Question 1

Income statements for corporations are the same as the income statements for proprietorships EXCEPT for the reporting of

Accepted Answer

A)  cost of goods sold. 
B)  income taxes. 
C)  gross profit. 
D)  other revenues and other expenses. 
A)  cost of goods sold. 
B)  income taxes. 
C)  gross profit. 
D)  other revenues and other expenses.

Question 2

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Accepted Answer

A) True 
 B)False

Question 3

Retained earnings

Accepted Answer

A)  is unique to the corporate form of business. 
B)  is an optional account in the partnership form of business. 
C)  reflects cash paid in by shareholders to date. 
D)  is closed at the end of the year. 
A)  is unique to the corporate form of business. 
B)  is an optional account in the partnership form of business. 
C)  reflects cash paid in by shareholders to date. 
D)  is closed at the end of the year.

Question 4

Checkered Rides Inc. has a March 31, 2021 fiscal year end and a 35% income tax rate. The following information is available for its 2021 year end:
1. Performed $ 880,000 service revenue and paid $ 325,000 in salaries. Interest expense was $ 12,600.
2. Paid dividends in December 2020 of $ 14,000 that had been declared in November 2020.
3. On March 10, 2021 declared dividends of $ 19,000 payable April 30, 2021.
4. Recorded and remitted taxes of $ 140,000 (related to 2021 fiscal year) during the year.
5. Issued common shares for $ 15,000 on January 31, 2021.
6. Retained earnings balance on April 1, 2020 is $ 67,000.
Instructions
a) Prepare an income statement and record the adjustment to income tax.
b) Prepare a statement of retained earnings.

Accepted Answer

The answer of Checkered Rides Inc. has a March 31,...

Question 5

Income tax expense is shown on the income statement.

Accepted Answer

A) True 
 B)False

Question 6

When a company is liquidated, the common shares will receive proceeds before the preferred shares.

Accepted Answer

A) True 
 B)False

Question 7

Tantramar Corporation has the following shareholders equity on July 31, 2020:   Assume that on June 15, 2021, Tantramar paid the preferred dividend for the current year (there were no dividends in arrears) and paid a dividend of $ 2 to each common shareholder. The company earned $ 45,000 in profit during 2021. The July 31, 2021 financial statements will show an ending balance in retained earnings of

Accepted Answer

A)  $ 500,000. 
B)  $ 545,000. 
C)  $ 475,000. 
D)  $ 430,000. 
A)  $ 500,000. 
B)  $ 545,000. 
C)  $ 475,000. 
D)  $ 430,000.

Question 8

Issued shares are the number of

Accepted Answer

A)  authorized shares that have been sold. 
B)  shares a corporation is legally able to sell. 
C)  shares sold each year by the corporation. 
D)  authorized shares in the corporation's articles of incorporation. 
A)  authorized shares that have been sold. 
B)  shares a corporation is legally able to sell. 
C)  shares sold each year by the corporation. 
D)  authorized shares in the corporation's articles of incorporation.

Question 9

Bancroft Holdings Inc. has authorized share capital of an unlimited number of common shares and 1,000,000 preferred, $ 3-cumulative preferred shares. At January 1, 2021, the balances in its share capital accounts were $ 45,000 in common shares representing 15,000 shares and $ 30,000 in preferred shares representing 1,000 shares. The retained earnings balance on that date was $ 180,000. Profit for the year ending December 31, 2021 was $ 24,000. There were no dividends in arrears at January 1, 2021 and no dividends were declared during 2021.
During 2021, Bancroft had the following share transactions:
Mar 1 Issued 4,000 common shares for $ 5 each.
Jun 30 Issued 500 preferred shares for $ 11 each.
Sep 1 Issued 60,000 common shares in exchange for land valued at $ 285,000.
Instructions
a) Journalize the share transactions.
b) Prepare the equity section of Bancroft's balance sheet at December 31, 2021 and describe any disclosure requirements related to share capital.
c) Calculate return on equity for 2021.

Accepted Answer

The answer of Bancroft Holdings Inc. has authorized share capital...

Question 10

What is the correct journal entry to adjust for income tax expense?

Accepted Answer

A)  Retained Earnings Income tax payable 
B)  Income tax expense Retained Earnings 
C)  Operating expense Income tax payable 
D)  Income tax expense Income tax payable 
A)  Retained Earnings Income tax payable 
B)  Income tax expense Retained Earnings 
C)  Operating expense Income tax payable 
D)  Income tax expense Income tax payable

Question 11

A redeemable preferred share gives shareholders the option to redeem shares at their own option rather than the corporation's option.

Accepted Answer

A) True 
 B)False

Question 12

Which transaction will cause an increase in cash flow for the corporation?

Accepted Answer

A)  Preferred shares are exchanged for common shares. 
B)  The company issues common shares for equipment. 
C)  The company issues common shares. 
D)  One of the main shareholders sells his shares to his son. 
A)  Preferred shares are exchanged for common shares. 
B)  The company issues common shares for equipment. 
C)  The company issues common shares. 
D)  One of the main shareholders sells his shares to his son.

Question 13

One of the disadvantages of a corporation is that the company will have continuous life.

Accepted Answer

A) True 
 B)False

Question 14

The board of directors of a corporation legally owns the corporation.

