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MCQs_Company Shares

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Question;1.;The;stockholders of a corporation have unlimited liability.;A.;True;B.;False;2.;Which;of these is not a major advantage of a corporation?;A.;Separate;legal existence;B.;Continuous;life;C.;Government;regulations;D.;Transferable;ownership rights;3.;Which;one of the following is a major disadvantage of a;corporation?;A.;Limited;liability of stockholders;B.;Additional;taxes;C.;Transferable;ownership rights;D.;Limited;life;4.;Which;of the following is not a characteristic of a corporation?;A.;Separate;legal existence;B.;Unlimited;liability for stockholders;C.;Easy;transfer of ownership interests;D.;Ability;to acquire capital easily;5.;Which;of the following is a disadvantage of the corporate business;form?;A.;No;income taxes;B.;Government;regulation;C.;Continuous;life;D.;Easy;acquisition of capital;6.;Which;of the following is not a stockholder's right?;A.;The;preemptive right;B.;The;right to share in dividends;C.;The;right to vote in the election for the board of directors;D.;The;right to participate in management decisions;7.;Ernest;an individual, receives $100 from Vernon Corp. in dividends and is in the 28%;tax bracket. Vernon Corp. already paid corporate taxes on the $100 at a 20%;tax rate. How much in personal taxes will Ernest need to pay?;A.;$0;B.;$28;C.;$8;D.;$20;8.;The par;value of corporate shares issued represents a corporation's legal capital.;A.;True;B.;False;9.;Which;of these statements is false?;A.;Ownership;of common stock gives the owner a voting right.;B.;The;stockholders' equity section begins with paid-in capital amounts.;C.;The;authorization of capital stock does not result in a formal accounting;entry.;D.;Legal;capital is intended to protect stockholders.;10.;If a;corporation issues 1,000 shares of $3 par common stock for $7 a share, how;much is the legal capital?;A.;$7,000;B.;$3,000;C.;$4,000;D.;$0;11.;Which;of the following represents the amount per share of stock that must be;retained in the business for the protection of corporate creditors?;A.;Legal;capital;B.;Par;value;C.;Market;value;D.;Stated;value;12.;Which;of the following represents the maximum number of shares a corporation can;issue?;A.;Outstanding;shares;B.;Issued;shares;C.;Authorized;shares;D.;Treasury;shares;13.;DT Inc.;issued 3,000 shares of $5 par value common stock for $6 per share. Which of;the following is one part of the journal entry to record the issuance?;A.;Debit;to Paid-in Capital in Excess of Par Value for $3,000;B.;Debit;to Cash for $15,000;C.;Credit;to Common Stock for $15,000;D.;Credit;to Common Stock for $18,000;14.;Wynola;Inc. issued 1,000 shares of common stock at $10 per share. If the stock has a;par value of $4 per share, which of the following will be part of the journal;entry to record the issuance?;A.;Credit;to Common Stock for $4,000;B.;Debit;to Cash for $4,000;C.;Credit;to Paid-in Capital in Excess of Par Value for $10,000;D.;Debit;to Retained Earnings for $6,000;15.;Harrison;Inc. issued 4,000 shares of common stock at $12 per share. If the stock has a;par value of $0.50 per share, which of the following will be part of the;journal entry to record the issuance?;A.;Credit;to Common Stock for $2,000;B.;Debit;to Cash for $4,000;C.;Credit;to Paid-in Capital in Excess of Par Value for $48,000;D.;Debit;to Retained Earnings for $46,000;16.;Harrison;Inc. issued 600 shares of common stock at $10 per share. If the stock was;no-par value stock, which of the following will be part of the journal entry;to record the issuance?;A.;Debit;to Cash for $600;B.;Credit;to Paid-in Capital in Excess of Par for $600;C.;Credit;to Common Stock for $6,000;D.;Debit;to Paid-in Capital $6,000;17.;The;13th Street Grill issued 10,000 of $1 par value common stock for $5 per;share. Which of the following will be part of the journal entry to record