If common stock is issued for an amount greater

Question 1

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend?

Answer

$12,800

$19,200

$32,000

$48,800

Question 2

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately:

Answer

$25

$150

$5

$30

Question 3

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be:

Answer

$5

$60

$25

$24

Question 4

A corporation issues 1,500 shares of common stock for $ 32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

Answer

$15,000

$32,000

$17,000

$2,000

Question 5

A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?

Answer

$0

$5,000

$2,500

$10,000

Question 6

A disadvantage of the corporate form of business entity is

Answer

mutual agency for stockholders

unlimited liability for stockholders

corporations are subject to more governmental regulations

the ease of transfer of ownership

Question 7

A restriction/appropriation of retained earnings

Answer

decreases total assets

increases total retained earnings

decreases total retained earnings

has no effect on total retained earnings

Question 8

Characteristics of a corporation include

Answer

shareholders who are mutual agents

direct management by the shareholders (owners)

its inability to own property

shareholders who have limited liability

Question 9

Earnings per share

Answer

is the net income per common share

must be reported by publicly traded companies

helps compare companies of different sizes

all of the above

Question 10

How is treasury stock shown on the balance sheet?

Answer

as an asset

as a decrease in stockholders' equity

as an increase in stockholders' equity

treasury stock is not shown on the balance sheet

Question 11

If common stock is issued for an amount greater than par value, the excess should be credited to

Answer

Retained Earnings.

Cash.

Legal Capital.

Paid-in Capital in Excess of Par Value.

Question 12

Miriah Inc. has 6,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?

Answer

$50 per share

$30,000 in total

$300 in total

$0.50 per share

Question 13

One of the main disadvantages of the corporate form is the

Answer

professional management

double taxation of dividends

charter

corporation must issue stock

Question 14

Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels’ earnings per share for 2011 is

Answer

$4.00

$5.25

$6.50

$5.00

Question 15

Stockholders' equity

Answer

is usually equal to cash on hand

includes paid-in capital and liabilities

includes retained earnings and paid-in capital

is shown on the income statement

Question 16

The authorized stock of a corporation

Answer

must be recorded in a formal accounting entry.

only reflects the initial capital needs of the company.

is indicated in its by-laws.

is indicated in its charter.

Question 17

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

Answer

5,000

45,000

40,000

50,000

Question 18

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 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared?

Answer

$60,000

$5,000

$100,000

$55,000

Question 19

The date on which a cash dividend becomes a binding legal obligation is on the

Answer

declaration date.

date of record.

payment date.

last day of the fiscal year end.

Question 20

The excess of issue price over par of common stock is termed a(n)

Answer

discount

income

deficit

premium

Question 21

The liability for a dividend is recorded on which of the following dates?

Answer

the date of record

the date of payment

the date of announcement

the date of declaration

Question 22

The par value per share of common stock represents

Answer

the minimum selling price of the stock established by the articles of incorporation.

the minimum amount the stockholder will receive when the corporation is liquidated

an arbitrary amount established in the articles of incorporation

the amount of dividends per share to be received each year

Question 23

Which of the following is not a right possessed by common stockholders of a corporation?

Answer

the right to vote in the election of the board of directors

the right to receive a minimum amount of dividends

the right to sell their stock to anyone they choose

the right to share in assets upon liquidation

Question 24

What is the total stockholders' equity based on the following account balances?

Common Stock

$450,000

Paid-In Capital in Excess of Par

90,000

Retained Earnings

190,000

Treasury Stock

10,000

Answer

$740,000

$730,000

$720,000

$640,000

Question 25

Those most responsible for the major policy decisions of a corporation are the

Answer

management.

board of directors.

employees.

stockholders.