Accepted Answer

A) True 
 B)False

Question 15

Abraham Griffin has invested $ 800,000 in a privately held family corporation. The corporation does NOT do well and must declare bankruptcy. What amount does Griffin stand to lose?

Accepted Answer

A)  up to his total investment of $ 800,000 
B)  zero 
C)  the $ 800,000 plus any personal assets the creditors demand 
D)  $ 400,000 
A)  up to his total investment of $ 800,000 
B)  zero 
C)  the $ 800,000 plus any personal assets the creditors demand 
D)  $ 400,000

Question 16

Cash dividends are shown as an addition to the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 17

Heinfell Inc. reported sales of $ 850,000, cost of goods sold of $ 510,000, and other expenses totalled $ 180,000. If the company's corporate tax rate is determined to be 26%, how much would Heinfell report as income tax expense in the year?

Accepted Answer

A)  $ 41,600 
B)  $ 100,000 
C)  $ 118,400 
D)  $ 160,000 
A)  $ 41,600 
B)  $ 100,000 
C)  $ 118,400 
D)  $ 160,000

Question 18

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.

Question 19

A public corporation is a corporation that does NOT issue its shares for sale to the public.

Accepted Answer

A) True 
 B)False

Question 20

Kean's Pumping, Inc. has 20,000, $ 4, cumulative preferred shares issued at $ 150, and 100,000 common shares issued at $ 1, at December 31, 2021. If the board of directors declares a $ 60,000 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 $ 60,000. 
C)  $ 60,000 will be held as restricted retained earnings and paid out at some future date. 
D)  preferred shareholders will receive $ 30,000 and the common shareholders will receive $ 30,000. 
A)  preferred shareholders will receive 1/10th of what the common shareholders will receive. 
B)  preferred shareholders will receive the entire $ 60,000. 
C)  $ 60,000 will be held as restricted retained earnings and paid out at some future date. 
D)  preferred shareholders will receive $ 30,000 and the common shareholders will receive $ 30,000.

Income statements for corporations are the same as the income statements for proprietorships EXCEPT for the reporting of

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Retained earnings

Income tax expense is shown on the income statement.

When a company is liquidated, the common shares will receive proceeds before the preferred shares.

Issued shares are the number of

What is the correct journal entry to adjust for income tax expense?

A redeemable preferred share gives shareholders the option to redeem shares at their own option rather than the corporation's option.

Which transaction will cause an increase in cash flow for the corporation?

One of the disadvantages of a corporation is that the company will have continuous life.

The board of directors of a corporation legally owns the corporation.

Abraham Griffin has invested $ 800,000 in a privately held family corporation. The corporation does NOT do well and must declare bankruptcy. What amount does Griffin stand to lose?

Cash dividends are shown as an addition to the statement of retained earnings.

Heinfell Inc. reported sales of $ 850,000, cost of goods sold of $ 510,000, and other expenses totalled $ 180,000. If the company's corporate tax rate is determined to be 26%, how much would Heinfell report as income tax expense in the year?

Which of the following is NOT true of a corporation?

A public corporation is a corporation that does NOT issue its shares for sale to the public.

Kean's Pumping, Inc. has 20,000, $ 4, cumulative preferred shares issued at $ 150, and 100,000 common shares issued at $ 1, at December 31, 2021. If the board of directors declares a $ 60,000 dividend, the

Long-Lived Assets

Current Liabilities and Payroll

Financial Reporting Concepts

Accounting for Partnerships

Corporations: Additional Topics and IFRS

Non-Current Liabilities

Investments

The Cash Flow Statement

Financial Statement Analysis

Understanding Interest, Annuities, and Bond Valuation

Filters

Exam 5: Introduction to Corporations

Income statements for corporations are the same as the income statements for proprietorships EXCEPT for the reporting of

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

Retained earnings

Income tax expense is shown on the income statement.

When a company is liquidated, the common shares will receive proceeds before the preferred shares.

Issued shares are the number of

What is the correct journal entry to adjust for income tax expense?

A redeemable preferred share gives shareholders the option to redeem shares at their own option rather than the corporation's option.

Which transaction will cause an increase in cash flow for the corporation?

One of the disadvantages of a corporation is that the company will have continuous life.

The board of directors of a corporation legally owns the corporation.

Abraham Griffin has invested $ 800,000 in a privately held family corporation. The corporation does NOT do well and must declare bankruptcy. What amount does Griffin stand to lose?

Cash dividends are shown as an addition to the statement of retained earnings.

Heinfell Inc. reported sales of $ 850,000, cost of goods sold of $ 510,000, and other expenses totalled $ 180,000. If the company's corporate tax rate is determined to be 26%, how much would Heinfell report as income tax expense in the year?

Which of the following is NOT true of a corporation?

A public corporation is a corporation that does NOT issue its shares for sale to the public.

Kean's Pumping, Inc. has 20,000, $ 4, cumulative preferred shares issued at $ 150, and 100,000 common shares issued at $ 1, at December 31, 2021. If the board of directors declares a $ 60,000 dividend, the

Long-Lived Assets

Current Liabilities and Payroll

Financial Reporting Concepts

Accounting for Partnerships

Corporations: Additional Topics and IFRS

Non-Current Liabilities

Investments

The Cash Flow Statement

Financial Statement Analysis

Understanding Interest, Annuities, and Bond Valuation

Filters