Question 1

If common stock is issued for an amount greater than par value, the excess should be credited to

Accepted Answer

A) Cash. 
B) Retained Earnings. 
C) Paid-in Capital in Excess of Par. 
D) Legal Capital. 
A) Cash. 
B) Retained Earnings. 
C) Paid-in Capital in Excess of Par. 
D) Legal Capital.

Question 2

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Accepted Answer

A) True 
 B)False

Question 3

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

Accepted Answer

A) True 
 B)False

Question 4

A corporation is not committed to a legal obligation when it declares

Accepted Answer

A) a cash dividend. 
B) either a cash dividend or a stock dividend. 
C) a stock dividend. 
D) a distribution date. 
A) a cash dividend. 
B) either a cash dividend or a stock dividend. 
C) a stock dividend. 
D) a distribution date.

Question 5

Restricting retained earnings for the cost of treasury stock purchased is a

Accepted Answer

A) contractual restriction. 
B) legal restriction. 
C) stock restriction. 
D) voluntary restriction. 
A) contractual restriction. 
B) legal restriction. 
C) stock restriction. 
D) voluntary restriction.

Question 6

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

Accepted Answer

A) preferred shareholders will receive 1/10th of what the common shareholders will receive. 
B) preferred shareholders will receive the entire $70,000. 
C) $70,000 will be held as restricted retained earnings and paid out at some future date. 
D) preferred shareholders will receive $35,000 and the common shareholders will receive $35,000. 
A) preferred shareholders will receive 1/10th of what the common shareholders will receive. 
B) preferred shareholders will receive the entire $70,000. 
C) $70,000 will be held as restricted retained earnings and paid out at some future date. 
D) preferred shareholders will receive $35,000 and the common shareholders will receive $35,000.

Question 7

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Accepted Answer

A) stated value of the stock. 
B) par value of the stock. 
C) market value of the stock. 
D) book value of the stock. 
A) stated value of the stock. 
B) par value of the stock. 
C) market value of the stock. 
D) book value of the stock.

Question 8

The number of common shares outstanding can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 9

Prior period adjustments

Accepted Answer

A) may only increase retained earnings. 
B) may only decrease retained earnings. 
C) may either increase or decrease retained earnings. 
D) do not affect retained earnings. 
A) may only increase retained earnings. 
B) may only decrease retained earnings. 
C) may either increase or decrease retained earnings. 
D) do not affect retained earnings.

Question 10

The following selected amounts are available for Clark Company.   What is its ending retained earnings balance?

Accepted Answer

A) $750 
B) $800 
C) $550 
D) $700 
A) $750 
B) $800 
C) $550 
D) $700

Question 11

Dividends are predominantly paid in

Accepted Answer

A) earnings. 
B) property. 
C) cash. 
D) stock. 
A) earnings. 
B) property. 
C) cash. 
D) stock.

Question 12

Accounting for treasury stock is done by the

Accepted Answer

A) FIFO method. 
B) LIFO method. 
C) cost method. 
D) lower of cost or market method. 
A) FIFO method. 
B) LIFO method. 
C) cost method. 
D) lower of cost or market method.

Question 13

In the financial statements, organization costs appears

Accepted Answer

A) immediately below Retained Earnings in the stockholders' equity section. 
B) in the income statement. 
C) as part of paid-in capital in the stockholders' equity section. 
D) as an intangible asset. 
A) immediately below Retained Earnings in the stockholders' equity section. 
B) in the income statement. 
C) as part of paid-in capital in the stockholders' equity section. 
D) as an intangible asset.

Question 14

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

Accepted Answer

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

Question 15

Crawl Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2015. The board of directors declared and paid a $2,000 dividend in 2014. In 2015, $10,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2015?

Accepted Answer

A) $6,000 
B) $5,000 
C) $4,000 
D) $3,000 
A) $6,000 
B) $5,000 
C) $4,000 
D) $3,000

Question 16

The purchase of treasury stock

Accepted Answer

A) decreases common stock authorized. 
B) decreases common stock issued. 
C) decreases common stock outstanding. 
D) has no effect on common stock outstanding. 
A) decreases common stock authorized. 
B) decreases common stock issued. 
C) decreases common stock outstanding. 
D) has no effect on common stock outstanding.

Question 17

When preferred stock is cumulative, preferred dividends not declared in a period are

Accepted Answer

A) considered a liability. 
B) called dividends in arrears. 
C) distributions of earnings. 
D) never paid. 
A) considered a liability. 
B) called dividends in arrears. 
C) distributions of earnings. 
D) never paid.

Question 18

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Accepted Answer

A) $0. 
B) $500. 
C) $5,000. 
D) $10,000. 
A) $0. 
B) $500. 
C) $5,000. 
D) $10,000.

Question 19

Preferred stock has contractual preference over common stock in certain areas.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) investment. 
B) liability. 
C) deduction from total paid-in capital. 
D) deduction from total paid-in capital and retained earnings. 
A) investment. 
B) liability. 
C) deduction from total paid-in capital. 
D) deduction from total paid-in capital and retained earnings.

If common stock is issued for an amount greater than par value, the excess should be credited to

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

A corporation is not committed to a legal obligation when it declares

Restricting retained earnings for the cost of treasury stock purchased is a

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

The number of common shares outstanding can never be greater than the number of shares issued.

Prior period adjustments

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Dividends are predominantly paid in

Accounting for treasury stock is done by the

In the financial statements, organization costs appears

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

The purchase of treasury stock

When preferred stock is cumulative, preferred dividends not declared in a period are

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Preferred stock has contractual preference over common stock in certain areas.

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

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

If common stock is issued for an amount greater than par value, the excess should be credited to

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

A corporation is not committed to a legal obligation when it declares

Restricting retained earnings for the cost of treasury stock purchased is a

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

The number of common shares outstanding can never be greater than the number of shares issued.

Prior period adjustments

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Dividends are predominantly paid in

Accounting for treasury stock is done by the

In the financial statements, organization costs appears

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

The purchase of treasury stock

When preferred stock is cumulative, preferred dividends not declared in a period are

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Preferred stock has contractual preference over common stock in certain areas.

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters