Question 1

A good measure of confidence in a corporation's future is

Accepted Answer

A)  par value. 
B)  price/earnings ratio. 
C)  dividends yield. 
D)  return on equity. 
A)  par value. 
B)  price/earnings ratio. 
C)  dividends yield. 
D)  return on equity.

Question 2

Brandt Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of $100 par value,8 percent preferred stock.Prepare entries in journal form without explanations to record the following transactions:
 $\begin{array}{l}
\text { Apr. } 15 \text { Issued 1,000 shares of common stock to an attorney for a bill of } \$ 9,000 \text { in } \
\text { connection with the organization of the corporation. } \
25 \text { Issued } 1,000 \text { shares of preferred stock for cash of } \$ 115 \text { per share. } \
27 \text { Issued } 8,000 \text { shares of common stock in exchange for land for a plant site } \
\text { valued at } \$ 50,000 \text {. } \
\text { May } 1 \text { Issued } 15,000 \text { shares of common stock for } \$ 90,000 \text { in cash. }
\end{array}$

Accepted Answer

The answer of Brandt Corporation is authorized to issue 100,000...

Question 3

The number of authorized shares should always equal or exceed the number of outstanding shares.

Accepted Answer

A) True 
 B)False

Question 4

Stock options often are granted by a corporation to management personnel as a means of additional compensation to and motivation of these employees.

Accepted Answer

A) True 
 B)False

Question 5

If a corporation has issued common stock at various prices that exceed par value,legal capital will be made up of the

Accepted Answer

A)  par value of the shares issued. 
B)  total stockholders' equity plus total liabilities. 
C)  total amount of contributed capital. 
D)  total amount of contributed capital plus retained earnings. 
A)  par value of the shares issued. 
B)  total stockholders' equity plus total liabilities. 
C)  total amount of contributed capital. 
D)  total amount of contributed capital plus retained earnings.

Question 6

A corporation often uses an underwriter for an initial public offering (IPO).

Accepted Answer

A) True 
 B)False

Question 7

The par value of stock constitutes the legal capital of a corporation.

Accepted Answer

A) True 
 B)False

Question 8

How should dividends in arrears be shown on a corporation's balance sheet?

Accepted Answer

A)  As an increase in liabilities 
B)  In a note or in the body of the financial statements 
C)  As a decrease in assets 
D)  As an increase in stockholders' equity 
A)  As an increase in liabilities 
B)  In a note or in the body of the financial statements 
C)  As a decrease in assets 
D)  As an increase in stockholders' equity

Question 9

Start-up and organization costs should be amortized over ten years or more.

Accepted Answer

A) True 
 B)False

Question 10

Kagel Corporation had 30,000 shares of $5 par value common stock issued and outstanding on December 31,2009.Each share was issued during 2007 at $14 per share.Prepare the entries in journal form without explanations for the following transactions occurring in 2010:
 Jan. 4 Purchased 5,000 shares of treasury stock for $ \$ 16 $ per share. This is the first transaction involving its own stock ever engaged in by the company.
31 Sold 1,000 shares of treasury stock for \$15 per share.

Feb. 20 Sold 1,000 shares of treasury stock for $ \$ 18 $ per share.
Mar. 16 Sold 1,000 shares of treasury stock for $ \$ 11 $ per share.
Apr. 5 Retired 2,000 shares of treasury stock.
May 8 Purchased 500 shares of treasury stock for $ \$ 12 $ per share.
31 Retired the 500 shares of treasury stock purchased on May 8 .

Accepted Answer

The answer of Kagel Corporation had 30,000 shares of $5...

Question 11

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 2 would be:

Accepted Answer

A) 
$\begin{array}{llr}
  \text { Cash  } &200,000\
 \text { Common Stock } &&200,000\
\end{array}$ 
B) 
$\begin{array}{l}
\text { Cash }&200,000\
\text { Common Stock } && 160,000 \
\text { Additional Paid-in Capital } && 40,000
\end{array}$ 
C) 
$\begin{array}{l}
\text { Cash } & 160,000\
\text { Additional Paid-in Capital }&&40,000\
\text { Common Stock }&&200,000
\end{array}$ 
D) 
$\begin{array}{ll}
\text { Cash } & 160,000 \
\text { Common Stock } &&160,000
\end{array}$ 
A) 
$\begin{array}{llr}
  \text { Cash  } &200,000\
 \text { Common Stock } &&200,000\
\end{array}$ 
B) 
$\begin{array}{l}
\text { Cash }&200,000\
\text { Common Stock } && 160,000 \
\text { Additional Paid-in Capital } && 40,000
\end{array}$ 
C) 
$\begin{array}{l}
\text { Cash } & 160,000\
\text { Additional Paid-in Capital }&&40,000\
\text { Common Stock }&&200,000
\end{array}$ 
D) 
$\begin{array}{ll}
\text { Cash } & 160,000 \
\text { Common Stock } &&160,000
\end{array}$

Question 12

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Accepted Answer

A) True 
 B)False

Question 13

Stockholders elect the board of directors which appoints the officers of a corporation.

