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| 1 | |
The normal balance of the Common Stock account is on the debit side. |
| | A) | True |
| | B) | False |
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| 2 | |
To increase the Paid-In Capital in Excess of Par Value, Common Stock account you would credit it. |
| | A) | True |
| | B) | False |
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| 3 | |
A disadvantage of a corporation is the limited liability of its stockholders. |
| | A) | True |
| | B) | False |
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| 4 | |
The Organization Expenses account appears in the Liabilities section of a balance sheet. |
| | A) | True |
| | B) | False |
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| 5 | |
Stockholders manage the daily activities of a corporation. |
| | A) | True |
| | B) | False |
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| 6 | |
A sale of shares in a corporation by one stockholder does not affect the total capital of the corporation. |
| | A) | True |
| | B) | False |
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| 7 | |
The paid-in capital in excess of par value, account is reported as part of stockholder's equity. |
| | A) | True |
| | B) | False |
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| 8 | |
When no-par stock is issued and is not assigned a stated value, the amount the corporation receives becomes the minimum legal capital and is recorded as Common Stock. |
| | A) | True |
| | B) | False |
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| 9 | |
Retained Earnings is the amount of cash the corporation has on hand at a point in time. |
| | A) | True |
| | B) | False |
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| 10 | |
If a company issues its $10 par value common stock at $13 per share, its stock is sold at a $3 per share premium. |
| | A) | True |
| | B) | False |
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| 11 | |
If a company issues 2,000 shares of its $10 par value common stock at $13 per share, the entry to record the transaction will include a credit to the Common Stock account for $26,000. |
| | A) | True |
| | B) | False |
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| 12 | |
If a company issues 5,000 shares of its $5 stated value common stock at $13 per share, the entry to record the transaction will include a debit to the Cash account for $40,000. |
| | A) | True |
| | B) | False |
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| 13 | |
A corporation can receive assets other than cash in exchange for its stock |
| | A) | True |
| | B) | False |
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| 14 | |
If a company issues 50 shares of $100 par value preferred stock for $12,000 cash the journal entry to record this event would include a credit to Paid-In Capital in Excess of Par Value, Preferred Stock for $7,000. |
| | A) | True |
| | B) | False |
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| 15 | |
Book value per common share, is the recorded amount of stockholders' equity applicable to preferred shares on a per share basis. |
| | A) | True |
| | B) | False |
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| 16 | |
When common stock is issued, what account is credited at the time the stock is issued? |
| | A) | Common Stock |
| | B) | Capital Stock |
| | C) | Cash |
| | D) | Preferred Stock |
| | E) | none of these |
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| 17 | |
The entry to record the issuance of 3,000 shares of common stock at a price of $14 per share, with a par value of $10 per share, is |
| | A) | debit Cash, $42,000; credit Paid-In Capital in Excess of Par Value, Common Stock, $12,000; credit Common Stock, $30,000. |
| | B) | debit Cash, $42,000; credit Common Stock, $30,000; credit Retained Earnings, $12,000. |
| | C) | debit Cash, $42,000; credit Common Stock, $42,000. |
| | D) | debit Cash, $42,000; credit Paid-in Capital in Excess of Stated Value, $12,000; credit Common Stock, $30,000. |
| | E) | none of these. |
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| 18 | |
The entry to record the issuance of 5,000 shares of common stock at a price of $15 per share, with a stated value of $10 per share, is |
| | A) | debit Cash, $75,000; credit Paid-In Capital in Excess of Par Value, Common Stock, $25,000; credit Common Stock, $50,000. |
| | B) | debit Cash, $75,000; credit Common Stock, $50,000; credit Retained Earnings, $25,000. |
| | C) | debit Cash, $75,000; credit Common Stock, $75,000. |
