Question 1

All of the following are true statements about a corporation except that it

Accepted Answer

A)  must pay state and federal income taxes 
B)  may engage in any legal activity 
C)  can enter into legal contracts 
D)  can continue in perpetuity 
A)  must pay state and federal income taxes 
B)  may engage in any legal activity 
C)  can enter into legal contracts 
D)  can continue in perpetuity

Question 2

Fully participating preferred shareholder's receive extra dividends equally with the common shareholder's.

Accepted Answer

A) True 
 B)False

Question 3

What variables must be considered when a corporation uses the option pricing model?

Accepted Answer

* exercise price
* expected li

Question 4

All of the following would appear in the contributed capital section of stockholders' equity on the balance sheet except

Accepted Answer

A)  additional paid-in capital from stock conversions 
B)  bonds payable 
C)  share rights and options 
D)  preferred stock 
A)  additional paid-in capital from stock conversions 
B)  bonds payable 
C)  share rights and options 
D)  preferred stock

Question 5

Provide the definitions for the following terms:
Open corporation
Closed corporation
Domestic corporation
Foreign corporation

Accepted Answer

Open corporation is also known as a publ

Question 6

Smith Corp. has both Class A and Class B shares of common stock. The difference between the two classes of stock is most likely related to

Accepted Answer

A)  Class A stock being worth more than Class B stock 
B)  Class A shareholders having greater voting rights than Class B shareholders 
C)  Class A shareholders receiving dividends while Class B shareholders do not 
D)  Class A shareholders having better preemptive rights than Class B shareholders 
A)  Class A stock being worth more than Class B stock 
B)  Class A shareholders having greater voting rights than Class B shareholders 
C)  Class A shareholders receiving dividends while Class B shareholders do not 
D)  Class A shareholders having better preemptive rights than Class B shareholders

Question 7

On January 1, 2015, sixty executives are offered a fixed compensatory stock option plan in which each of them will receive options to buy 5,000 shares of $10 par common stock at $30 a share. On the grant date, the fair value per option is $7.50. There is a three-year service period and an estimated annual employee turnover rate of 3%.
Required: 
a.Compute the expected total compensation cost.
b.Compute the compensation expense for 2011.
c.Prepare the journal entry to record the exercise of options by six of the executives on January 1, 2018.

Accepted Answer

The answer of On January 1, 2015, sixty executives are...

Question 8

Assume common stock is issued to employees as a result of exercising stock purchase rights issued under a noncompensatory share purchase plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively?

Accepted Answer

A)  decreased, increased, and decreased 
B)  no effect, increased, and increased 
C)  decreased, increased, and no effect 
D)  no effect, increased, and no effect 
A)  decreased, increased, and decreased 
B)  no effect, increased, and increased 
C)  decreased, increased, and no effect 
D)  no effect, increased, and no effect

Question 9

Norwalk Corporation issued 10,000 shares of $50 par preferred stock at $74 a share. A stock warrant attached to each preferred share allows the holder to buy one share of $10 par common stock for $20. Right after issuance, the preferred stock sells ex-rights for $63 per share. The warrants began selling at $7 per warrant. The amount credited to Common Stock Warrants at issuance of the preferred stock is

Accepted Answer

A)  $ 0 
B)  $ 70,000 
C)  $ 74,000 
D)  $160,000 
A)  $ 0 
B)  $ 70,000 
C)  $ 74,000 
D)  $160,000

Question 10

Mars Corp. has 15,000 shares of $5 par, cumulative, 8% preferred stock and 15,000 shares of common stock outstanding since being organized at the beginning of 2014. It declared its first dividend of $40,000 at the end of 2016. This means that

Accepted Answer

A)  all of the $40,000 dividends available are paid to the preferred stockholders 
B)  all of the $40,000 dividends available are paid to the common stockholders 
C)  an equal dollar amount is paid to each class of shareholder 
D)  3 years' worth of dividends will be paid to preferred stockholders prior to paying anything to common stockholders 
A)  all of the $40,000 dividends available are paid to the preferred stockholders 
B)  all of the $40,000 dividends available are paid to the common stockholders 
C)  an equal dollar amount is paid to each class of shareholder 
D)  3 years' worth of dividends will be paid to preferred stockholders prior to paying anything to common stockholders

Question 11

On January 1, 2013, Biggs Company granted a performance-based stock option plan to 40 executives to buy a maximum of 3,000 shares each of its $10 par common stock at $30 a share. The fair value per option is $8. The terms of the plan, which has a three-year service and vesting period, are based on the following scale: 
  
Biggs expects an annual employee turnover rate of 3%, and the company initially anticipates an increase in sales during the service period of 18%. By the end of 2015, the actual sales increase is 17%.
a.Compute the estimated total compensation cost.
b.Compute the annual compensation expense for each of the three years.
c.Prepare the January 1, 2016, entry when 10 executives exercise their options.

Accepted Answer

The answer of On January 1, 2013, Biggs Company granted...

Question 12

In most states, it is illegal to sell stock

Accepted Answer

A)  at a discount 
B)  with no par value 
C)  at a premium 
D)  in excess of par value 
A)  at a discount 
B)  with no par value 
C)  at a premium 
D)  in excess of par value

Question 13

The following information is provided for Wolf Company:  
If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Accepted Answer

A)  $52,500 
B)  $51,000 
C)  $53,500 
D)  $56,700 
A)  $52,500 
B)  $51,000 
C)  $53,500 
D)  $56,700

Question 14

Why would a corporation want to repurchase their own stock?

