Question 1

A corporation is a legal entity that may enter into contracts,may sue or be sued,and is responsible for its own debts.

Accepted Answer

A) True 
 B)False

Question 2

Double Taxation means:

Accepted Answer

A) A corporation must pay double the amount of tax that an unincorporated business pays. 
B) A corporation pays taxes to the federal government and to the state government. 
C) The corporation pays tax on its income and the stockholders pay tax on their dividends. 
D) The corporation pays tax on its income and the officers of the corporation pay tax on their salaries. 
A) A corporation must pay double the amount of tax that an unincorporated business pays. 
B) A corporation pays taxes to the federal government and to the state government. 
C) The corporation pays tax on its income and the stockholders pay tax on their dividends. 
D) The corporation pays tax on its income and the officers of the corporation pay tax on their salaries.

Question 3

The assets of a partnership belong jointly to all the partners while the assets of a sole proprietorship belong to the proprietorship.

Accepted Answer

A) True 
 B)False

Question 4

When evaluating the liquidity of a proprietorship,creditors will likely base their decision on:

Accepted Answer

A) The business ability to generate a profit. 
B) Previous debts of the business. 
C) The financial strength of the owner. 
D) The total assets owned by the business. 
A) The business ability to generate a profit. 
B) Previous debts of the business. 
C) The financial strength of the owner. 
D) The total assets owned by the business.

Question 5

X Corporation had a net income of $375,000 in 2015.The Board of Directors declared a dividend of $0.25 a share on the 150,000 shares outstanding on December 13 to be paid on December 23.Retained earnings on January 01,2016 were $630,000.
(a)Prepare the journal entries for the declaration of the dividends and for the payment of these dividends.
(b)Prepare the Retained Earnings Statement at the end of 2015.

Accepted Answer

The answer of X Corporation had a net income of...

Question 6

Which of the following is a characteristic of a corporation?

Accepted Answer

A) Mutual agency. 
B) Stockholder liability for business debts. 
C) Indefinite existence. 
D) Taxable at individual rates. 
A) Mutual agency. 
B) Stockholder liability for business debts. 
C) Indefinite existence. 
D) Taxable at individual rates.

Question 7

A corporation,as well as a partnership,must file a corporate income tax return and pay tax on its earnings.

Accepted Answer

A) True 
 B)False

Question 8

In order to form a corporation,the corporation must obtain a charter from:

Accepted Answer

A) The federal government. 
B) A state government. 
C) The Securities and Exchange Commission. 
D) The stockholders of the corporation. 
A) The federal government. 
B) A state government. 
C) The Securities and Exchange Commission. 
D) The stockholders of the corporation.

Question 9

Listed below are several accounting terms introduced in this section.   Each of the following statements may (or may not)describe one of these accounting terms.In the space provided,indicate the term described,or enter "none" if the statement does not correctly describe any of the terms.
_________(A.)An unincorporated business owned by one person.
_________(B.)An example of an organized securities market.
_________(C.)The right of each partner to negotiate binding contracts.
_________(D.)The total earnings of a corporation less dividends paid out.
_________(E.)Investments by the owners of a corporation.
_________(F.)A partnership where one or more partners are not personally liable for the debts of the partnership.
_________(G.)An organization that serves the professional needs of a CPA.
_________(H.)A business that is responsible for its own debts and which pays income taxes on its earnings.
_________(I.)An unincorporated business owned by two or more people.
_________(J.)A corporation whose shares are not publicly traded.

Accepted Answer

(A.)Sole Proprietorship; (B.)The New Yor

Question 10

Grey,Dailey,and Sanders have formed a partnership.Net income for the first year amounted to $50,400.The partnership agreement states that Grey will receive a salary of $10,000,Dailey will receive $15,000,and Sanders will receive $20,000.They each have capital accounts of $30,000,$40,000,and $50,000 respectively.The contract calls for interest of 12% of their beginning capital balances for each partner.Any profit or loss will be split equally.How much income will each partner receive?

Accepted Answer

Grey will receive income of $1

Question 11

In a limited liability partnership,a partner has unlimited liability for his own actions and limited liability for the actions of his partners.

