Accounting Chapter 11 Quiz

Curtain Co. paid dividends of $5,000, $8,000, and $10,000 during Year 1, Year 2, and Year 3, respectively. The company had 1,200 shares of 6.0%, $100 par value preferred stock outstanding that paid a cumulative dividend. What is the total amount of dividends paid to common shareholders during Year 3? $7,200 $1,400 $3,000 $2,200

$1,400

Montana Company was authorized to issue 140,000 shares of common stock. The company had issued 63,000 shares of stock when it purchased 10,000 shares of treasury stock. After the purchase of treasury stock, the number of outstanding shares of common stock was which of the following? 130,000 73,000 63,000 53,000

53,000

Which of the following entities would have a "Paid-in Capital in Excess" account in the equity section of the balance sheet? A corporation A municipality A sole proprietorship A partnership

A corporation

How is treasury stock reported on a corporation's balance sheet? As an addition to total paid-in capital As a deduction in determining total stockholders' equity As a deduction from total paid-in capital As a deduction from retained earnings

As a deduction in determining total stockholders' equity

Which form of business organization is established as a separate legal entity? Sole proprietorship Partnership Corporation None of these

Corporation

Fixit Corporation issued 18,000 shares of $10 par value common stock at its current market price of $22. How does this event affect total stockholders' equity? It increases by $216,000. It is unaffected. It increases by $396,000. It increases by $180,000.

It increases by $396,000.

Which of the following terms designates the maximum number of shares of stock that a corporation may issue? Number of shares issued Number of shares authorized Par value Number of shares outstanding

Number of shares authorized

Which of the following best describes how each share of par value stock issued is reported in the Common Stock account? Current market value Average issue price Par or stated value Lower of cost or market

Par or stated value

Which of the following statements about par value is true? Par value dictates the initial price of the stock. Par value may be revised each time a company issues more shares of stock. Par value is generally greater than market value. Par value has little connection to the market value of the stock.

Par value has little connection to the market value of the stock.

On January 2, Year 1, Torres Corporation issued 18,000 shares of $12 par-value common stock for $20 per share. Which of the following statements is true? The Paid-in Capital in Excess of Par Value account will increase by $144,000. The Cash account will increase by $216,000. Total stockholders' equity will increase by $216,000. The Common Stock account will increase by $360,000.

The Paid-in Capital in Excess of Par Value account will increase by $144,000.

Which of the following is not normally a preference given to the holders of preferred stock? The right to receive a specified amount of dividends prior to any being paid to common stockholders. The right to vote before the common stockholders at the corporation's annual meeting. The right to receive preference over common stockholders as to the distribution of assets during a liquidation process. All of these are preferences given to preferred stock.

The right to vote before the common stockholders at the corporation's annual meeting.

A corporation must record a liability for cash dividends on the date of record.

false

Lack of ease in transferability of ownership is one of the disadvantages of the corporate form of business organization.

false

The class or type of stock that every corporation must have is preferred stock.

false

Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share. For this transaction, Common Stock should be credited (increased) for $120,000.

false