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 15

Under IFRS companies are allowed to revalue their property, plant, and equipment as well as intangible assets, the revaluation is based upon market value and can be either increased up or down.

Accepted Answer

A) True 
 B)False

Question 16

When accounting for a fixed compensatory share option plan, a company must make which of the following on the date of grant?

Accepted Answer

A)  journal entry recognizing the common stock issued 
B)  journal entry recognizing the compensation expense 
C)  memorandum entry explaining the terms of the compensatory share option plan 
D)  memorandum entry of the expected annual compensation expense amount 
A)  journal entry recognizing the common stock issued 
B)  journal entry recognizing the compensation expense 
C)  memorandum entry explaining the terms of the compensatory share option plan 
D)  memorandum entry of the expected annual compensation expense amount

Question 17

Advance Medical Imaging, Inc. reacquired 2,000 shares of its $5 par common stock at $15 a share. The stock originally sold for $10 a share.
Required:

Accepted Answer

The answer of Advance Medical Imaging, Inc. reacquired 2,000 shares...

Question 18

Which one of the following statements concerning treasury stock is true?

Accepted Answer

A)  It carries voting rights. 
B)  It participates in stock splits. 
C)  It receives dividend distributions. 
D)  It retains the preemptive right. 
A)  It carries voting rights. 
B)  It participates in stock splits. 
C)  It receives dividend distributions. 
D)  It retains the preemptive right.

Question 19

Baltimore Bike had outstanding 12,000 shares of $50 par callable preferred stock. The corporation called 35% of the shares (originally issued at $75 per share) at a call price of $80 per share.
Required:
Record the journal entry for the call of this preferred stock.

Accepted Answer

The answer of Baltimore Bike had outstanding 12,000 shares of...

Question 20

Exhibit 15-4 On January 1, 2014, Masters, Inc., grants a compensatory share option plan to 15 of its executives. The plan allows each executive to buy 1,000 shares of its $1 par common stock at $30 a share after a three-year service period. The value of each option is estimated to be $9. The company estimates it will have an annual 3% employee turnover rate during the service period.
-Refer to Exhibit 15-4. What is the compensation expense for the year ended December 31, 2015?

Accepted Answer

A)  $ 0 
B)  $ 41,070 
C)  $135,000 
D)  $123,211 
A)  $ 0 
B)  $ 41,070 
C)  $135,000 
D)  $123,211

All of the following are true statements about a corporation except that it

Fully participating preferred shareholder's receive extra dividends equally with the common shareholder's.

What variables must be considered when a corporation uses the option pricing model?

All of the following would appear in the contributed capital section of stockholders' equity on the balance sheet except

Provide the definitions for the following terms: Open corporation Closed corporation Domestic corporation Foreign corporation

Smith Corp. has both Class A and Class B shares of common stock. The difference between the two classes of stock is most likely related to

Assume common stock is issued to employees as a result of exercising stock purchase rights issued under a noncompensatory share purchase plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively?

Mars Corp. has 15,000 shares of $5 par, cumulative, 8% preferred stock and 15,000 shares of common stock outstanding since being organized at the beginning of 2014. It declared its first dividend of $40,000 at the end of 2016. This means that

In most states, it is illegal to sell stock

The following information is provided for Wolf Company: If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Why would a corporation want to repurchase their own stock?

Under IFRS companies are allowed to revalue their property, plant, and equipment as well as intangible assets, the revaluation is based upon market value and can be either increased up or down.

When accounting for a fixed compensatory share option plan, a company must make which of the following on the date of grant?

Advance Medical Imaging, Inc. reacquired 2,000 shares of its $5 par common stock at $15 a share. The stock originally sold for $10 a share. Required:

Which one of the following statements concerning treasury stock is true?

Baltimore Bike had outstanding 12,000 shares of $50 par callable preferred stock. The corporation called 35% of the shares (originally issued at $75 per share) at a call price of $80 per share. Required: Record the journal entry for the call of this preferred stock.

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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Exam 15: Contributed Capital

All of the following are true statements about a corporation except that it

Fully participating preferred shareholder's receive extra dividends equally with the common shareholder's.

What variables must be considered when a corporation uses the option pricing model?

All of the following would appear in the contributed capital section of stockholders' equity on the balance sheet except

Provide the definitions for the following terms: Open corporation Closed corporation Domestic corporation Foreign corporation

Smith Corp. has both Class A and Class B shares of common stock. The difference between the two classes of stock is most likely related to

Assume common stock is issued to employees as a result of exercising stock purchase rights issued under a noncompensatory share purchase plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively?

Mars Corp. has 15,000 shares of $5 par, cumulative, 8% preferred stock and 15,000 shares of common stock outstanding since being organized at the beginning of 2014. It declared its first dividend of $40,000 at the end of 2016. This means that

In most states, it is illegal to sell stock

The following information is provided for Wolf Company: If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Why would a corporation want to repurchase their own stock?

Under IFRS companies are allowed to revalue their property, plant, and equipment as well as intangible assets, the revaluation is based upon market value and can be either increased up or down.

When accounting for a fixed compensatory share option plan, a company must make which of the following on the date of grant?

Advance Medical Imaging, Inc. reacquired 2,000 shares of its $5 par common stock at $15 a share. The stock originally sold for $10 a share. Required:

Which one of the following statements concerning treasury stock is true?

Baltimore Bike had outstanding 12,000 shares of $50 par callable preferred stock. The corporation called 35% of the shares (originally issued at $75 per share) at a call price of $80 per share. Required: Record the journal entry for the call of this preferred stock.

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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