Question 1

The acquisition of treasury stock by a corporation

Accepted Answer

A) increases its total assets and total stockholders' equity. 
B) decreases its total assets and total stockholders' equity. 
C) has no effect on total assets and total stockholders' equity. 
D) requires that a gain or loss be recognized on the income statement. 
A) increases its total assets and total stockholders' equity. 
B) decreases its total assets and total stockholders' equity. 
C) has no effect on total assets and total stockholders' equity. 
D) requires that a gain or loss be recognized on the income statement.

Question 2

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and pays a $250,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

Accepted Answer

A) $0 
B) $150,000 
C) $250,000 
D) $100,000 
A) $0 
B) $150,000 
C) $250,000 
D) $100,000

Question 3

Which of the following statements concerning taxation is accurate?

Accepted Answer

A) Partnerships pay state income taxes but not federal income taxes. 
B) Corporations pay federal income taxes but not state income taxes. 
C) Corporations pay federal and state income taxes. 
D) Only the owners must pay taxes on corporate income. 
A) Partnerships pay state income taxes but not federal income taxes. 
B) Corporations pay federal income taxes but not state income taxes. 
C) Corporations pay federal and state income taxes. 
D) Only the owners must pay taxes on corporate income.

Question 4

Which of the following statements about dividends is not accurate?

Accepted Answer

A) Many companies declare and pay cash quarterly dividends. 
B) Low dividends may mean high stock returns. 
C) The board of directors is obligated to declare dividends. 
D) A legal dividend may not be a feasible one. 
A) Many companies declare and pay cash quarterly dividends. 
B) Low dividends may mean high stock returns. 
C) The board of directors is obligated to declare dividends. 
D) A legal dividend may not be a feasible one.

Question 5

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

Accepted Answer

A) True 
 B)False

Question 6

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

Accepted Answer

A) credit to Stock Dividends for $18,000. 
B) credit to Cash for $78,000. 
C) credit to Common Stock Dividends Distributable for $60,000. 
D) debit to Common Stock Dividends Distributable for $60,000. 
A) credit to Stock Dividends for $18,000. 
B) credit to Cash for $78,000. 
C) credit to Common Stock Dividends Distributable for $60,000. 
D) debit to Common Stock Dividends Distributable for $60,000.

Question 7

Karl Corporation was organized on January 2, 2015. During 2015, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2015?

Accepted Answer

A) $1,280,000 
B) $1,404,000 
C) $1,416,000 
D) $1,440,000 
A) $1,280,000 
B) $1,404,000 
C) $1,416,000 
D) $1,440,000

Question 8

Ramos Corporation sold 400 shares of treasury stock for $45 per share. The cost for the shares was $35. The entry to record the sale will include a

Accepted Answer

A) credit to Gain on Sale of Treasury Stock for $14,000. 
B) credit to Paid-in Capital from Treasury Stock for $4,000. 
C) debit to Paid-in Capital in Excess of Par for $4,000. 
D) credit to Treasury Stock for $18,000. 
A) credit to Gain on Sale of Treasury Stock for $14,000. 
B) credit to Paid-in Capital from Treasury Stock for $4,000. 
C) debit to Paid-in Capital in Excess of Par for $4,000. 
D) credit to Treasury Stock for $18,000.

Question 9

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

A) declaration date. 
B) date of record. 
C) payment date. 
D) last day of the fiscal year-end. 
A) declaration date. 
B) date of record. 
C) payment date. 
D) last day of the fiscal year-end.

Question 10

Retained earnings is increased by each of the following except

Accepted Answer

A) net income. 
B) some prior period adjustments. 
C) some disposals of treasury stock. 
D) All of these increase retained earnings. 
A) net income. 
B) some prior period adjustments. 
C) some disposals of treasury stock. 
D) All of these increase retained earnings.

Question 11

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the following events would not require a formal journal entry on a corporation's books?

Accepted Answer

A) 2 for 1 stock split 
B) 100% stock dividend 
C) 2% stock dividend 
D) $1 per share cash dividend 
A) 2 for 1 stock split 
B) 100% stock dividend 
C) 2% stock dividend 
D) $1 per share cash dividend

Question 13

Additional paid-in capital includes all of the following except

Accepted Answer

A) paid-in capital from treasury stock. 
B) paid-in capital in excess of par. 
C) paid-in capital in excess of stated value. 
D) paid-in capital in excess of book value. 
A) paid-in capital from treasury stock. 
B) paid-in capital in excess of par. 
C) paid-in capital in excess of stated value. 
D) paid-in capital in excess of book value.

