Accounting II Multiple Choice test 2 corporate organizations...

A. Credit to paid in capital in excess of par

45. When a corporation issued stock at a price above par the journal entry A. Credit to paid in capital in excess of par B. Credit to retained earnings C. Credit to gain on sale of stock D. None of the above stock must be sold at par

D. Debit to land for its current market value

46. If the city donates a plot of land to a corporation the journal entry would include A. Debit to land for its historical B. Debit to donated Capital C. Credit to revenue from donations D. Debit to land for its current market value

A. Unlimited stockholders equity

21. All of the following represent advantages of Corporations over other business entities except: A. Unlimited stockholders liability B. Continuity of existence C. Separate legal entity D. Ease of transferring ownership

B. Charter

22. The document used by a state to Grant permission to form a corporation is called a: A. Proxy B. Charter C. Stock certificate D. Bylaw agreement

C. A corporation is subject to greater governmental regulation than a proprietorship or a partnership

23. Which of the following statements describing a corporation is true: A. Stockholders are the creditors of a corporation B. Stockholders own the business and manage it's day to day operations C. A corporati on is subject to greater governmental regulation than a proprietorship or a partnership D. When ownership of a corporation changes, the corporation terminates

C. Investments by the stockholders of a corporation

24. Paid in capital represents: A. Investments by the creditors of a corporation B. Capital that the corporation has earned through profitable operations C. Investments by the stockholders of a corporation D. None of the above

D. Represents Capital that the corporation has earned through profitable operations

25. Retained earnings: A. Is classified as an asset on the corporate balance sheet B. Is part of contributed capital C. Represents Investments by the stockholders of a corporation D. Represents Capital that the corporation has earned through profitable operations

B. Stockholders

26. The owners of a corporation are referred to as: A. Creditors B. Stockholders C. Partners D. Both B and C are correct

B. Corporation

27. Which of the following forms of business organizations is a distinct legal entity? A. Partnership B. Corporation C. Proprietorship D. Both A and B are correct

B. Partnership

28. Which of the following forms of business organization terminates when the ownership structure changes? A. Corporation B. Partnership C. Both A and B D. Neither A nor B

A. The cost of their investment

29. Stockholders liability for Corporation debts is generally limited to: A. The cost of their Investments B. The market value of the stock C. The par value of the stock D. Total stockholders equity

B. Government regulation

30. Which of the following is a disadvantage of the corporate form of business organization? A. Mutual agency B. Government regulation C. Limited liability D. Difficulty in transferring ownership

A. Common stock and preferred stock

31. A corporation May issue: A. Common stock and preferred B. Preferred stock but not common stock C. Common stock but not preferred stock D. Either common or preferred but not both

D. Assets and increases stockholders equity

32. An owner investment of cash in a corporation increases: A. Assets and increases liabilities B. One asset and decreases another asset C. Assets and decreases stockholders equity D. Assets and increases stockholders equity

C. Declaration of a cash dividend

33. All of the following transactions increase stockholders Equity except A. issuance of common stock B. Profitable operations C. Declaration of a cash dividend D. Issuance of convertible preferred stock

B. Debiting income summary and crediting retained earnings

34. A profitable Corporation would close out income summary by A. Debiting income summary and crediting paid in capital in excess of par B. Debiting income summary and crediting retained earnings C. Crediting income summary & debiting retained earnings D. Crediting income summary & debiting paid in capital in excess of par

C. Crediting income summary & debiting retained earnings

35. A corporation operating at a loss would close out income summary by A. Debiting income summary and crediting retained earnings B. Debiting income summary and crediting paid in capital in excess of par C. Crediting income summary & debiting retained earnings D. Crediting income summary and everything paid in capital in excess of par

C. Deficit

36. A debit balance in retained earnings is referred to as a A. Normal balance B. Asset C. Deficit D. Liability

D. Both A and B are correct

37. Dividends A. Are a distribution of cash to the stockholders B. Decrease both the essay and the total stockholders Equity of the corporation C. Increase retained earnings D. Both A and B are correct

B. The right to receive a proportionate share of the corporate assets prior to the payment of liabilities in liquidation

38. All of the following are basic rights of a common stock holder except A. To receive a proportionate share of the corporate assets remaining after the corporation pays its liabilities in liquidation B. The right to it a proportionate share of the corporate assets prior to the payment of liabilities in liquidation C. The right to receive a proportionate share of any dividend D. The right to vote

C. Receiving dividends Before Common stockholders

39. Which of the following is a priority granted to Preferred stockholders A. Voting for the corporate board of directors B. Receiving asses before creditors if the corporation C. Receiving dividends Before Common stockholders D. Receiving a guaranteed fixed dollar amount of dividends each year

B. Debit to cash for $62,500

40. The entry to record the issuance of 5000 shares of $10 par common stock for $12.50 per share includes a: A. Debit to cash for $50,000 B. Debit to cash for $62,500 C. Credit to common stock for $62,500 D. David to paid in cash in excess of par common for $12,500

C. Credit to stock for $75,000

41. Entry to record the issuance of 6000 shares of no par common stock for $12.50 per share includes a: A. Credit to cash for $75,000 B. Debit to common stock for $75,000 C. Credit to common stock for $75,000 D. Credit to retained earnings for $75,000

D. Credit to paid in capital in excess of par common for $2,000

42. Land is acquired by issuing 500 shares of $20 per common stock. The land has a current market value of $12,000. The journal entry requires a: A. Debits and land for $10,000 B. Credit to common stock for $12,000 C. Credit to paid in capital in excess of par common for $12,000 D. Credit to paid in capital in excess of par common for $2,000

A. Increases by $577,500

43. When 35000 shares of $10 par common stock are used at $16.50 per share, total paid in capital. A. Increases by $577,500 B. Increases by $350,000 C. Increases by $227,500 D. Decreases by $577,500

C. Credit to common stock for $440,000

44. The entry to record the issuance of 55000 shares of no par common stock with a stated value of $8 at $13.50 per share includes a: A. Credit to paid in capital in excess of stated value common for $440,000 B. Debit to cash for $440,000 C. Credit to common stock for $440,000 D. Debit to paid in capital in excess of stated value common for $302,500

A. Donated capital for a $187,500

47. A corporation received land valued at $85,000 and a building valued at $102,500 from the town of Bedford for free in exchange for moving their corporate headquarters to the town the entry to record this transaction includes a credit to A. Donated capital for $187,500 B. Revenue from donations for $187,500 C. Retained earnings for $187,500 D. Paid in capital in excess of par for $187,500

A. $40 par and 450 shares

48. Jolly Corporation has the following journal entry recorded on June 15th of the current year CASH 27,000 CS 18,000 PAID in capital in excess of par common 9,000 The explanation States the stock was sold for $60 per share what is the part of the stock and how many shares were sold A. $40 par and 450 shares B. $20 par and 450 shares C. $60 par and 300 shares D. None of the above

B. $23,000

49. Dye Works Corporation exchanges a piece of land for 600 shares of Pfizer Corporation common stock with a pair of $30 per share the land had caused iWorks Corporation $10,000 years ago and currently has a fair market value of $23,000 what is the total increase to paid in capital for Pfizer Corporation as a result of this Exchange A. $10,000 B. $23,000 C. $18,000 D. Impossible to determine using the given data