Question 1

When the board of directors declares a cash or stock dividend, this action decreases retained earnings.

Accepted Answer

A) True 
 B)False  True

Question 2

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to

Accepted Answer

A)  Treasury Stock for $8,500 
B)  Paid-In Capital from Sale of Treasury Stock for $8,500 
C)  Paid-In Capital in Excess of Par-Common Stock for $2,900 
D)  Paid-In Capital from Sale of Treasury Stock for $2,900 
A)  Treasury Stock for $8,500 
B)  Paid-In Capital from Sale of Treasury Stock for $8,500 
C)  Paid-In Capital in Excess of Par-Common Stock for $2,900 
D)  Paid-In Capital from Sale of Treasury Stock for $2,900 D

Question 3

Before a stock dividend can be declared or paid, there must be sufficient cash.

Accepted Answer

A) True 
 B)False  False

Question 4

On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining shares at $28 per share.
​
Journalize the transaction of February 1, March 15, and June 2.

Accepted Answer

The answer of On February 1, Marine Company reacquired 7,500...

Question 5

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Accepted Answer

A)  decrease retained earnings, increase common stock, and increase paid-in capital 
B)  increase retained earnings, decrease common stock, and decrease paid-in capital 
C)  increase retained earnings, decrease common stock, and increase paid-in capital 
D)  decrease retained earnings, increase common stock, and decrease paid-in capital 
A)  decrease retained earnings, increase common stock, and increase paid-in capital 
B)  increase retained earnings, decrease common stock, and decrease paid-in capital 
C)  increase retained earnings, decrease common stock, and increase paid-in capital 
D)  decrease retained earnings, increase common stock, and decrease paid-in capital

Question 6

A large retained earnings account means that there is cash available to pay dividends.

Accepted Answer

A) True 
 B)False

Question 7

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 8

On March 4 of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its common stock at $89 per share. On August 7, Barefoot Bay sold 3,500 of the reacquired shares at $100 per share. The remaining 1,500 shares were sold at $88 per share on November 29. (a) Joumalize the transaction of March 4, August 7 , and November 29.
(b) What is the balance in Paid-in Capital from Sale of Treasury Stock on December 31 of the current year?
(c) Why might Barefoot Bay Inc. have purchased the treasury stock?

Accepted Answer

The answer of On March 4 of the current year,...

Question 9

The ability of a corporation to obtain capital is

Accepted Answer

A)  less than the ability of a partnership 
B)  about the same as the ability of a partnership 
C)  restricted because of the limited life of the corporation 
D)  enhanced because of limited liability and ease of share transferability 
A)  less than the ability of a partnership 
B)  about the same as the ability of a partnership 
C)  restricted because of the limited life of the corporation 
D)  enhanced because of limited liability and ease of share transferability

Question 10

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

Accepted Answer

A) True 
 B)False

Question 11

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: $\begin{array}{lr}
\text { Year 1: } & \$ 10,000 \
\text { Year 2: } & 45,000 \
\text { Year 3: } & 90,000
\end{array}$ 
 Determine the dividends per share for preferred and common stock for the first year.

Accepted Answer

A)  $0.50 and $0.10 
B)  $0.00 and $0.10 
C)  $0.50 and $0.00 
D)  $2.00 and $0.00 
A)  $0.50 and $0.10 
B)  $0.00 and $0.10 
C)  $0.50 and $0.00 
D)  $2.00 and $0.00

Question 12

Which of the following statements concerning taxation is accurate?

Accepted Answer

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

Question 13

The initial stockholders of a newly formed corporation are called directors.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  investment 
B)  liability 
C)  current asset 
D)  deduction from stockholders' equity 
A)  investment 
B)  liability 
C)  current asset 
D)  deduction from stockholders' equity

Question 15

Stockholders' equity

Accepted Answer

A)  is usually equal to cash on hand 
B)  includes paid-in capital and liabilities 
C)  includes retained earnings and paid-in capital 
D)  is shown on the income statement 
A)  is usually equal to cash on hand 
B)  includes paid-in capital and liabilities 
C)  includes retained earnings and paid-in capital 
D)  is shown on the income statement

Question 16

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

Question 17

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

Accepted Answer

A) True 
 B)False

Question 18

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

Accepted Answer

A) True 
 B)False

Question 19

Match between columns
                        Premises:  The account used to record the difference when issue price exceeds par value of stock
 The dollar amount assigned to each share of stock
 The number of shares currently held by stockholders
 A class of stock having first rights to dividends of a corporation
 The maximum number of shares a company can issue to shareholders
 The number of shares sold to stockholders
 A class of stock that provides no preference rights to shareholders
 A financial institution that records and maintains records of another company's stockholders.

Accepted Answer

The Answer of authorized shares and issued shares and outstanding is...

Question 20

If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders.

Accepted Answer

A) True 
 B)False

When the board of directors declares a cash or stock dividend, this action decreases retained earnings.

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to

Before a stock dividend can be declared or paid, there must be sufficient cash.

On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining shares at $28 per share. Journalize the transaction of February 1, March 15, and June 2.

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

A large retained earnings account means that there is cash available to pay dividends.

Which of the following is not true of a corporation?

The ability of a corporation to obtain capital is

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

Which of the following statements concerning taxation is accurate?

The initial stockholders of a newly formed corporation are called directors.

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

Stockholders' equity

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

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders.

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 12: Corporations: Organization, Stock Transactions, and Dividends

When the board of directors declares a cash or stock dividend, this action decreases retained earnings.

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to

Before a stock dividend can be declared or paid, there must be sufficient cash.

On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining shares at $28 per share. ​ Journalize the transaction of February 1, March 15, and June 2.

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

A large retained earnings account means that there is cash available to pay dividends.

Which of the following is not true of a corporation?

The ability of a corporation to obtain capital is

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

Which of the following statements concerning taxation is accurate?

The initial stockholders of a newly formed corporation are called directors.

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

Stockholders' equity

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

When a corporation issues stock at a premium, it reports the premium as an other income item on the income statement.

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders.

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining shares at $28 per share. Journalize the transaction of February 1, March 15, and June 2.