
A) Contributed capital 
B) Preferred shares 
C) Retained earnings 
D) Financial leverage 
E) The income statement

Question 11

Buying shares in a corporation is attractive to investors because

Accepted Answer

A) Shareholders are not liable for the corporation's actions and debts. 
B) Shares are easily transferred. 
C) A corporation has unlimited life. 
D) Shareholders are not agents of the corporation. 
E) All of these answers are correct. 
A) Shareholders are not liable for the corporation's actions and debts. 
B) Shares are easily transferred. 
C) A corporation has unlimited life. 
D) Shareholders are not agents of the corporation. 
E) All of these answers are correct.

Question 12

The date of record is the date the directors vote to pay a dividend to shareholders.

Accepted Answer

A) True 
 B)False

Question 13

The total amount of shares that a corporation's charter allows it to issue is

Accepted Answer

A) Authorized 
B) Issued 
C) Outstanding 
D) Common 
E) Preferred 
A) Authorized 
B) Issued 
C) Outstanding 
D) Common 
E) Preferred

Question 14

For preferred shares to increase the return earned by common shareholders,the preferred dividend rate as a percentage of the capital raised must be

Accepted Answer

A) Equal to the rate of return on common and preferred equity combined 
B) Lower than the rate of return on common and preferred equity combined 
C) Higher than the rate of return on common and preferred equity combined 
D) Both equal to and lower than the rate of return on common and preferred equity combined 
E) None of these 
A) Equal to the rate of return on common and preferred equity combined 
B) Lower than the rate of return on common and preferred equity combined 
C) Higher than the rate of return on common and preferred equity combined 
D) Both equal to and lower than the rate of return on common and preferred equity combined 
E) None of these

Question 15

All of the following are given as possible motivations for a corporation to issue preferred shares except

Accepted Answer

A) Raise capital without sacrificing voting control. 
B) Increase the return of common shareholders. 
C) Appeal to investors who do not want to invest in common shares. 
D) If the preferred shares are convertible,they are more attractive to potential investors. 
E) Preferred dividends are paid before common dividends. 
A) Raise capital without sacrificing voting control. 
B) Increase the return of common shareholders. 
C) Appeal to investors who do not want to invest in common shares. 
D) If the preferred shares are convertible,they are more attractive to potential investors. 
E) Preferred dividends are paid before common dividends.

Question 16

Hex Corporation showed the following amounts in the equity section of its balance sheet at January 1, 2021:
$\begin{array}{|l|r|}
\hline \text { Preferred Shares, } \$ 2 \text { cumulative (in arrears for 2020), 10,000 shares issued } & \$ 500,000 \
\hline \text { Common shares } 40,000 \text { shares issued } & \$ 800,000 \
\hline \text { Retained Earnings } & \$ 500,000 \
\hline
\end{array}$
In 2021: On Jan. 20, 2021, 10,000 common shares were issued for $150,000. On Nov. 1, 2021, Cash dividends of $90,000 were declared. Dividends will be paid on January 18, 2022. On Dec. 31, 2021 Hex reported revenues of $150,000 and expenses of $80,000 for the year.

-Prepare journal entries for 2021.Use an Income Summary account and Cash Dividends account as required

Accepted Answer

The answer of Hex Corporation showed the following amounts in...

Question 17

Rio Inc.received its charter and began business in 2020.The company was authorized to issue 28,000,$5,noncumulative preferred shares,and 500,000 common shares.Prepare journal entries to record the following transactions that occurred during 2020:
 $\begin{array}{|l|l|}
\hline \text { Jul-01 } & \text { Sold 2,000 preferred shares for } \$ 35 \text { per share, cash. } \
\hline \text { Aug-06 } & \text { Exchanged } 3,000 \text { common shares for equipment and inventory with a fair } \
& \text { market value of } \$ 25,000 \text { and } \$ 15,000 \text { respectively. } \
\hline
\end{array}$

Accepted Answer

The answer of Rio Inc.received its charter and began business...

Question 18

When a corporation issues only one class of shares they are

Accepted Answer

A) Special shares 
B) Preferred shares 
C) Common shares 
D) Private shares 
E) Public shares 
A) Special shares 
B) Preferred shares 
C) Common shares 
D) Private shares 
E) Public shares

Question 19

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional shares of common shares issued by the corporation is called

Accepted Answer

A) Preemptive right 
B) Proxy 
C) Right to call 
D) Financial leverage 
E) Voting right 
A) Preemptive right 
B) Proxy 
C) Right to call 
D) Financial leverage 
E) Voting right

Question 20

Discuss the characteristics of corporations.

Accepted Answer

Corporations are legal entities separate

Corporations can be either public or limited.

Income tax expense is recorded with the operating expenses on the income statement for a corporation.

The liability for preferred dividends declared is recorded on the date of record.

Preferred shares are seen by some investors as being less risky and having a greater dividend rate than common shares.

The largest number of shares specified by a corporation are known as

The use of preferred shares to increase return to common shareholders is an example of financial leverage.

When issuing shares,the initial investment is credited to Retained Earnings.

Shares are attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

The payment of a dividend will reduce the following two accounts

The category of equity for a corporation which represents the cumulative profits less losses and dividends is called

Buying shares in a corporation is attractive to investors because

The date of record is the date the directors vote to pay a dividend to shareholders.

The total amount of shares that a corporation's charter allows it to issue is

For preferred shares to increase the return earned by common shareholders,the preferred dividend rate as a percentage of the capital raised must be

All of the following are given as possible motivations for a corporation to issue preferred shares except

When a corporation issues only one class of shares they are

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional shares of common shares issued by the corporation is called

Discuss the characteristics of corporations.

Property, plant and Equipment Intangibles

Current Liabilities

Partnerships

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Exam 4: Organization and Operation of Corporations

Corporations can be either public or limited.

Income tax expense is recorded with the operating expenses on the income statement for a corporation.

The liability for preferred dividends declared is recorded on the date of record.

Preferred shares are seen by some investors as being less risky and having a greater dividend rate than common shares.

The largest number of shares specified by a corporation are known as

The use of preferred shares to increase return to common shareholders is an example of financial leverage.

When issuing shares,the initial investment is credited to Retained Earnings.

Shares are attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

The payment of a dividend will reduce the following two accounts

The category of equity for a corporation which represents the cumulative profits less losses and dividends is called

Buying shares in a corporation is attractive to investors because

The date of record is the date the directors vote to pay a dividend to shareholders.

The total amount of shares that a corporation's charter allows it to issue is

For preferred shares to increase the return earned by common shareholders,the preferred dividend rate as a percentage of the capital raised must be

All of the following are given as possible motivations for a corporation to issue preferred shares except

When a corporation issues only one class of shares they are

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional shares of common shares issued by the corporation is called

Discuss the characteristics of corporations.

Property, plant and Equipment Intangibles

Current Liabilities

Partnerships

Corporate Reporting: Income, earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters