Question 1

Which statement below is not a reason for a corporation to buy back its own stock?

Accepted Answer

A)  resale to employees 
B)  bonus to employees 
C)  for supporting the market price of the stock 
D)  to increase the shares outstanding 
A)  resale to employees 
B)  bonus to employees 
C)  for supporting the market price of the stock 
D)  to increase the shares outstanding

Question 2

Match each of the following stockholders' equity concepts to the most appropriate term a-h).
-The maximum number of shares a company can issue to shareholders

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) common stock
F)preferred stock
G)Paid-In Capital in Excess of Par
H)transfer agent 
A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) common stock
F)preferred stock
G)Paid-In Capital in Excess of Par
H)transfer agent

Question 3

A corporation is a separate entity for accounting purposes but not for legal purposes.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Retained Earnings represents past net income less past dividends, therefore any balance in this account would be listed on the income statement.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

Vincent Corporation has 100,000 shares of $100 par common stock outstanding. On June 30, Vincent Corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record July 15. The market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15, and July 30.

Accepted Answer

June 30
Stock Dividends 100,000 × 5% × $

Question 9

Match each of the following stockholders' equity concepts to the most appropriate term a-h).
-The account used to record the difference when issue price exceeds par value of stock

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) common stock
F)preferred stock
G)Paid-In Capital in Excess of Par
H)transfer agent 
A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) common stock
F)preferred stock
G)Paid-In Capital in Excess of Par
H)transfer agent

Question 10

Match each of the following stockholders' equity concepts to the appropriate term a-h).
-A company whose shares can be bought and sold in public markets

Accepted Answer

A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends 
A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends

Question 11

Solar Company has 600,000 shares of $75 par common stock outstanding. On February 13, Solar declared a 3% stock dividend to be issued on April 30 to stockholders of record on March 14. The market price of the stock was $90 per share on February 13.
Journalize the entries required on February 13, March 14, and April 30.

Accepted Answer

The answer of Solar Company has 600,000 shares of $75...

Question 12

Match each of the following stockholders' equity concepts to the appropriate term a-h).
-A legal entity, separate from the people who create and operate it

Accepted Answer

A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends 
A) articles of incorporation 
B) limited liability 
C) bylaws 
D) corporation 
E) public corporation
F)board of directors
G)private corporation
H)dividends

Question 13

A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.
a) What will be the number of shares outstanding after the split?
b) If the common stock had a market price of $240 per share before the stock split, what would be an approximate market price per share after the split?
c) Journalize the entry to record the stock split.

Accepted Answer

a) 54,000 shares
b)

Question 14

What is the total stockholders' equity based on the following account balances? Common Stock $375,000
Paid-In Capital in Excess of Par 90,000
Retained Earnings 190,000
Treasury Stock 15,000

Accepted Answer

A)  $670,000 
B)  $655,000 
C)  $640,000 
D)  $565,000 
A)  $670,000 
B)  $655,000 
C)  $640,000 
D)  $565,000

Question 15

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

Accepted Answer

A) True 
 B)False

Question 16

Match the following stockholders' equity concepts to the appropriate term a-h).
-The day of the event that creates a liability to company

Accepted Answer

A) cash dividend 
B) date of record 
C) Stock Dividends Distributable 
D) date of declaration 
E) treasury stock
F)preferred stock
G)date of payment
H)Paid-In Capital in Excess of Par 
A) cash dividend 
B) date of record 
C) Stock Dividends Distributable 
D) date of declaration 
E) treasury stock
F)preferred stock
G)date of payment
H)Paid-In Capital in Excess of Par

Question 17

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Accepted Answer

A)  Preferred Stock for $750,000 
B)  Preferred Stock for $500,000 and Paid­In Capital in Excess of Par-Preferred Stock for $250,000 
C)  Preferred Stock for $500,000 and Retained Earnings for $250,000 
D)  Paid-In Capital from Preferred Stock for $750,000 
A)  Preferred Stock for $750,000 
B)  Preferred Stock for $500,000 and Paid­In Capital in Excess of Par-Preferred Stock for $250,000 
C)  Preferred Stock for $500,000 and Retained Earnings for $250,000 
D)  Paid-In Capital from Preferred Stock for $750,000

Question 18

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

Accepted Answer

A)  the financial condition, earnings record, and dividend record of the corporation 
B)  investor expectations of the corporation's earning power 
C)  how high the par value is 
D)  general business and economic conditions and prospects 
A)  the financial condition, earnings record, and dividend record of the corporation 
B)  investor expectations of the corporation's earning power 
C)  how high the par value is 
D)  general business and economic conditions and prospects

Question 19

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)  excess of issue price over par 
D)  treasury stock 
A)  common stock 
B)  common stock distributable 
C)  excess of issue price over par 
D)  treasury stock

Question 20

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

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

Which statement below is not a reason for a corporation to buy back its own stock?

Match each of the following stockholders' equity concepts to the most appropriate term a-h). -The maximum number of shares a company can issue to shareholders

A corporation is a separate entity for accounting purposes but not for legal purposes.

Which of the following is not true of a corporation?

Retained Earnings represents past net income less past dividends, therefore any balance in this account would be listed on the income statement.

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

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

Match each of the following stockholders' equity concepts to the most appropriate term a-h). -The account used to record the difference when issue price exceeds par value of stock

Match each of the following stockholders' equity concepts to the appropriate term a-h). -A company whose shares can be bought and sold in public markets

Match each of the following stockholders' equity concepts to the appropriate term a-h). -A legal entity, separate from the people who create and operate it

What is the total stockholders' equity based on the following account balances? Common Stock $375,000 Paid-In Capital in Excess of Par 90,000 Retained Earnings 190,000 Treasury Stock 15,000

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

Match the following stockholders' equity concepts to the appropriate term a-h). -The day of the event that creates a liability to company

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

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

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

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, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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