| | D) | debit Cash, $75,000; credit Paid-in Capital in Excess of Stated Value, Common Stock, $25,000; credit Common Stock, $50,000. |
| | E) | none of these. |
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| 19 | |
Which of the following accounts would NOT appear in the Stockholders' Equity section of the balance sheet? |
| | A) | Premium on Common Stock |
| | B) | Accounts Payable |
| | C) | Discount of Preferred 7 Percent Stock |
| | D) | Discount on Notes Payable |
| | E) | none of these |
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| 20 | |
One DISADVANTAGE of a corporation is |
| | A) | limited liability of stockholders. |
| | B) | corporate taxation |
| | C) | continuous life. |
| | D) | ease of transferring ownership. |
| | E) | ease of raising investment capital. |
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| 21 | |
Which of these is an ADVANTAGE of a corporation |
| | A) | limited liability of stockholders. |
| | B) | ease of raising investment capital |
| | C) | continuous life. |
| | D) | ease of transferring ownership. |
| | E) | all of the above are advantages of a corporation. |
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| 22 | |
Which of the following classifications would represent the most shares of common stock? |
| | A) | outstanding shares |
| | B) | issued shares |
| | C) | authorized shares |
| | D) | unissued shares |
| | E) | none of these |
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| 23 | |
The authorized capital stock is the number of shares that are |
| | A) | sold originally for cash or exchanged for property. |
| | B) | specified in the charter. |
| | C) | set by law. |
| | D) | all of these. |
| | E) | none of these. |
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| 24 | |
If a corporation sold $90 par-value common stock for $95 per share, the excess of the cash received over the par value would be credited to |
| | A) | Paid-in Capital in Excess of Par Value, Common. |
| | B) | Premium on Preferred Stock. |
| | C) | Paid-in Capital in Excess of Stated Value, Common. |
| | D) | Common Stock. |
| | E) | none of these. |
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| 25 | |
Attorneys' fees and promotion expenditures incurred in starting a corporation are debited to |
| | A) | Preferred Stock. |
| | B) | Organization Expenses. |
| | C) | Common Stock. |
| | D) | Retained Earnings. |
| | E) | none of these. |
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| 26 | |
Outstanding stock is |
| | A) | the maximum number of shares a corporation may issue. |
| | B) | stock that pays a large dividend. |
| | C) | cumulative preferred stock. |
| | D) | participating preferred stock. |
| | E) | none of these. |
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| 27 | |
Dyer Corporation has the following account balances on its Trial Balance: Accounts Payable, $71,000; Common Stock, $190,000; Contributed Capital in excess of Par, Common Stock, $14,000; Retained Earnings, $73,000. The total amount of Stockholders' Equity is |
| | A) | $204,000. |
| | B) | $240,000. |
| | C) | $275,000. |
| | D) | $348,000. |
| | E) | none of these. |
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| 28 | |
The entry to record the issuance of 5,000 shares of no-par common stock at a cash price of $15 per share is, |
| | A) | debit Common Stock, no par value, $75,000; credit Cash, $75,000 |
| | B) | debit Cash, $75,000; credit Retained Earnings, $75,000. |
| | C) | debit Cash, $75,000; credit Common Stock, no par value, $75,000. |
| | D) | debit Cash, $75,000; credit Paid-in Capital in Excess of Stated Value, Common Stock, $25,000; credit Common Stock, $50,000. |
| | E) | none of these. |
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| 29 | |
The entry to record receipt of services valued at $11,000 in organizing the corporation in return for 1,000 shares of $5 par value common stock, is |
| | A) | debit Organization Expenses, $5,000; credit Common Stock, $5,000. |
| | B) | debit Cash, $11,000; credit Common Stock, $5,000; credit Retained Earnings, $6,000. |
| | C) | debit Cash, $11,000; credit Common Stock, $11,000. |
| | D) | debit Organization Expenses, $11,000; credit Paid-in Capital in Excess of Par Value, Common Stock, $6,000; credit Common Stock, $5,000. |
| | E) | none of these. |
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| 30 | |
In general, which of the following is a characteristic of a corporation? |
| | A) | double taxation |
| | B) | ease of transferring ownership rights |
| | C) | limited liability of stockholders |
| | D) | continuous existence |
| | E) | all of these |
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