Question 1

Which of the following items will not be disclosed on a statement of stockholders' equity?

Accepted Answer

A)  Conversion of preferred stock into common stock
B)  Results of discontinued operations
C)  Purchase of treasury stock
D)  Declaration of a stock dividend

Question 2

Start-up and organization costs include all of the following except

Accepted Answer

A)  goodwill.
B)  cost of printing stock certificates.
C)  attorney's fees.
D)  state incorporation fees.

Question 3

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Accepted Answer

A) True 
 B)False

Question 4

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Accepted Answer

A) True 
 B)False

Question 5

Retained earnings are a component of contributed capital.

Accepted Answer

A) True 
 B)False

Question 6

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Accepted Answer

A) True 
 B)False

Question 7

A disadvantage of the corporate form of business is

Accepted Answer

A)  centralized authority and responsibility.
B)  its status as a separate legal entity.
C)  government regulation.
D)  continuous existence.

Question 8

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

Accepted Answer

A)  credited to a liability account.
B)  debited to the Retained Earnings account.
C)  debited to an account titled Discount on Capital Stock.
D)  credited to the Retained Earnings account.

Question 9

Corporations are subject to more government control and regulation than are other forms of business.

Accepted Answer

A) True 
 B)False

Question 10

Dividends in arrears must be paid when a corporation calls in its preferred stock.

Accepted Answer

A) True 
 B)False

Question 11

The sale of treasury stock cannot result in

Accepted Answer

A)  an increase in Retained Earnings.
B)  the crediting of Paid-in Capital,Treasury Stock.
C)  the debiting of Paid-in Capital,Treasury Stock.
D)  an increase in total stockholders' equity.

Question 12

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

Accepted Answer

Limited liability can be considered both...

Question 13

Use this information to answer the following question. Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.The following transactions occurred during the year:
Mar. 17 Declared a 10 percent stock dividend to stockholders of record on March 20. Market value of the stock was $22 on March 17.
Mar. 30 Distributed the stock dividend.
-The entry to record the transaction of March 17 is:

Accepted Answer

A)  Stock Dividends 198,000 Common Stock Distributable 90,000Additional Paid-in Capital 108,000
B)  Common Stock Distributable 90,000 Common Stock 90,000
C)  Common Stock Distributable 198,000 Common Stock 90,000Retained Earnings 108,000
D)  Stock Dividends 198,000 Cash 198,000

Question 14

A stock dividend increases the total amount of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 15

Match between columns
                        Premises: Par value per share
Total stockholders' equity
Balance of Common Stock account
Total number of shares outstanding
Total retained earnings
Assets
Total contributed capital

Accepted Answer

The Answer of increase and no effect and decrease is...

Question 16

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Accepted Answer

A) True 
 B)False

Question 17

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 3,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5.
-The entry to record the sale of the treasury shares on March 2,20x5 is

Accepted Answer

A)  
B)  
C)  
D)

Question 18

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Accepted Answer

A) True 
 B)False

Question 19

Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

Accepted Answer

A)  $225.40.
B)  $120.40.
C)  $232.40
D)  $253.40.

Question 20

Define outstanding stock.

Accepted Answer

Outstanding stock is stock tha...

Exam 13: Accounting for Corporations

Indicate on the blanks below the effect (increase,decrease,no effect)of a stock split on each of the items listed.

Start-up and organization costs include all of the following except

Correct Answer
verified

Correct Answer
verified

The sale of treasury stock cannot result in

Correct Answer
verified

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Correct Answer
verified

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Correct Answer
verified

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Correct Answer
verified

A disadvantage of the corporate form of business is

Correct Answer
verified

Retained earnings are a component of contributed capital.

Correct Answer
verified

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Correct Answer
verified

Define outstanding stock.

Correct Answer
verified
Outstanding stock is stock tha...
View Answer

Corporations are subject to more government control and regulation than are other forms of business.

Correct Answer
verified

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Correct Answer
verified

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

Correct Answer
verified
Limited liability can be considered both...
View Answer

Correct Answer
verified

Which of the following items will not be disclosed on a statement of stockholders' equity?

Correct Answer
verified

A stock dividend increases the total amount of stockholders' equity.

Correct Answer
verified

Correct Answer
verified

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

Correct Answer
verified

Dividends in arrears must be paid when a corporation calls in its preferred stock.

Correct Answer
verified

Exam 13: Accounting for Corporations

Indicate on the blanks below the effect (increase,decrease,no effect)of a stock split on each of the items listed.

Start-up and organization costs include all of the following except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The sale of treasury stock cannot result in

Correct AnswerverifiedShow Answer

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Correct AnswerverifiedShow Answer

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Correct AnswerverifiedShow Answer

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Correct AnswerverifiedShow Answer

A disadvantage of the corporate form of business is

Correct AnswerverifiedShow Answer

Retained earnings are a component of contributed capital.

Correct AnswerverifiedShow Answer

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Correct AnswerverifiedShow Answer

Define outstanding stock.

Correct AnswerverifiedOutstanding stock is stock tha...View AnswerShow Answer

Corporations are subject to more government control and regulation than are other forms of business.

Correct AnswerverifiedShow Answer

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Correct AnswerverifiedShow Answer

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

Correct AnswerverifiedLimited liability can be considered both...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following items will not be disclosed on a statement of stockholders' equity?

Correct AnswerverifiedShow Answer

A stock dividend increases the total amount of stockholders' equity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

Correct AnswerverifiedShow Answer

Dividends in arrears must be paid when a corporation calls in its preferred stock.

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Outstanding stock is stock tha...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Limited liability can be considered both...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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