ACCT 202 - Corporations Review Quiz (CH 11)

Which of the following is true regarding corporations? Select one: a. A corporation is a separate legal entity that may sue and be sued as if it were a person b. Ownership is difficult to transfer c. The president and various vice presidents are elected by the stockholders d. Unlimited personal liability for business debts e. Corporate charters are issued by the federal government

a. A corporation is a separate legal entity that may sue and be used as if it were a person

The costs of bringing a corporation into existance, including legal fees, promoter fees, and amounts paid to the state are called: Select one: a. Organizational costs b. Paid-in capital c. Legal capital d. Par value e. Prepaid fees

a. Organizational costs

Owners of preferred stock do not have: Select one: a. Voting rights b. Ownership rights to assets of the corporation c. The right to sell their stock d. Preference to dividends e. Preference to assets at liquidation

a. Voting rights

A corporation sold 14,000 shares of its $10 par value common stock for $13 per share. The entry to record this transaction would include: Select one: a. a credit to Common stock for $140,000 b. a debit to Paid-in capital in excess of par for $42,000. c. a credit to Paid-in capital in excess of par for $182,000 d. a debit to Cash for $140,000 e. a credit to Common stock for $182,000

a. a credit to Common stock for $140,000

A 2-for-1 stock split: Select one: a. doubles the number of shares outstanding and divides the par value in half b. changes the number of shares authorized c. requires a journal entry d. is recorded by transferring the par value of shares from retained earnings to common stock e. is accounted for in the same way as a stock dividend

a. doubles the number of shares outstanding and divides the par value in half

A corporation's legal capital can be defined as the total par value of the shares: Select one: a. issued. b. that are owned by the corporation. c. outstanding. d. that are noncumulative. e. authorized.

a. issued

Treasury stock represents: Select one: a. shares previously owned by investors but which have been repurchased by the corporation b. a current asset c. shares of ownership in the United States Treasury Department d. authorized shares which have never been issued e. restircted stock

a. shares previously owned by investors but which have been repurchased by the corporation

Prior period adjustments are reported in the: Select one: a. statement of retained earnings b. income statement c. balance sheet d. notes to the financial statements e. statement of cash flows

a. statement of retained earnings

Bob's Corporation was organized on January 1, 2013. During 2013, the corporation issued 20,000 shares of stock at $12 per share, purchased 3,000 shares of treasury stock at $13 per share, and had net income of $150,000. What is the total amount of stockholders' equity at December 31, 2013? Select one: a. $360,000 b. $351,000 c. $320,000 d. $390,000 e. $354,000

b. $351,000

A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current year. The ending balance in retained earnings is: Select one: a. $11,675 b. $43,375 c. $(12,625) d. ($11,375) e. $49,000

b. $43,375

A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that is currently advertised for sale at $84,000. The stock is currently trading for $16 per share. The entry to record this transaction would include: Select one: a. a debit to land for $84,000 b. a credit to Paid-in capital in excess of par for $24,000 c. a debit to land for $96,000 d. a debit to Common stock for $60,000 e. a credit to common stock for $96,000

c. a debit to land for $96,000

The purchase of treasury stock: Select one: a. decreases retained earnings b. decreases common stock issued c. decreases common stock outstanding d. has no effect on common stock oustanding e. decreases common stock authorized

c. decreases common stock outstanding

Below is the information relating to the stockholders' equity of Blue Corporation as of December 31, 2013. 10% preferred stock, $100 par $420,000 Common stock, $20 par, 500,000 sares authorized, 100,000 shares issued and outstanding 2,000,000 Additional paid-in capital: common stock 2,300,000 Retained earnings 755,000 Total stockholders' equity is: Select one: a. $5,076,000 b. $4,992,000 c. $4,200,000 d. $5,475,000 e. $4,365,000

d. $5,475,000

The following data were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of shares outstanding is: Select one: a. 17,000 b. 23,000 c. 15,000 d. 12,000 e. 20,000

d. 12,000

The date the board of directors votes to pay a dividend is called the: Select one: a. Payment date b. Record date c. Meeting date d. Declaration date e. Liquidating date

d. Declaration date

A corporation issued 400 shares of $10 par value common stock in payment of a $4,500 bill from its attorneys for assistance in filing the initial charter for the corporation. The entry to record this transaction will include: Select one: a. a $4,500 credit to common stock b. a $4,000 debit to legal expense c. a $4,000 debit to organization expense d. a $4,000 credit to common stock e. a $4,500 credit to organizational expense

d. a $4,000 credit to common stock

A corporation reacquired 600 shares of its $10 par value common stock in February for $35,000 cash. The journal entry to record this transaction would include: Select one: a. a credit to Common stock for $6,000 b. there is no journal entry required for this transaction c. a debit to Cash for $35,000 d. a debit to Treasury stock for $35,000 e. a credit to Paid-in capital in excess for par for $29,000

d. a debit to Treasury stock for $35,000

Below is the information relating to the stockholders' equity of Blue Corporation as of December 31, 2013. 10% preferred stock, $100 par $420,000 Common stock, $20 par, 500,000 sares authorized, 100,000 shares issued and outstanding 2,000,000 Additional paid-in capital: common stock 2,300,000 Retained earnings 755,000 How many shares of preferred stock are issued and outstanding? Select one: a. 4,400 shares b. 4,000 shares c. cannot be determined from the information given d. 4,620 shares e. 4,200 shares

e. 4,200 shares

In the stockholders' equity section of the balance sheet, the classification of capital stock consists of: Select one: a. common stock, preferred stock and treasury stock b. common stock and treasury stock c. additional paid-in capital and common stock d. capital stock and retained earnings e. common stock and preferred stock

e. common stock and preferred stock

What is the cumulative effect of the declaration and payment of a cash dividend on the basic accounting equation? Select one: a. decrease in assets; decrease in liabilities b. decrease in assets; increase in liabilities c. increase in assets; increase in stockholders' equity d. increase in liabilities; increase in stockholders' equity e. decrease in assets; decrease in stockholders' equity

e. decrease in assets; decrease in stockholders' equity

The two parts of stockholders' equity are: Select one: a. preferred and common b. par and no-par stock c. assets and equity d. retained earnings and dividends e. paid-in capital and retained earnings

e. paid-in capital and retained earnings

A stock dividend transfers: Select one: a. paid in capital to assets b. retained earnings to assets c. paid-in capital to retained earnings d. assets to paid-in capital e. retained earnings to paid-in capital

e. retained earnings to paid-in capital

When no-par stock is issued: Select one: a. there is a credit to a liability account for the difference between the price paid by the stockholders and the fair value of the stock b. the transaction usually involves only an exchange for noncash assets or services, since the stock have no value assigned c. the entire amount received is credited to the Paid-in capital in excess of par account d. there is no legal capital created because there is no par or stated value e. the entire amount is credited to the Common stock account

e. the entire amount is credited to the Common stock account