Accepted Answer

A) True 
 B)False

Question 12

The entry to record the issuance of 100 shares of capital stock in exchange for $1,000 cash includes a debit to Capital Stock.

Accepted Answer

A) True 
 B)False

Question 13

Stewart and Brooke form a partnership.Stewart invests $80,000 and Brooke invests $120,000.If there are any profits or losses they will share them as follows:
They will each receive a salary of $25,000.
Any remaining amount will be allocated ¾ to Brooke and ¼ to Stewart.
(1)If the partnership income for the year is $115,000 what amount will be allocated to Brooke?
(2)If the partnership income for the year is $125,000 what amount will be allocated to Stewart?
(3)If the partnership income for the year is $45,000 what amount will be allocated to Stewart and what amount to Brooke?

Accepted Answer

(1)Brooke will receive $73,750

Question 14

The net income of a sole proprietorship should compensate the owner for all of the following except:

Accepted Answer

A) Personal service. 
B) The income taxes paid by the owner. 
C) Capital invested by the owner. 
D) The risk taken by the owner. 
A) Personal service. 
B) The income taxes paid by the owner. 
C) Capital invested by the owner. 
D) The risk taken by the owner.

Question 15

The salaries paid to partners are shown as an expense on the income statement while the salary taken by a sole proprietor is debited to a drawing account.

Accepted Answer

A) True 
 B)False

Question 16

Shareholders report and pay income tax on dividends received from a corporation.

Accepted Answer

A) True 
 B)False

Question 17

Income taxes to a partnership:

Accepted Answer

A) Are an obligation of the partnership. 
B) Are an obligation to each partner only when cash is received. 
C) Are an obligation to each partner based on their share of profits. 
D) Are not an obligation to each partner since a partnership does not pay tax. 
A) Are an obligation of the partnership. 
B) Are an obligation to each partner only when cash is received. 
C) Are an obligation to each partner based on their share of profits. 
D) Are not an obligation to each partner since a partnership does not pay tax.

Question 18

A and B are partners.A has $50,000 in his capital account and B has $75,000 at the beginning of the year.A receives a salary of $15,000 and B receives $12,000.Each partner receives 5% of the beginning balance of their capital accounts.The remainder is split 45% to A and 55% to
B.Net income for the year was $125,000.What is the amount of each capital account at year-end?

Accepted Answer

A's capital balance

Question 19

C,D,and E are partners.C has $25,000 in her capital account.D has $35,000 in hers,and E has $45,000.Each gets a salary allowance of $15,000.C gets 10% interest on the beginning balance in the capital account,D gets 12%,and E gets 14%.The remainder is divided 20% to C,35% to E,and 45% to
E.What is the balance in the capital account at the end of the year if net income was $80,000?

Accepted Answer

C's capital balance

Question 20

When a sole proprietorship incorporates,the assets of the new business are recorded at cost.

Accepted Answer

A) True 
 B)False

Exam 27: Forms of Business Organization

A corporation is a legal entity that may enter into contracts,may sue or be sued,and is responsible for its own debts.

Double Taxation means:

The assets of a partnership belong jointly to all the partners while the assets of a sole proprietorship belong to the proprietorship.

When evaluating the liquidity of a proprietorship,creditors will likely base their decision on:

Which of the following is a characteristic of a corporation?

A corporation,as well as a partnership,must file a corporate income tax return and pay tax on its earnings.

In order to form a corporation,the corporation must obtain a charter from:

In a limited liability partnership,a partner has unlimited liability for his own actions and limited liability for the actions of his partners.

The entry to record the issuance of 100 shares of capital stock in exchange for $1,000 cash includes a debit to Capital Stock.

The net income of a sole proprietorship should compensate the owner for all of the following except:

The salaries paid to partners are shown as an expense on the income statement while the salary taken by a sole proprietor is debited to a drawing account.

Shareholders report and pay income tax on dividends received from a corporation.

Income taxes to a partnership:

When a sole proprietorship incorporates,the assets of the new business are recorded at cost.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

The Time Value of Money: Future Amounts and Present Values

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