Question 1

The liability of a stockholder is usually limited to the stockholder's investment in the corporation.

Accepted Answer

A) True 
 B)False

Question 2

Shares of treasury stock are

Accepted Answer

A)  issued shares that have been bought back by the corporation and are being held by the corporation. 
B)  shares held by the U.S. Treasury Department. 
C)  part of the total outstanding shares but not part of the total issued shares of a corporation. 
D)  unissued shares that are held by the treasurer of the corporation. 
A)  issued shares that have been bought back by the corporation and are being held by the corporation. 
B)  shares held by the U.S. Treasury Department. 
C)  part of the total outstanding shares but not part of the total issued shares of a corporation. 
D)  unissued shares that are held by the treasurer of the corporation.

Question 3

The following amounts were reported by Ebert Corporation on December 31,2009:
 $\begin{array}{lr}
\text { Common stock- } \$ 5 \text { par value } & \$ 150,000 \
\text { Additional paid-in capital } & 120,000 \
\text { Treasury stock }(8,000 \text { shares at cost }) & 60,000
\end{array}$
 On January 3,2010,5,000 shares of treasury stock were sold.After the sale of the treasury shares,total stockholders' equity amounted to $277,500.No stockholders' equity transactions other than the sale of the treasury stock occurred between December 31,2009,and January 3,2010.From the information given,compute the selling price per share of the treasury stock.

Accepted Answer

$13.50 per share [27

Question 4

The balance in the Additional Paid-in Capital account must be added to the balance of the Common Stock account to compute the amount of legal capital for a corporation with a par value common stock.

Accepted Answer

A) True 
 B)False

Question 5

Sylmar Corporation has 30,000 shares of $100 stated value no-par common stock authorized,and 20,000 shares were outstanding during 2009.The following transactions relate to cash dividends of Sylmar Corporation for the year ended December 31,2009.Prepare entries in journal form without explanations to record the following transactions:

Accepted Answer

The answer of Sylmar Corporation has 30,000 shares of $100...

Question 6

Preferred stock is least likely to have which of the following characteristics?

Accepted Answer

A)  Preference as to dividends 
B)  The right of the holder to vote at stockholders' meetings 
C)  Preference as to assets upon liquidation of the corporation 
D)  The right of the holder to convert to common stock 
A)  Preference as to dividends 
B)  The right of the holder to vote at stockholders' meetings 
C)  Preference as to assets upon liquidation of the corporation 
D)  The right of the holder to convert to common stock

Question 7

Use the following information to answer the question below. When Calvert Corporation was formed on January 1,2010,the corporate charter provided for 50,000 shares of $20 par value common stock.The following transactions were among those engaged in by the corporation during its first month of operation:
1)The corporation issued 200 shares of stock to its lawyer in full payment of the $5,000 bill for assisting the company in drawing up its articles of incorporation and filing the proper papers with the state agency.
2)The company issued 8,000 shares of stock at a price of $25 per share.
3)The company issued 7,000 shares of stock in exchange for equipment that had a fair market value of $160,000.
The entry to record transaction 3 would be:

Accepted Answer

A) 
$\begin{array}{l}
\text { Equipment } &140,000\
\text { Common Stock }&&140,000
\end{array} $ 
B) 
$\begin{array}{c}
\text { Common Stock } &140,000\
\text { Equipment }&&140,000
\end{array}$ 
C) 
$\begin{array}{l}
\text { Equipment } &160,000\
\text { Common Stock }&&160,000
\end{array}$ 
D) 
$\begin{array} { lr c } 
\text { Equipment } & 160,000 & \
\text { Common Stock } && 140,000 \
\text { Additional Paid-in Capital } && 20,000
\end{array}$ 
A) 
$\begin{array}{l}
\text { Equipment } &140,000\
\text { Common Stock }&&140,000
\end{array} $ 
B) 
$\begin{array}{c}
\text { Common Stock } &140,000\
\text { Equipment }&&140,000
\end{array}$ 
C) 
$\begin{array}{l}
\text { Equipment } &160,000\
\text { Common Stock }&&160,000
\end{array}$ 
D) 
$\begin{array} { lr c } 
\text { Equipment } & 160,000 & \
\text { Common Stock } && 140,000 \
\text { Additional Paid-in Capital } && 20,000
\end{array}$

Question 8

The following information relates to the number of common shares of the Nelly Corporation:
 40,000 Authorized shares$\quad $15,000 Unissued shares$\quad $2,500 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

Accepted Answer

22,500 shares outsta

Question 9

Dividends in arrears cannot exist in conjunction with

Accepted Answer

A)  callable preferred stock. 
B)  convertible preferred stock. 
C)  noncumulative preferred stock. 
D)  cumulative preferred stock. 
A)  callable preferred stock. 
B)  convertible preferred stock. 
C)  noncumulative preferred stock. 
D)  cumulative preferred stock.