Question 14

Vega Corporation's December 31, 2015 balance sheet showed the following:   Vega declared and paid a $58,000 cash dividend on December 15, 2015. If the company's dividends in arrears prior to that date were $10,000, Vega's common stockholders received

Accepted Answer

A) $48,000. 
B) $22,000. 
C) $36,000. 
D) no dividend. 
A) $48,000. 
B) $22,000. 
C) $36,000. 
D) no dividend.

Question 15

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Accepted Answer

A) fair value. 
B) cost. 
C) zero. 
D) a nominal amount. 
A) fair value. 
B) cost. 
C) zero. 
D) a nominal amount.

Question 16

Under IFRS, equity is described as each of the following except

Accepted Answer

A) retained equity. 
B) shareholders' funds. 
C) owners' equity. 
D) capital and reserves. 
A) retained equity. 
B) shareholders' funds. 
C) owners' equity. 
D) capital and reserves.

Question 17

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 18

A small stock dividend is defined as

Accepted Answer

A) less than 30% but greater than 25% of the corporation's issued stock. 
B) between 50% and 100% of the corporation's issued stock. 
C) more than 30% of the corporation's issued stock. 
D) less than 20-25% of the corporation's issued stock. 
A) less than 30% but greater than 25% of the corporation's issued stock. 
B) between 50% and 100% of the corporation's issued stock. 
C) more than 30% of the corporation's issued stock. 
D) less than 20-25% of the corporation's issued stock.

Question 19

Salon Company originally issued 4,000 shares of $10 par value common stock for $120,000 ($30 per share). Salon subsequently purchases 400 shares of treasury stock for $27 per share and resells the 400 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a

Accepted Answer

A) credit to Common Stock for $10,800. 
B) credit to Treasury Stock for $4,000. 
C) debit to Paid-In Capital in Excess of Par of $12,000. 
D) credit to Paid-In Capital from Treasury Stock for $800. 
A) credit to Common Stock for $10,800. 
B) credit to Treasury Stock for $4,000. 
C) debit to Paid-In Capital in Excess of Par of $12,000. 
D) credit to Paid-In Capital from Treasury Stock for $800.

Question 20

Which of the following is not true of a corporation?

Accepted Answer

A) It may buy, own, and sell property. 
B) It may sue and be sued. 
C) The acts of its owners bind the corporation. 
D) It may enter into binding legal contracts in its own name. 
A) It may buy, own, and sell property. 
B) It may sue and be sued. 
C) The acts of its owners bind the corporation. 
D) It may enter into binding legal contracts in its own name.

The acquisition of treasury stock by a corporation

Which of the following statements concerning taxation is accurate?

Which of the following statements about dividends is not accurate?

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

Karl Corporation was organized on January 2, 2015. During 2015, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2015?

Ramos Corporation sold 400 shares of treasury stock for $45 per share. The cost for the shares was $35. The entry to record the sale will include a

The date on which a cash dividend becomes a binding legal obligation is on the

Retained earnings is increased by each of the following except

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Which one of the following events would not require a formal journal entry on a corporation's books?

Additional paid-in capital includes all of the following except

Vega Corporation's December 31, 2015 balance sheet showed the following: Vega declared and paid a $58,000 cash dividend on December 15, 2015. If the company's dividends in arrears prior to that date were $10,000, Vega's common stockholders received

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Under IFRS, equity is described as each of the following except

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

A small stock dividend is defined as

Which of the following is not true of a corporation?

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

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

The acquisition of treasury stock by a corporation

Which of the following statements concerning taxation is accurate?

Which of the following statements about dividends is not accurate?

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

Karl Corporation was organized on January 2, 2015. During 2015, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2015?

Ramos Corporation sold 400 shares of treasury stock for $45 per share. The cost for the shares was $35. The entry to record the sale will include a

The date on which a cash dividend becomes a binding legal obligation is on the

Retained earnings is increased by each of the following except

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Which one of the following events would not require a formal journal entry on a corporation's books?

Additional paid-in capital includes all of the following except

Vega Corporation's December 31, 2015 balance sheet showed the following: Vega declared and paid a $58,000 cash dividend on December 15, 2015. If the company's dividends in arrears prior to that date were $10,000, Vega's common stockholders received

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Under IFRS, equity is described as each of the following except

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

A small stock dividend is defined as

Which of the following is not true of a corporation?

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