Which of the following is NOT considered to be an advantage of forming a corpora
ID: 2572572 • Letter: W
Question
Which of the following is NOT considered to be an advantage of forming a corporation?
A.
ability to raise more capital than a partnership or proprietorship
B.
government regulation
C.
continuous life
D.
limited liability of stockholders for corporation's debts
Which one of the following is NOT a stockholder's right of ownership in a corporation?
A.
the right to decide if a dividend should be distributed
B.
the right to maintain one's proportionate share of ownership in the corporation
C.
the right to receive a proportionate share of the assets remaining after all liabilities are paid upon liquidation
D.
the right to participate in management by voting on matters that come before the stockholders
Stockholders' equity is divided into:
A.
assets and liabilities.
B.
common stock and preferred stock.
C.
retained earnings and
paidminusin
capital.
D.
retained earnings and common stock.
If a corporation has only one class of stock, it is understood to be:
A.
preferred stock.
B.
common stock.
C.
redeemable stock.
D.
participating stock.
The arbitrary amount assigned by a company to a share of its stock is the:
A.
stated value per share.
B.
par value per share.
C.
book value per share.
D.
A and B
Which statement about corporations is FALSE?
A.
A greater ability to raise capital than other forms of organization is an advantage.
B.
Limited life is an advantage.
C.
Double taxation of distributed profits is a disadvantage.
D.
The ease of transferring ownership is an advantage.
Legal capital for a corporation equals:
A.
the par value of stock that has been issued.
B.
the par value of stock that has been authorized.
C.
the selling price of stock that has been issued.
D.
the par value of stock that is outstanding.
When a company issues common stock at a price per share greater than its par value per share, the excess should be credited to:
A.
Paidin Capital in Excess of
Par—Common.
B.
Retained Earnings.
C.
Common Stock.
D.
Excess Capital.
If a corporation issues 2,000
shares of $5 par value common stock for
$91,000, the journal entry would include a credit to:
A.
Paid-in Capital in Excess of —Common
for $91,000.
B.
Common Stock for
$81,000.
C.
Paid-in Capital in Excess of
Par—Common for
$81,000.
D.
Common Stock for
$91,000.
If stock is issued for an asset other than cash, the asset should be recorded on the books of the corporation at the:
A.
fair market value of the stock minus the par value of the stock.
B.
par value of the stock.
C.
current market value of the asset.
D.
book value of the asset.
Badger Corporation issued 8,000
shares of its $5 par value common stock in payment for attorney services billed at
$88,000. Badger Corporation's stock has been actively trading at
$11 per share. The journal entry for this transaction would include a:
A.
credit to Paid-in Capital in Excess of
Par—Common $88,000.
B.
debit to Legal Expense $88,000.
C.
credit to Common Stock $48,000.
D.
debit to Legal Expense $40,000.
When reporting stockholders' equity on the balance sheet, a corporation lists the accounts in the following order:
A.
Retained Earnings, Preferred Stock, Common Stock.
B.
Common Stock, Preferred Stock, Additional
Paidin
Capital, Retained Earnings.
C.
Retained Earnings, Common Stock,
Paidin
Capital in Excess of
Par dash—Common.
D.
Preferred Stock, Common Stock, Additional
Paidin
Capital, Retained Earnings.
Paltrowski Company issued 1 million shares of no-par common stock with a stated value of
$10.
The issue price was $50
per share. Which journal entry is prepared?
A.
debit Cash
$ 50 million and credit Retained Earnings
$ 50 million.
B.
debit Cash $ 50 million,
credit Common Stock
$ 10 million and credit Paid-in Capital in Excess of
Par—Common
$ 40 million.
C.
debit Cash $ 50 million and credit Common Stock
$ 50 million.
D.
debit Cash $ 50 million, credit Common Stock
$ 10 million and credit Paid-in Capital in Excess of Stated
Value—Common
$ 40 million.
Lewandowski Company reports the following information at the fiscal year end of December 31, 2017:
Common Stock, $0.10 par value per share
$98 million
Paid-in Capital in Excess of Par-Common
600 million
Retained Earnings
900 million
Total Stockholders' Equity
$1,598 million
What is the total paid-in capital for this company at December 31, 2017?
A.
$ 98 million.
B.
$ 698million.
C.
$ 998 million.
D.
$1,598 million.