Question 10

Which of the following could be described as both an advantage and a disadvantage of incorporation?

Accepted Answer

A)  Continuous existence 
B)  Limited liability 
C)  Double taxation 
D)  Lack of mutual agency 
A)  Continuous existence 
B)  Limited liability 
C)  Double taxation 
D)  Lack of mutual agency

Question 11

Use the following information to answer the question below. The following accounts appear in the ledger of Sayre Corporation on December 31,20xx:
$\begin{array}{lr}
\text { Preferred Stock } & \$ 30,000 \
\text { Common Stock } & 56,000 \
\text { Additional Paid-in Capital, Preferred } & 7,000 \
\text { Additional Paid-in Capital, Common } & 18,000 \
\text { Retained Earnings } & 40,000
\end{array}$
 A balance sheet prepared on December 31,20xx,would report total stockholders' equity of

Accepted Answer

A)  $77,000. 
B)  $84,000. 
C)  $102,000. 
D)  $142,000. 
A)  $77,000. 
B)  $84,000. 
C)  $102,000. 
D)  $142,000.

Question 12

According to generally accepted accounting principles,treasury stock usually should be recorded at

Accepted Answer

A)  original issue cost. 
B)  par or stated value. 
C)  cost. 
D)  net realizable value. 
A)  original issue cost. 
B)  par or stated value. 
C)  cost. 
D)  net realizable value.

Question 13

A company purchases 400 shares of its $50 par value common stock at $55 per share.It then reissues 60 shares at $58 per share.The entry upon reissue of the stock would be:

Accepted Answer

A) 
$\begin{array}{l}
\text { Cash }&3,480\
\text { Treasury Stock-Common } && 3,300 \
\text { Paid-in Capital, Treasury Stock } && 180
\end{array}$ 
B) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Treasury Stock-Common }&&3,480
\end{array}$ 
C) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Paid-in Capital, Treasury Stock }&&3,480
\end{array}$ 
D) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Treasury Stock-Common } &&3,000\
\text { Retained Earnings }&&480
\end{array}$ 
A) 
$\begin{array}{l}
\text { Cash }&3,480\
\text { Treasury Stock-Common } && 3,300 \
\text { Paid-in Capital, Treasury Stock } && 180
\end{array}$ 
B) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Treasury Stock-Common }&&3,480
\end{array}$ 
C) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Paid-in Capital, Treasury Stock }&&3,480
\end{array}$ 
D) 
$\begin{array}{l}
\text { Cash } &3,480\
\text { Treasury Stock-Common } &&3,000\
\text { Retained Earnings }&&480
\end{array}$

Question 14

Dividends Payable is closed by transferring to Retained Earnings at the end of the period.

Accepted Answer

A) True 
 B)False

Question 15

Beckham Corporation has 3,000 shares of $100 par value,7 percent cumulative preferred stock,and 10,000 shares of $10 par value common stock outstanding during its first five years of operation.Beckham Corporation paid cash dividends as follows: 2006,$16,500; 2007,$0; 2008,$65,000; 2009,$30,000; 2010,$15,000.The amount of dividends the common stockholders received during 2006 was

Accepted Answer

A)  $0. 
B)  $8,250. 
C)  $16,500. 
D)  $24,750. 
A)  $0. 
B)  $8,250. 
C)  $16,500. 
D)  $24,750.

Question 16

When callable preferred stock is called and surrendered,the shareholder is entitled to all of the following except

Accepted Answer

A)  dividends in arrears. 
B)  a prorated portion of the current period's dividend. 
C)  a call premium. 
D)  the market value of the stock. 
A)  dividends in arrears. 
B)  a prorated portion of the current period's dividend. 
C)  a call premium. 
D)  the market value of the stock.

