Accounting ch 13-15

Retained earnings are a part of stockholders equity

TRUE

Which one of the following would not be considered an advantage of the corporate form of organization?

GOVERNMENT REGULATION

Secured bonds are bonds that

HAVE SPECIFIC ASSETS OF THE ISSUER PLEDGED AS COLLATERAL

The chief accounting officer in a company is known as the

CONTROLLER

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

CALLABLE BONDS

Bonds that may be exchanged for common stock at the option of the bondholders are called

CONVERTIBLE BONDS

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

CORPORATION IS SUBJECT TO MORE FEDERAL AND STATE GOVERNMENT REGULATIONS

The date on which a cash dividend becomes a binding legal obligation is on the

DECLARATION DATE

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

DECREASE TOTAL ASSETS AND STOCKHOLDERS EQUITY

A Board of Directors does not generally

EXECUTE POLICY

A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.

FALSE

A corporation must be incorporated in each state in which it does business

FALSE

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

FALSE

Callable bonds are bonds that can be converted into common stock at the bondholder's option.

FALSE

Dividends in arrears on cumulative preferred stock are considered a liability

FALSE

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

FALSE

The par value of common stock must always be equal to its market value on the date the stock is issued

FALSE

Treasury stock purchased for $35 per share that is reissued at $31 per share results in a Loss on Sale of Treasury Stock being recognized on the income statement

FALSE

When a corporation has only one class of capital stock, it is identified as preferred stock

FALSE

A small stock dividend is defined as

LESS THAN 20-25% OF THE CORPORATION ISSUED STOCK

Which of the following statements is not considered a disadvantage of the corporate form of organization?

LIMITED LIABILITY OF STOCKHOLDERS

On the dividend record date,

NO ENTRY IS REQUIRED

A corporation recognizes a gain or loss

ONLY WHEN BONDS ARE REDEEMED BEFORE MATURITY

The two ways that a corporation can be classified by purpose are

PROFIT AND NON-PROFIT

The term residual claim refers to stockholders' right to

SHARE IN ASSETS UPON LIQUIDATION

Each of the following is correct regarding bonds except they are

SOLD IN LARGE DENOMINATIONS

Which of the following is not true of a corporation?

THE ACTS OF ITS OWNERS BIND THE CORPORATION

Stockholders of a corporation directly elect

THE BOARD OF DIRECTORS

Which of the following statements about dividends is not accurate?

THE BOARD OF DIRECTORS IS OBLIGATED TO DECLARE DIVIDENDS

The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is THE

THE CORPORATION

A debenture bond is an unsecured bond which is issued against the general credit of the borrower.

TRUE

A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable.

TRUE

A stockholder has the right to vote in the election of the board of directors.

TRUE

A successful corporation can have a continuous and perpetual life.

TRUE

Bonds are a form of interest-bearing notes payable.

TRUE

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

TRUE

Dividends may be declared and paid in cash or stock

TRUE

Earnings per share indicates the net income earned by each share of outstanding common stock.

TRUE

If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date.

TRUE

The number of common shares outstanding can never be greater than the number of shares issued.

TRUE

Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold

TRUE