the;issuance?;A.;A;debit of $10,000 to Common Stock;B.;A;debit of $50,000 to Common Stock;C.;A credit;of $10,000 to Common Stock;D.;A;credit of $50,000 to Common Stock;18.;Dynatech;issues 1,000 shares of $10 par value common stock at $12 per share. When the;transaction is recorded, which accounts are credited?;A.;Common;Stock $10,000 and Gain on Stock Sale $2,000;B.;Common;Stock $12,000;C.;Common;Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000;D.;Common;Stock $10,000 and Retained Earnings $2,000;19.;When;treasury stock is purchased, the number of outstanding shares decreases.;A.;True;B.;False;20.;For;what reason might a company acquire treasury stock?;A.;To;reissue the shares to officers and employees under bonus and stock;compensation plans;B.;To;signal to the stock market that management believes the stock is overpriced;C.;To;increase profit;D.;To;increase the number of shares of stock outstanding;21.;Which;one of the following decreases when a corporation purchases treasury stock?;A.;Authorized;shares;B.;Issued;shares;C.;Treasury;shares;D.;Outstanding;shares;22.;What;method is normally used to account for treasury stock?;A.;Stated;value method;B.;Legal;value method;C.;Par;value method;D.;Cost;method;23.;If;1,000 shares of $5 par common stock are reacquired by a corporation for $12 a;share, by how much will total stockholders' equity be reduced?;A.;$5,000;B.;$12,000;C.;$0;D.;$7,000;24.;A;corporation sold 1,000 shares of its $2.00 par value common stock for $10.00;per share and later repurchased 100 of those shares for $12.00 per share.;Which of the following will be debited to record the repurchase of the 100;shares?;A.;Common;Stock for $1,200;B.;Treasury;Stock for $1,200;C.;Treasury;Stock for $200;D.;Cash;for $1,200;25.;Which;of the following increases when a corporation purchases treasury stock?;A.;Number;of shares authorized;B.;Number;of shares issued;C.;Number;of treasury shares;D.;Number;of outstanding shares;26.;A;cumulative dividend feature means that preferred stockholders must be paid;only current-year dividends before common stockholders receive dividends.;A.;True;B.;False;27.;Dividends;in arrears are reported as a current liability on the balance sheet.;A.;True;B.;False;28.;A;corporation has cumulative preferred stock on which it pays dividends of;$20,000 per year. The dividends are in arrears for two years. If the;corporation plans to distribute $90,000 as dividends in the current year, how;much will the common stockholders receive?;A.;$20,000;B.;$30,000;C.;$40,000;D.;$60,000;29.;Which;one of the following statements is incorrect?;A.;Dividends;cannot be paid on common stock while any dividend on preferred stock is in;arrears.;B.;Dividends;in arrears on preferred are not considered a liability.;C.;Dividends;may be paid on common stock while dividends are in arrears on preferred;stock.;D.;When;preferred stock is noncumulative, any dividend passed in a year is lost;forever.;30.;Which;one of the following is nota right of preferred;stockholders?;A.;Priority;in relation to dividends;B.;Priority;voting rights;C.;Priority;to the assets in the event of liquidation;D.;Priority;to dividends, assets and voting rights.;31.;Which;of the following is a feature associated only with preferred stock?;A.;Dividend;preference;B.;Preference;to assets in the event of liquidation;C.;Cumulative;dividends;D.;All;of the answer choices are correct;32.;M-Bot;Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred;stock outstanding at December 31, 2014. No dividends were declared in 2012 or;2013. If M-Bot wants to pay $375,000 of dividends in 2014, how much will;common stockholders receive?;A.;$0;B.;$295,000;C.;$215,000;D.;$135,000;33.;How are;dividends in arrears reported in the financial statements?;A.;As a;liability;B.;As an;expense;C.;In a;footnote;D.;As an;equity item

 

Paper#38276 | Written in 18-Jul-2015

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