Question 17

On January 1,2010,Belmont Corporation had 50,000 shares of $10 par value common stock issued and outstanding.All 50,000 shares had been issued in a prior period at $15 per share.On February 1,2010,Belmont purchased 2,000 shares of treasury stock for $18 per share and later sold the treasury shares for $20 per share on March 2,2010.The entry to record the sale of the treasury shares on March 2,2010,would be:

Accepted Answer

A) 
$\begin{array}{l}
\text { Cash }&40,000\
\text { Treasury Stock-Common}&&40,000
\end{array} $ 
B) 
$\begin{array}{ll}
\text { Cash } & 40,000 \
\text { Treasury Stock-Common } & &36,000\
\text { Paid-in Capital, Treasury Stock } &&4,000
\end{array}$ 
C) 
$\begin{array}{ll}
\text { Cash } & 40,000 \
\text { Treasury Stock-Common } & &36,000\
\text { Retained Earnings } &&4,000 
\end{array}$ 
D) 
$\begin{array}{l}
\text { Cash } &40,000\
\text { Treasury Stock-Common } &&36,000\
\text { Gain on Treasury Stock }&&4,000
\end{array}$ 
A) 
$\begin{array}{l}
\text { Cash }&40,000\
\text { Treasury Stock-Common}&&40,000
\end{array} $ 
B) 
$\begin{array}{ll}
\text { Cash } & 40,000 \
\text { Treasury Stock-Common } & &36,000\
\text { Paid-in Capital, Treasury Stock } &&4,000
\end{array}$ 
C) 
$\begin{array}{ll}
\text { Cash } & 40,000 \
\text { Treasury Stock-Common } & &36,000\
\text { Retained Earnings } &&4,000 
\end{array}$ 
D) 
$\begin{array}{l}
\text { Cash } &40,000\
\text { Treasury Stock-Common } &&36,000\
\text { Gain on Treasury Stock }&&4,000
\end{array}$

Question 18

When stock is issued for noncash assets or services,how does one place a valuation (dollar amount)on the transaction?

Accepted Answer

The transaction should be valu

Question 19

Which of the following stock terms is least like the others?

Accepted Answer

A)  Market value 
B)  Stated value 
C)  Par value 
D)  Legal capital 
A)  Market value 
B)  Stated value 
C)  Par value 
D)  Legal capital

Question 20

Most preferred stocks are callable preferred stocks,which means that the callable feature may be exercised by

Accepted Answer

A)  the state that issued the corporation's charter. 
B)  a preferred stockholder. 
C)  the issuing corporation. 
D)  either the issuing corporation or a preferred stockholder. 
A)  the state that issued the corporation's charter. 
B)  a preferred stockholder. 
C)  the issuing corporation. 
D)  either the issuing corporation or a preferred stockholder.

Exam 11: Contributed Capital

The liability of a stockholder is usually limited to the stockholder's investment in the corporation.

Shares of treasury stock are

The balance in the Additional Paid-in Capital account must be added to the balance of the Common Stock account to compute the amount of legal capital for a corporation with a par value common stock.

Preferred stock is least likely to have which of the following characteristics?

The following information relates to the number of common shares of the Nelly Corporation: 40,000 Authorized shares \quad 15,000 Unissued shares \quad 2,500 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

Dividends in arrears cannot exist in conjunction with

Which of the following could be described as both an advantage and a disadvantage of incorporation?

According to generally accepted accounting principles,treasury stock usually should be recorded at

A company purchases 400 shares of its $50 par value common stock at $55 per share.It then reissues 60 shares at $58 per share.The entry upon reissue of the stock would be:

Dividends Payable is closed by transferring to Retained Earnings at the end of the period.

When callable preferred stock is called and surrendered,the shareholder is entitled to all of the following except

When stock is issued for noncash assets or services,how does one place a valuation (dollar amount)on the transaction?

Which of the following stock terms is least like the others?

Most preferred stocks are callable preferred stocks,which means that the callable feature may be exercised by

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

Filters

The following information relates to the number of common shares of the Nelly Corporation: 40,000 Authorized shares $\quad$ 15,000 Unissued shares $\quad$ 2,500 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.