chapter 10 true/false
A corporation must be incorporated in each state in which it does business.
False
As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.
False
For accounting purposes, stated value is not treated the same way as par value.
False
If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000.
False
If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.
False
If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.
False
If the market rate of interest at the date of issuance of a bond is greater than the stated interest rate, the bond will be issued at a premium.
False
The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.
False
The higher the sales tax rate, the more profit a retailer can earn.
False
The par value of common stock must always be equal to its market value on the date the stock is issued.
False
Unearned revenues should be classified as Other Revenues and Gains on the income statement.
False
Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.
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
If the market rate of interest is greater than the contractual rate of interest, bonds will sell at a discount.
True
Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.
True
Payroll taxes include the employer's share of Social Security taxes as well as the state and federal unemployment taxes.
True
The liability of a stockholder is usually limited to the stockholder's investment in the corporation.
True
The sale of shares in a corporation by one stockholder to another does not affect the total capital of the corporation.
True