Previously issued stock that a corporation purchases from shareholders is called:
A.
treasury stock.
B.
issued stock.
C.
outstanding stock.
D.
authorized stock.
Gruber Law Offices paid $61,000
to buy back 16,000 shares of its $1 par value common stock. The stock was sold later at a selling price of $17 per share. The journal entry to record the sale would include a:
A.
credit to Paid-in Capital from Treasury Stock Transactions
$61,000.
B.
debit to Common Stock
$61,000.
C.
credit to Paid-in Capital from Treasury Stock Transactions
$211,000.
D.
credit to Common Stock
$211,000.
Peter's Computers purchased 1,000 shares of its own $1 par value common stock for
$100,000. As a result of this transaction:
A.
Peter's stockholders' equity increased
$99,000.
B.
Peter's stockholders' equity increased
$1,000.
C.
Peter's stockholders' equity decreased
$100,000.
D.
Peter's stockholders' equity increased
$100,000.
Treasury stock has a:
A. debit balance, the same as other stockholders' equity accounts.
B.
debit balance, the opposite of other stockholders' equity accounts.
C.
credit balance, the opposite of other stockholders' equity accounts.
D.
credit balance, the same as other stockholders' equity accounts.
Marvin Corporation has the following information reported on the balance sheet as of December 31, 2017:
Common Stock, $10 par value (authorized 20,000 shares)
$80,000
Treasury Stock
(2,000 shares)
$30,000
Based on the information above, how many shares of common stock are outstanding?
A.
20,000.
B.
8,000.
C.
6,000.
D.
2,000.
If a company has a deficit in retained earnings:
A.
the deficit is subtracted to determine total stockholders' equity on the balance sheet.
B.
then the corporation's lifetime earnings exceed lifetime losses and dividends.
C.
the deficit is added to determine total stockholders' equity on the balance sheet.
D.
then retained earnings has a credit balance.
How does the declaration of a cash dividend affect the accounting equation?
A.
increase to liabilities and a decrease to stockholders' equity
B.
increase to assets and a decrease to liabilities
C.
increase to liabilities and a decrease to assets
D.
increase to stockholders' equity and a decrease to assets
The date on which a cash dividend becomes a legal obligation is the:
A.
declaration date.
B.
payment date.
C.
date of record.
D.
last day of the fiscal year.
Before a company can pay dividends to the common stockholders, the owners of cumulative preferred stock must receive:
A.
all dividends in arrears plus the current year's dividends.
B.
the current year's dividends, but not dividends in arrears.
C.
neither the current year's dividends nor dividends in arrears.
D.
all dividends in arrears, but not the current year's dividends.
On December 31, Clorine Corporation has the following data available:
Net Income
$190,000
Interest expense
20,000
Preferred dividends
20,000
Total assets at the beginning of the year
860,000
Total assets at the end of the year
790,000
Total stockholders' equity at the beginning of the year
590,000
Total stockholders' equity at the end of the year
490,000
What is return on assets? (Round your final answer to two decimal places, X.XX%)
A.
31.4831.48%.
B.
25.4525.45%.
C.
20.6120.61%.
D.
38.8938.89%.
Kunze Corporation has $1 par value Common Stock with 100,000 shares authorized and 25,000 shares issued. The journal entry to record Kunze's purchase of 9,000 shares of common stock at $3 per share would be
A.
debit Treasury Stock for
$27,000
and credit Cash for
$27,000.
B.
debit Common Stock for
$27,000
and credit Cash for
$27,000.
C.
debit Common Stock for
$9,000,
debit Paid-in Capital in Excess of
Par—Common for
$18,000
and credit Cash for
$27,000.
D.
debit Cash for
$27,000,
credit Common Stock for
$9,000
and credit Paid-in Capital in Excess of
Par—Common for
$18,000.
Common Stock, $0.10 par value per share
$98 million
Paid-in Capital in Excess of Par-Common
600 million
Retained Earnings
900 million
Total Stockholders' Equity
$1,598 million
Explanation / Answer
1)Government regulation
Corporation carries a more regulation than a properitorship or partnership concern
2)correct option is A" -the right to decide if a dividend should be distributed
Whether dividend should be distributed or not is decided by board of directors.not stockholders
3)correct option is "C"
Stockholders equity consist of paid in capital minus treasury stock(if any) +and retained earning
4)correct option is "B" -common stock
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