Orion C11

Which of the following is true about corporations? A. A stockholder is personally liable for the debts of the corporation. B. The corporation's life is stipulated in its charter. C. Stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. D. Stockholders wishing to sell their corporation shares must get the approval of other stockholders.

B. The corporation's life is stipulated in its charter.

Hadley Corporation issued 200,000 shares of $5 par value common stock for $25 per share. During that year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show A : common stock of $1,000,000. B : common stock of $5,000,000. C : total paid-in capital of $5,400,000. D : total paid-in capital of $4,600,000.

A : common stock of $1,000,000.

When companies set their dividend payout, they generally aim for a rate that is A : sustainable. B : low. C : high. D : variable.

A : sustainable

In what way is a corporation different from a sole proprietorship or partnership? A. A corporation's temporary accounts are closed at the end of the accounting period. B. A corporation is an accounting economic entity. C. A corporation is organized for the purpose of making a profit. D. A corporation is subject to more federal and state government regulations.

D. A corporation is subject to more federal and state government regulations.

Stewart Soaps began business by issuing 25,000 shares of $5 par value common stock for $20 per share. During its first year, the corporation sustained a net loss of $5,000. The year-end balance sheet would show A : total paid-in capital of $475,000. B : common stock of $500,000. C : total paid-in capital of $595,000. D : common stock of $125,000.

D. Common stock of $125,000. Entry : DB: Bank (25,000*20) ..... $500,000 CR: Common Stock (25,000*5) ....$125,000

To find the return on common stockholders' equity, divide net income available to common stockholders by ________ stockholders' equity. A : average common B : average total C : ending total D : ending common

A : average common

Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur? A : Net income will increase by $1,000,000. B : There will be no effect on total common stockholders' equity. C : Total paid-in capital will increase by $1,000,000. D : Retained earnings will decrease by $1,000,000.

B : There will be no effect on total common stockholders' equity.

Which of the following statements is true? A : A stock split will increase the number of shares outstanding and will increase total stockholders' equity. B : Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity. C : Both a stock split and a stock dividend will increase the number of shares outstanding and will both increase total stockholders' equity. D : A stock split will increase the number of shares outstanding but will decrease total stockholders' equity.

B :Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity.

Clayworks Corporation issued 300,000 shares of $5 par value common stock for $26 per share. During that year, the corporation sustained a net loss of $80,000. The year-end balance sheet would show A : total paid-in capital of $6,300,000. B : common stock of $7,800,000. C : common stock of $1,500,000. D : total paid-in capital of $7,000,000.

C : common stock of $1,500,000.

The board of directors of Pilgrim Company authorizes a $100,000 restriction of retained earnings for a future plant expansion. This action will A : decrease total assets and total stockholders' equity. B : decrease total retained earnings and increase total liabilities. C : reduce the amount of retained earnings available for dividend declarations. D : increase stockholders' equity and decrease total liabilities.

C : reduce the amount of retained earnings available for dividend declarations.

A-Team Corporation issued 1,000 shares of $5 par value stock for land. The stock is actively traded at $9 per share. The land was advertised for sale at $10,500. The land should be recorded at A : $5,000. B : $4,000. C : $9,000. D : $10,500.

C. $9,000 The land should be recorded at > $9 per share * 1,000 = $9,000

When a corporation purchases treasury stock, the acquisition A. requires that a gain or loss be recognized on the income statement. B. has no effect on total assets and total stockholders' equity. C. decreases the company's total assets and total stockholders' equity. D. increases the company's total assets and total stockholders' equity.

C. decreases the company's total assets and total stockholders' equity.

A ________ does not require a formal journal entry on a corporation's books. A : $1.00 per share cash dividend B : 100% stock dividend C : 2% stock dividend D : 2-for-1 stock split

D : 2-for-1 stock split

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to A : Common Stock $10,000 and Retained Earnings $2,000. B : Common Stock $10,000 and Paid-in Capital in Excess of Stated Value-Common Stock $2,000. C : Common Stock $12,000. D : Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000.

D : Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000 Common Stock = 1,000 Shares * $ 10 = $ 10,000 Paid-In Capital in Excess of Par = 1,000 Shares * $ 2 = $ 2,000

Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur? A : Par value will become $2.50 per share. B : Par value will become $2.00 per share. C : Total par value of outstanding shares will increase. D : Par value will become $1.00 per share.

D : Par value will become $1.00 per share.

What happens if no-par value stock does not have a stated value? A : The entire proceeds from the issuance of the stock becomes cash dividends. B : The entire proceeds from the issuance are recorded as retained earnings. C : The entire proceeds from the issuance of the stock becomes additional paid-in capital. D : The entire proceeds from the issuance of the stock becomes legal capital.

D : The entire proceeds from the issuance of the stock becomes legal capital.

When a company declares a stock dividend, the declaration will A : change the total of stockholders' equity. B : increase total liabilities. C : increase total assets. D : increase paid-in capital.

D : increase paid-in capital.

When a company declares a stock dividend, the declaration will A : increase total assets. B : increase total liabilities. C : change the total of stockholders' equity. D : increase paid-in capital.

D : increase paid-in capital.

Taft Industries had 250,000 shares of common stock outstanding before a stock split occurred and 500,000 shares outstanding after the stock split. The stock split was A : 1-for-5. B : 2-for-5. C : 5-for-1. D : 2-for-1.

D. 2-for-1 500,000/250,000 = 2 >> 2-for-1