Principles Managerial accounting
Corporations are subject to fewer state and federal regulations than partnerships or proprietorships.
False
Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.
False
Most of the largest U.S. corporations are privately held corporations.
False
The board of directors of a corporation legally owns the corporation.
False
The net income of a corporation is not taxed as a separate entity.
False
The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders.
False
Declared and paid a cash dividend of $13,000.
Financing Activity
Issued $50,000 par value common stock for cash.
Financing Activity
Paid 17000 cash dividend to preferred stockholders
Financing activity; Not applicable
Paid 4000 cash dividend to common stockholders
Financing activity; Not applicable
Received 100000 from issuing bonds payable
Financing activity; Not applicable
Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?
Gain on disposal of equipment
The order of presentation of activities on the statement of cash flows is
Operating, investing, and financing
If Ivanhoe company issues 4300 shares of $5 par value common stock for 150500, the account
Paid-in capital in excess of par will be credited for 129000
Which one of the following affects cash during a period?
Payments of accounts payable
The two ways that a corporation can be classified by ownership are
Publicly held & privately held
suppose that the board of directors of target declared a cash dividend on November 15, 2025 to be paid on December 15, 2025 to stockholders owning the stock on November 30, 2025. Given these facts, the date of November 30, 2025 is referred to as the
Record date
Interest payable account increased 5000
Operating activity; Added to net income
Inventory increased 2000
Operating activity; Subtracted from net income
The information to prepare the statement of cash flows comes from all of the following sources except
Adjusted trial balance
Which one of the following is not necessary in order for a corporation to pay a cash dividend?
Approval of stockholders
The date on which a cash dividend becomes a binding legal obligation is on the
Declaration date
Computing cash flows from operating activities by starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the
Indirect method
Sold a long-term investment with a cost of $15,000 for $15,000 cash.
Investing Activity
Acquired equipment for 16000 cash
Investing activity; Not applicable
Received 26000 from sale of plant assets
Investing activity; Not applicable
Generally, the most important category on the statement of cash flows is cash flows from
Operating activites
Accounts receivable account decreased 10000
Operating activity; Added to net income
Depreciation expense was 80000
Operating activity; Added to net income
Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000.
Noncash Activity
Purchased a machine for $30,000, giving a long-term note in exchange.
Noncash Activity
Acquired land by issuing common stock to seller
Noncash Transaction; Not applicable
Collected $16,000 of accounts receivable.
Operating Activity
Paid $18,000 on accounts payable.
Operating Activity
A corporation is an entity separate and distinct from its owners.
True
As a legal entity, a corporation has most of the rights and privileges of a person.
True
Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.
True
The chief accounting officer of a corporation is the controller.
True
Which of the following transactions does not affect cash during a period?
Write-off of an uncollectible account
Treasury stock is
a corporation's own stock, which has been reacquired and held for future use.
The acquisition of land by issuing common stock is
a noncash transaction that is not reported in the body of a statement of cash flows
Continuous life
advantage
Ease of transfer of ownership
advantage
Separate legal entity
advantage
ability to acquire capital
advantage
seperation of ownership and management
advantage
The acquisition of treasury stock by a corporation
decreases its total assets and total stockholders' equity.
Government Regulation
disadvantage
Taxable entity resulting in additional taxes
disadvantage
issuance of capital stock
financing activity
payment of dividends
financing activity
retirement of bonds
financing activity
purchase of land
investing activity
sale of building at book value
investing activity
Financing activities involve
issuing debt
Exchange land for patent
noncash investing and financing activity
conversion of bonds into common stock
noncash investing and financing activity
issuance of bonds for land
noncash investing and financing activity
Unlimited liability of owners
not applicable
amortization of patent
operating activity
depreciation of plant assets
operating activity
loss on disposal of plant assets
operating activity
