Question 1

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 2

The journal entry when a dividend is declared for $150,000 would be:

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 3

John's Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000.Metal works' journal entry to record this transaction included:

Accepted Answer

A) A debit to Capital Stock for $10,000. 
B) A debit to Cash for $100,000. 
C) A credit to Capital Stock for $10,000. 
D) A credit to Cash for $100,000. 
A) A debit to Capital Stock for $10,000. 
B) A debit to Cash for $100,000. 
C) A credit to Capital Stock for $10,000. 
D) A credit to Cash for $100,000.

Question 4

Personal liability of the owners for any business debts is an important consideration when selecting an appropriate form of business organization.

Accepted Answer

A) True 
 B)False

Question 5

Net income in a partnership may not be distributed to the partners:

Accepted Answer

A) As a salary allowance. 
B) As interest on beginning capital. 
C) In a fixed ratio. 
D) In the form of dividends. 
A) As a salary allowance. 
B) As interest on beginning capital. 
C) In a fixed ratio. 
D) In the form of dividends.

Question 6

X Corporation had a net income of $375,000 in 2018.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 01,2019 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 2018.

Accepted Answer

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

Question 7

When a corporation declares a dividend:

Accepted Answer

A) Assets decrease,liabilities increase. 
B) Retained earnings increase,liabilities increase. 
C) Liabilities increase,retained earnings decrease. 
D) Retained earnings decrease,assets increase. 
A) Assets decrease,liabilities increase. 
B) Retained earnings increase,liabilities increase. 
C) Liabilities increase,retained earnings decrease. 
D) Retained earnings decrease,assets increase.

Question 8

Retained Earnings represents:

Accepted Answer

A) The profits of the company. 
B) The investments of the owners. 
C) The profits of the company plus the investments of the owners. 
D) The total earnings of the company,less the dividends distributed to the owners and less any losses. 
A) The profits of the company. 
B) The investments of the owners. 
C) The profits of the company plus the investments of the owners. 
D) The total earnings of the company,less the dividends distributed to the owners and less any losses.

Question 9

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 10

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 11

A partnership has a limited life and each partner has unlimited personal liability.

Accepted Answer

A) True 
 B)False

Question 12

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 Y

Question 13

The ability of a sole proprietorship to pay its debts may be determined by the financial strength of the owner.

Accepted Answer

A) True 
 B)False

Question 14

Mutual agency refers to the ability of each partner to withdraw cash and other assets at will.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Which of the following is a characteristic of a corporation?

Accepted Answer

A) Declaration of a dividend by the stockholders 
B) Appointment of officers by the stockholders 
C) Transferability of shares of stock 
D) Unlimited liability 
A) Declaration of a dividend by the stockholders 
B) Appointment of officers by the stockholders 
C) Transferability of shares of stock 
D) Unlimited liability

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 his or her 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 his or her share of profits. 
D) Are not an obligation to each partner since a partnership does not pay tax.

Question 18

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 19

Paid-in Capital refers to:

Accepted Answer

A) The lifetime earnings of the corporation. 
B) The amount invested by stockholders. 
C) Net income less dividends. 
D) The amount in excess of the par value of the stock. 
A) The lifetime earnings of the corporation. 
B) The amount invested by stockholders. 
C) Net income less dividends. 
D) The amount in excess of the par value of the stock.

Question 20

The adjusting entry to record income taxes in an unprofitable period would debit Income Tax Payable and credit Income Tax Expense.

Accepted Answer

A) True 
 B)False

Exam 28: Forms of Business Organization

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.

The journal entry when a dividend is declared for $150,000 would be:

John's Metalworks Incorporated recently issued 10,000 shares of stock in exchange for $100,000.Metal works' journal entry to record this transaction included:

Personal liability of the owners for any business debts is an important consideration when selecting an appropriate form of business organization.

Net income in a partnership may not be distributed to the partners:

When a corporation declares a dividend:

Retained Earnings represents:

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

A partnership has a limited life and each partner has unlimited personal liability.

The ability of a sole proprietorship to pay its debts may be determined by the financial strength of the owner.

Mutual agency refers to the ability of each partner to withdraw cash and other assets at will.

Which of the following is a characteristic of a corporation?

Which of the following is a characteristic of a corporation?

Income taxes to a partnership:

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

Paid-in Capital refers to:

The adjusting entry to record income taxes in an unprofitable period would debit Income Tax Payable and credit Income Tax Expense.

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

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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