Reference no: EM132235155
Question: 1. The ownership of a corporation consists of __________.
A. the governing body
B. the officers of the corporation
C. the stockholders
D. the board of directors
2. When stock is exchanged for noncash assets, __________.
A. debit the asset for prior book value; credit Common Stock for cash received
B. debit assets for market value; credit Common Stock for par value; if needed, credit Paid-in Capital in Excess of Par
C. debit assets for market value; credit Common Stock for market value
D. debit assets for par value; credit Common Stock for par value
3. Which of the following is a characteristic of a corporation?
A. The stockholders have limited liability.
B. When stockholders sell their shares, the corporation is dissolved.
C. A corporation cannot own property in its name.
D. Cash dividends to the stockholders are nontaxable.
4. The articles of incorporation are __________.
A. submitted by the incorporators to the IRS for approval
B. submitted by the incorporators to the Office of the Secretary of State for approval
C. submitted by the incorporators to Securities and Exchange Commission for approval
D. submitted by the incorporators to the Governor of the State for approval
5. Soy.com has 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock outstanding. The company paid $2,000 cash dividends including one-year dividends in arrears to preferred stockholders. Preferred stockholders received __________.
A. $1,200
B. $2,000
C. $182
D. $600
6. Preferred stock that is given a right to share with the common stock in dividends in excess of a stated preferred dividend rate is called __________.
A. nonparticipating
B. participating
C. cumulative
D. noncumulative
7. In exchange for $1,500 legal services to help set up the new company, Hickory Grove Corporation issued 100 shares of $10 par value stock to its attorney. The entry to record the issuance of the stock would include a __________.
A. credit to Common Stock for $1,000
B. debit to Common Stock for $1,000
C. credit to Common Stock for $1,500
D. debit to Paid-in Capital in Excess of Par Value for $500
8. The entry to record selling 150 shares of no-par common stock with a stated value of $30 for $40 would be to __________.
A. debit Common Stock $6,000; credit Cash $6,000
B. debit Cash $6,000; credit Common Stock $6,000
C. debit Cash $6,000; credit Common Stock $4,500; credit Paid-In Capital in Excess of Stated Value-Common $1,500
D. debit Cash $6,000; credit Common Stock $4,500; credit Paid-In Capital in Excess of Par Value-Common $1,500
9. Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to __________.
A. Equipment for $12,500
B. Debit to Common Stock for $12,500
C. Paid-In Capital in Excess of Par-Common for $1,000
D. Common Stock for $13,500
10. A major disadvantage of a corporation is the __________.
A. difficulty in transferring ownership
B. limited life
C. difficulty in raising capital
D. double taxation of the corporation's income and of dividends paid to shareholders
11. Custer.com's outstanding stock is 100 shares of $100, 6% cumulative nonparticipating preferred stock, and 1,000 shares of $10 par value common stock. Custer paid $2,000 cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders received __________.
A. $0
B. $800
C. $1,818
D. $600
12. The major parts of the Stockholders' Equity section of the balance sheet are __________.
A. Paid-in Capital and Retained Earnings
B. Stock and Retained Earnings
C. Stock, Paid-in Capital, and Retained Earnings
D. Authorized Stock and Preferred Stock
13. Stockholders' investment appears in __________.
A. Paid-in Capital
B. Owner's Equity
C. Retained Earnings
D. Cash
14. The Harvester Corporation issued 40 shares of $20 par value stock to its accountant. The shares are in full payment for her $900 fee for helping to set up the new company. The entry to record the issuance of the stock would include a __________.
A. credit to Common Stock for $900
B. debit to Common Stock for $900
C. credit to Common Stock for $800
D. debit to Common Stock for $800
15. The entry to record MidIowa.net selling 800 shares of $6.00 par value common stock at $8.00 would be to __________.
A. debit Cash $6,400; credit Common Stock $4,800; credit Paid-in Capital in Excess of Par Value-Common $1,600
B. debit Cash $4,800; credit Common Stock $4,800
C. debit Cash $6,400; debit Paid-in Capital in Excess of Par Value-Common $1,600; credit Common Stock $8,000
D. none of the above
16. ABC sells 400 shares of its $23 par common stock for $27. The entry would entail credit(s. to __________.
A. Cash for $9,200
B. Paid-in Capital in Excess of Par-Common for $800; Common Stock for $10,800
C. Paid-in Capital in Excess of Par-Common for $1,600; Common Stock for $9,200
D. Common Stock for $10,800
17. Rhubarb Corporation's outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock, and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received __________.
A. $0
B. $500
C. $2,500
D. $1,100
18. Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment with a fair market value of $2,400. The entry to record the acquisition of the equipment would include a __________.
A. debit to Equipment for $2,000
B. debit to Paid-in Capital in Excess of Par for $400
C. credit to Common Stock for $2,400
D. debit to Equipment for $2,400
19. Antiques.com's outstanding stock is 75 shares of $60, 8% cumulative nonparticipating preferred stock, and 2,000 shares of $10 par value common stock. Antiques paid $2,400 cash dividends during the year. Common stockholders received __________.
A. $2,400
B. $360
C. $2,040
D. $0
20. Which of the following would normally not appear in the Stockholders' Equity section of the balance sheet?
A. Cash
B. Paid-in Capital
C. Common Stock
D. Preferred Stock