Chapter 15 test

Which one of the following statement is false? A) When stock issued, legal capital is usually the total amount received B) Par value has no direct relationship to market value C) the accounting for stated value, no par stock parallels accounting for par-value stock D) Capital stockholders have limited liability

A) When stock is issued, legal capital is usually the total amount received

Which one of the following statements is false? A) When stock is issued, legal capital is usually the total amount received B) Par value has no direct relationship to market value stock C) the accounting for stated value, no-par stock parallel accounting for par-value stock D) Capital stockholders have limited liability

A) When stock is issued, legal capital is usually the total amount received

In most stated, it is illegal to sell stock A) at a discount B) with no par value C) at a premium D) in excess of par value

A) at a discount

Henson Co. issued 10,000 shares of its $5 par common stock for $15 a share. In addition, it incurred legal and accounting fee, stock certificate cost, and related expenses totaling 18,500

A) credit to additional paid-in capital on common stock for 18,500

A corporation legal capital A) is established to protect the corporation creditors B) is a requirement established by the SEC to aid in enforcement of regulations C) is the amount of cash received by the corporation from its shareholders when it originally issues stock D) allows a corporation to declare dividends of any amount

A) is established to protect the corporation creditors

What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation? A) organization expense B) Additional Paid-in Capital C) Organization Cost D) Common Stock

A) organization expense

Which of the following represents shares of stocks that will be issued upon completion of an installment purchase contract? A) subscribed capital stock B) outstanding capital stock C) treasury stock D) contracted capital stock

A) subscribed capital stock

Which of the following is not part of the stockholders' equity section of the balance sheet? A) working capital B) contributed capital C) treasury stock D) retained earning

A) working capital

Which one of the following entries would not be likely to be made by a corporation?

B) Cash XX Common Stock, no par XX Additional paid-in capital on common stock XX

Which of the following is not a characteristic of the corporate form of business entity? A) It is a separate legal entity B) Owners have unlimited liability C) It has an indefinite life span D) Owners often are not an active part of management

B) Owners have unlimited liability

Which one of the following phrases is least desirable when describing an amount received from a sale of stock in excess of the par value of the stock? A) paid in capital in excess of par value B) capital surplus C) additional paid-in capital on preferred stock D) contributed capital in excess of par value

B) capital surplus

Which one of the following phrases is least desirable when describing an amount received from a sale of stock in excess of the par value of the stock? A) pain-in capital in excess of par value B) capital surplus C) additional paid-in capital of preferred stock D) contribution capital in excess of par value

B) capital surplus

All of the following are true statement about a corporation except that is A) must pay state and federal income taxes B)may engage in any legal activity C) can enter into legal contacts D) can continue in perpetuity

B) may engage in any legal activity

A corporation whose stock is traded on a stock exchange is called A) foreign corporation B) open corporation C) domestic corporation D) closed corporation

B) open corporation

When existing corporation issue stock, costs such as legal fees and underwriters fees are usually accounted for as A) organization expenses B) reduction of additional paid-in capital C) organizational cost D) reduction of retained earnings

B) reduction of additional paid-in capital

A corporation is a legal entity A) held jointly by its owners and management B) separate from its owners C) formed by the laws of the U.S> Department of Commerce D) under the laws established by the SEC

B) separate form its owners

Smith Corp. has both Class A and Class B shares of common stock. The difference between the two classes of stock is most likely related to A) Class A stock being worth more than Class B stock B) Class A shareholders having greater voting right than Class B shareholder C) Class A shareholders receiving dividends while Class B shareholders do not D) Class A shareholders having better preemptive right than Class B shareholders

B)Class A shareholders having greater voting rights than Class B shareholders

In United Stated, corporation account for A) 10% of all companies B) 15% of all companies C) 11% of all companies D) 50% of all companies

C) 11% of all companies

Henson Co. issued 10,000 shares its $5 par common stock for $15 a share. In addition, it incurred legal and accounting fee, stock certificate costs, and other related expenses totaling $18,500

C) debt to organization expense for $18,500

University, hospitals, churches are example of which type of corporation? A) stock companies B) privately held companies C) nonstock companies D) publicly held companies

C) nonstock companies

The legal capital of a corporation may be any of the following except A) the stated value of the stock B) the par value of the stock C) the market value of the stock at the balance sheet date D) the entire proceeds form the stock issuance

C) the market value of the stock at the balance sheet date

A preemptive right is A) the right to vote in the election of directors and to established corporate polices B) the right to share in the profits when a dividend is declared C) the right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportionate share of additional capital such stock be issued D) the right to share in the distribution of the assets of the corporation should it be liquidated

C) the right to maintain a proportion interest in the ownership of the corporation by purchasing a proportionate share of additional capital stock should such stock be issued

A preemptive right is A) the right to vote in the election of directors and to establish corporate policies B) the right to share in the profits when a dividend is declared C) the right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportionate share of additional capital stock should such stock be issued D) the right to share in the distribution of the assets of the corporation should it be liquidated

C) the right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportionate share of additional capital stock should such stock be issued

The corporate form of organization is important to the U.S. economy because A) there are more corporation than sole proprietorship B)there are more corporations than partnerships C)there are more sales of goods and services by corporation than other business forms D)corporation provide more donations to the economy than other business form due to the many tax incentive geared toward corporations

C) there are more sales of goods and service by corporations than other business forms

When common stock is issued at an amount greater than par value, the difference between the par value and the proceeds from the sale is recorded by

Crediting an additional paid-in capital account

A corporation acquired a copyright by issuing 1,000 shares of $5 par common stock, At the time of the exchange, the stock was selling for $40 per share. the copyright had a carrying value of $18,000 to the author. the purchasing corporation corporation should assign to the copyright a value of.....

D) $40,000

If a company has 75,000 shares of treasury stock, 520,000 shares outstanding, and 1,500,000 shares authorized, how many shares are issued? A) 500,000 B) 75,000 C) 520,000 D) 595,000

D) 595,000

In the United States, corporation provide more than A) 27% of the total revenue of all companies B) 53% of the total revenue of all companies C) 78% of the total revenue of all companies D) 82% of the total revenue of all companies

D) 82% of the total revenue of all companies

Which one of the following equation is accurate? A) Treasure= Authorized - Issued stock B) Treasure stock = Outstanding stock- Subscribed stock C) Treasure stock = Authorized stock -Outstanding stock D) Treasury stock = Issued stock- Outstanding stock

D) Treasury stock = Issued stock - Outstanding

The securities and exchange commission requires that subscription receivable be disclosed on the financial statement slide with it as an

D) contra-stockholders' equity account

Which of the following types of corporations is owned or operated by a government unit? A) domestic B) private C) closed D) public

D) public

Accumulated Other Comprehensive Income is not reported with shareholder's equity.

false

An open corporation does not allow the sale of their stock to the general public only to investment capital brokers

false

miscellaneous fee arising from the issuance of stock are charged to the organization expense account only if this is not the company first issuance of stock

false

state laws established the concept of legal capital which is design to protect the corporation creditors by restricting the distribution of shareholders equity to shareholder

true