Question 1

Which of the following is NOT an advantage of the corporate form of business?

Accepted Answer

Double taxation of distributed profits

Question 2

A corporation issues 10 million shares of $$0.05 par value common stock at 10 $$per share. What is the amount credited to Paid-in Capital in Excess of Par?

Accepted Answer

$99,500,000

Question 3

Which of the following best describes treasury stock?

Accepted Answer

Shares issued and reacquired by the company

Question 4

When a corporation declares a cash dividend, which equation correctly shows the effect on the accounting equation?

Accepted Answer

$$0 = +Dividends Payable + (-Retained Earnings)$$

Question 5

A company purchases 6 million shares of treasury stock for $$100 million and later sells 3 million of those shares for 70 $$million. What is the cost per share of treasury stock?

Accepted Answer

$$\16.67$

Question 6

Which of the following statements about stock splits is TRUE?

Accepted Answer

Stock splits decrease the par value per share and increase the number of shares

Question 7

If a corporation issues common stock for services, how is the transaction recorded?

Accepted Answer

Debit Services Expense, Credit Common Stock and Paid-in Capital in Excess of Par

Question 8

Which of the following is classified as a contra-stockholders' equity account?

Accepted Answer

Treasury Stock

Question 9

A company has beginning retained earnings of $$17,246, net income of 4$$,535, and dividends of $1,743. What is the ending retained earnings balance?

Accepted Answer

$$20,038$$

Question 10

Which of the following is TRUE regarding the resale of treasury stock?

Accepted Answer

Amounts received above cost are credited to Paid-in Capital from Treasury Stock Transactions

Question 11

Which of the following is NOT a reason a company might reacquire its own shares as treasury stock?

Accepted Answer

To decrease total assets

Question 12

A corporation issues 15,000 shares of $$1 par common stock for equipment valued at 4$$,000 and a building valued at $120,000. What is the amount credited to Paid-in Capital in Excess of Par?

Accepted Answer

$$109,000$$

Question 13

Which of the following is TRUE about preferred stock?

Accepted Answer

Preferred shareholders receive assets first in liquidation

Question 14

Which of the following is required before a corporation can pay a cash dividend?

Accepted Answer

Sufficient retained earnings and cash

Question 15

If a company issues no-par common stock, how is the amount credited to Common Stock determined?

Accepted Answer

By the market value times the number of shares issued

Question 16

Which of the following correctly describes the effect of a large stock dividend (greater than 25%)?

Accepted Answer

Recorded at par value and does not change total equity

Question 17

Which of the following is TRUE regarding the retirement of treasury stock?

Accepted Answer

A memorandum entry decreases the number of shares issued

Question 18

A corporation has authorized 1,800 shares, issued 939 shares, and 939 shares are outstanding. Which statement is TRUE?

Accepted Answer

All issued shares are outstanding

Question 19

Which of the following best describes paid-in capital?

Accepted Answer

Amount of equity stockholders have contributed

Question 20

Which of the following is NOT a feature of common stock?

Accepted Answer

Shareholders earn a fixed dividend

Stockholders’ Equity: Features, Transactions, and Financial Statement Reporting

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