Accepted Answer

A) True 
 B)False

Question 14

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

Accepted Answer

A) True 
 B)False

Question 15

An advantage of the corporate form is the ability of the board to hire professional managers to attend to the corporation's affairs.

Accepted Answer

A) True 
 B)False

Question 16

The following information relates to the number of common shares of the Telly Corporation:
 80,000 Authorized shares $\quad $ 30,000 Unissued shares$\quad $5,000 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

Accepted Answer

45,000 shares outsta

Question 17

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year:
Apr. 1 Purchased 2,000 shares of its own preferred stock for $ \$ 20 $, the current market price. This is the first transaction involving its own stock engaged in by the company.

May 3 Sold 400 of the shares purchased on April 1 for $25 per share.
June 5 Retired 600 of the shares purchased on April 1. The original issue price was $ \$ 10 $. The par value of the stock is $ \$ 5 $. 
The entry to record the June 5 transaction would be:

Accepted Answer

A) 
$\begin{array} { l l } 
\text { Preferred Stock } & 3,000 \
\text { Additional Paid in Capital, Preferred } & 3,000 \
\quad \text { Treasury Stock, Preferred } &&6,000
\end{array}$ 
B) 
$\begin{array}{llr}
  \text {Treasury Stock, Preferred  } &6,000\
 \text { Cash } &&6,000\
\end{array}$ 
C) 
$\begin{array}{llr}
  \text {Cash } &3,000\
 \text { Treasury Stock, Preferred  } &&3,000\
\end{array}$ 
D) 
$\begin{array} { l l } \text { Preferred Stock } & 3,000 \ \text { Additional Paid in Capital, Preferred } & 3,000 \ \text { Retained Earnings } & 6,000\\text { Treasury Stock, Preferred}&&12,000 \end{array}$ 
A) 
$\begin{array} { l l } 
\text { Preferred Stock } & 3,000 \
\text { Additional Paid in Capital, Preferred } & 3,000 \
\quad \text { Treasury Stock, Preferred } &&6,000
\end{array}$ 
B) 
$\begin{array}{llr}
  \text {Treasury Stock, Preferred  } &6,000\
 \text { Cash } &&6,000\
\end{array}$ 
C) 
$\begin{array}{llr}
  \text {Cash } &3,000\
 \text { Treasury Stock, Preferred  } &&3,000\
\end{array}$ 
D) 
$\begin{array} { l l } \text { Preferred Stock } & 3,000 \ \text { Additional Paid in Capital, Preferred } & 3,000 \ \text { Retained Earnings } & 6,000\\text { Treasury Stock, Preferred}&&12,000 \end{array}$

Question 18

Gault Corporation had the following shares of stock outstanding on December 31,2010: Common stock,$50 par value,200,000 shares outstanding
Preferred stock,8 percent,$100 par value,cumulative,20,000 shares outstanding
Dividends were in arrears for 2008 and 2009.On December 31,2010,total cash dividends of $800,000 were declared.The total amounts payable to preferred stockholders and common stockholders,respectively,are

Accepted Answer

A)  $160,000 and $640,000. 
B)  $480,000 and $320,000. 
C)  $320,000 and $480,000. 
D)  $400,000 and $400,000. 
A)  $160,000 and $640,000. 
B)  $480,000 and $320,000. 
C)  $320,000 and $480,000. 
D)  $400,000 and $400,000.

Question 19

The number of shares of issued stock equals

Accepted Answer

A)  unissued shares minus authorized shares. 
B)  outstanding shares plus treasury shares. 
C)  subscribed shares plus outstanding shares. 
D)  authorized shares minus treasury shares. 
A)  unissued shares minus authorized shares. 
B)  outstanding shares plus treasury shares. 
C)  subscribed shares plus outstanding shares. 
D)  authorized shares minus treasury shares.

Question 20

A corporation has

Accepted Answer

A)  government regulations. 
B)  a limited existence. 
C)  unlimited liability. 
D)  no tax liability. 
A)  government regulations. 
B)  a limited existence. 
C)  unlimited liability. 
D)  no tax liability.

Exam 11: Contributed Capital

A good measure of confidence in a corporation's future is

The number of authorized shares should always equal or exceed the number of outstanding shares.

Stock options often are granted by a corporation to management personnel as a means of additional compensation to and motivation of these employees.

If a corporation has issued common stock at various prices that exceed par value,legal capital will be made up of the

A corporation often uses an underwriter for an initial public offering (IPO).

The par value of stock constitutes the legal capital of a corporation.

How should dividends in arrears be shown on a corporation's balance sheet?

Start-up and organization costs should be amortized over ten years or more.

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Stockholders elect the board of directors which appoints the officers of a corporation.

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

An advantage of the corporate form is the ability of the board to hire professional managers to attend to the corporation's affairs.

The following information relates to the number of common shares of the Telly Corporation: 80,000 Authorized shares \quad 30,000 Unissued shares \quad 5,000 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

The number of shares of issued stock equals

A corporation has

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 Telly Corporation: 80,000 Authorized shares $\quad$ 30,000 Unissued shares $\quad$ 5,000 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.