Financial Accounting Chapter 11

Lox, Stock and Bagel, Inc. issued 50,000 shares of the 100,000 authorized. It has since repurchased 5,000 of its shares. The number of shares outstanding equals ______ shares.

45,000

The entry to record the issuance of 100,000 shares of $0.10 par value common stock for $10 per share is debit ______.

Cash for $1,000,000 and credit Common Stock for $10,000 and Additional Paid-in Capital for $990,000

True or false: When a corporation declares a dividend its Net Income on the income statement is reduced.

False

_____ is an insignificant value per share of capital stock specified in the corporate charter.

Par value

The maximum number of shares a corporation is allowed to sell in accordance with its corporate charter are called

authorized shares

Transactions between a company and its stockholders affect the company's _____ accounts only.

balance sheet

Advantages of debt financing over equity financing are that ______. (Check all that apply.)

control is not diluted interest payments on debt are tax deductible

Advantages of equity financing over debt financing include that ______. (Check all that apply.)

dividends are optional equity financing does not require repayment

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares authorized. Stockit has repurchased 10,000 of its shares. The number of shares authorized represents the ______. (Check all that apply.)

maximum number of shares Stockit is allowed to issue

If you own stock in a corporation that goes bankrupt, you ______.

only stand to lose what you paid to buy the stock

A common stock's _ value is typically set at a low amount and has little meaning today other than being used to by some states to assess fees. (Enter only one word per blank.)

par

Investors earn a return on stock investments by ______. (Check all that apply.)

selling the stock for more than its cost receiving dividends

The number of shares issued represents the number of shares ______.

sold

If a business cannot pay its debts, creditors can expect the owner(s) to pay the debts with their personal assets if the business is a ______. (Check all that apply.)

sole proprietorship general partnership

Diva, Inc. declared and paid $10,000 of dividends. Dividends of $10,000 may be found on the ______.

statement of retained earnings

Treasury stock is reported in the ______.

stockholders' equity section of the balance sheet

Contributed capital of $1,000,000 is found in the ______ section of the ______.

stockholders' equity; balance sheet

Treasury stock represents ______. (Check all that apply.)

the amount paid for stock reacquired and currently held in treasury a contra-equity account

Contributed capital of $1,000,000 represents ______.

the amount stockholders have invested in exchange for stock

When a corporation buys back its own stock, the stock is reported on the balance sheet as ______.

treasury stock