Which of the following is not true of a corporation?
a. It may sue and be sued.
b. The owners are personally liable for corporate actions.
c. It may enter into binding legal contracts in its own name.
d. It may buy, own, and sell property.
answer
b. The owners are personally liable for corporate actions.
question
An advantage of the corporate form of business entity is
answer
d. the ease of transfer of ownership.
question
One of the main disadvantages of the corporate form is
answer
a. double taxation.
question
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?
answer
a. 50,000
60,000-10,000=50,000
question
When no-par stock is issued,
answer
Common Stock is credited for the full amount of the proceeds.
question
The number of shares of stock that a corporation can issue as stated in its charter is referred to as
answer
authorized.
question
term used with cumulative preferred stock dividends.
answer
Arrears
question
The number of shares remaining in the hands of shareholders after some stock has been reacquired is referred to as the shares
answer
outstanding.
question
All of the following are conditions for a cash dividend except
a. sufficient retained earnings.
b. sufficient cash.
c. formal action by the board of directors.
d. All of these choices are correct.
answer
All of these choices are correct.
question
The date on which cash dividends are paid is on the
answer
date of payment.
question
the date the board of directors formally authorizes the payment of the dividend.
answer
date of declaration
question
Luke Enterprises has 300,000 shares of $20 par common stock outstanding. On January 19, Luke Enterprises declared a 3% stock dividend. The market price of the stock on January 19 was $28 per share. The journal entry to record the stock dividend would include
answer
debit to Stock Dividends for $252,000.
300,000*28*.03=252,000
question
Cash dividends are paid on __________ stock.
answer
outstanding
question
A major objective of a stock split is to
answer
reduce the market price per share of the stock.
question
Which of the following statements is true concerning stock splits?
answer
Each shareholder will own the same total par amount of stock before and after the split.
question
A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 5% stock dividend on a date when the market price was $11 per share. What is the amount transferred from the retained earnings account to the paid-in capital accounts as a result of the stock dividend?
answer
$22,000
40,000*11*.05=22,000
question
When a corporation completes a 2-for-1 stock split,
answer
both market price per share and par value per share are decreased.
question
Which of the following statements is true regarding treasury stock?
answer
Paid-In Capital from Sale of Treasury Stock may be debited on the sale of treasury stock.
question
Treasury stock shares are
answer
issued shares that are held by the treasurer of the corporation.
question
A corporation purchases 1,000 shares of its own common stock for $4,000 on February 13. On April 13, half of the treasury stock was sold for $3,000. On April 26, the other half of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include a
answer
debit to Paid-In Capital from Sale of Treasury Stock for $200.
Since the April 13 transaction generated a credit balance in Paid-In Capital from Sale of Treasury Stock, a decrease from the April 26 sale can be debited to the account for the difference between the cost of the treasury stock and the amount of the sale ($2,000 − $1,800 = $200).
Cash
1,800
Paid-In Capital from Sale of Treasury Stock
200
Treasury Stock
2,000
question
The purchase and resale of treasury stock is normally recorded using the
answer
cost method.
question
What is the total stockholders' equity based on the following account balances?
Common Stock
$500,000
Paid-In Capital in Excess of Par—C/S
50,000
Retained Earnings
190,000
Treasury Stock
40,000
answer
$700,000
500,000+50,000+190,000-40,000
question
A statement of stockholders' equity is normally prepared when
a. there is a change in stock accounts.
b. there is a change in paid-in capital accounts.
c. there is a purchase of treasury stock.
d. All of these choices are correct.
answer
d. All of these choices are correct.
question
What is the total stockholders' equity based on the following account balances?
Common Stock
$100,000
Paid-In Capital in Excess of Par
500,000
Retained Earnings
190,000
Treasury Stock
40,000
answer
$750,000
100,000+500,000+190,000-40,000
question
All of the following are normally found in a corporation's Stockholders' Equity section except
a. Paid-In Capital in Excess of Par.
b. Dividends Payable.
c. Common Stock.
d. Retained Earnings.
answer
Dividends Payable.
question
If earnings per share changes from $3.30 to $2.60, what does this indicate about the company's profitability?
answer
An unfavorable change in the company's profitability is indicated.
question
In the calculation of earnings per share, preferred stock dividends are
answer
subtracted from net income.
question
Corporations whose stock is traded in a public market must report earnings per share on their
answer
income statement.
question
Earnings per share is calculated as
answer
a. (Net Income -Preferred Dividends)/Average Number of Common Shares Outstanding.
question
If we still owed preferred in cumulative feature its called what
answer
in arrears
question
Find total preferred dividends when there is 100,000 2% of preferred dividends and 100 par.
answer
total 200,000 preferred dividends shareholders are entitled to.
100,000*.02*100
question
if we sell stock more than its par value what is that called
answer
premium
question
you own the open market and buy back some of your own shares is called what (buy some of your own stock that's in open market)
answer
Treasury stock
question
the difference between issue stock and treasury stock is
answer
you find what is outstanding. (subtract the treasury stock from what was issued gives you the outstanding stock.)
question
The cumulative feature of preferred stock
answer
requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders called in arears
question
Have 2 shares of stock and its a 2 for 1 split how many shares will you have? if par value was $50 how much will par value be after split?
answer
4(2*2)
25 (50/2)
question
issuing stock @ a credit what is the journal entry
answer
cash will be debited
preferred stock or common stock will be credited @ par value
question
when you buy treasury stock and paid $50 for it what is the journal entry?
answer
treasury stock will be debited
Cash will be credited
question
if you had sold the treasury stock @45 and purchased it @50 you will have a loss but if you sold it @60 you will have a gain. what will be the journal entry of a sold treasury stock
answer
cash will be debited
treasury stock will be credited.
question
what does cumulative feature mean?
answer
if we don't have enough to pay them we will get them caught up and until we do common will not get anything.
question
why would a company split their stock?
answer
it makes it more averageable to investors. reduces prices so investors will be more willing to spend at their company or store.
question
treasury shares
answer
Issued shares that have been repurchased by the corporation. Treasury shares may not be voted by the corporation. Treasury shares may be resold by the corporation.
question
what is always the highest note
answer
authorized
question
if that had buy backs it would use (the smaller note)
answer
outstanding
question
what do we pay dividends on
answer
only on outstanding
question
why would a company buy back their own stocks
answer
employees would receive rewards.
Haven't found what you need?
Search for quizzes and test answers now
Quizzes.studymoose.com uses cookies. By continuing you agree to our cookie policy
