Question 1

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 2

The retained earnings statement

Accepted Answer

A)  is the owners' equity statement for a corporation.
B)  will show an addition to the beginning retained earnings balance for a net income in the current year.
C)  will not reflect net losses.
D)  will, in some cases, fail to reconcile the beginning and ending retained earnings balances.E) All of the above
F) A) and C)

Question 3

The numerator in the payout ratio is

Accepted Answer

A)  total cash dividends declared.
B)  total cash dividends paid.
C)  cash dividends declared on common stock.
D)  cash dividends declared on preferred stock.E) C) and D)
F) B) and C)

Question 4

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Accepted Answer

A)  stated value of the stock.
B)  par value of the stock.
C)  market value of the stock.
D)  book value of the stock.E) None of the above
F) All of the above

Question 5

If stock is issued for less than par value, the account

Accepted Answer

A)  Paid-In Capital in Excess of Par is credited.
B)  Paid-In Capital in Excess of Par is debited if a debit balance exists in the account.
C)  Paid-In Capital in Excess of Par is debited if a credit balance exists in the account.
D)  Retained Earnings is credited.E) All of the above
F) B) and D)

Question 6

What is ordinarily the first step in the formation of a corporation?

Accepted Answer

A)  Development of by-laws for the corporation
B)  Issuance of the corporate charter
C)  Application for incorporation to the appropriate Secretary of State
D)  Registration with the SECE) A) and B)
F) A) and C)

Question 7

The numerator of the return on common stockholders' equity is

Accepted Answer

A)  net income.
B)  net income less common and preferred dividends.
C)  net income less common dividends.
D)  net income less preferred dividends.E) All of the above
F) A) and C)

Question 8

On October 10, the board of directors of Pattern Corporation declared a 15% stock dividend.On October 10, the company had 10,000 shares of $1 par common stock issued and outstanding with a market price of $16 per share.The stock dividend will be distributed on October 31 to shareholders of record on October 25.Journalize the entries needed for the declaration and distribution of the stock dividend.

Accepted Answer

The answer of On October 10, the board of directors...

Question 9

Accepted Answer

The answer of ...

Question 10

A corporation is not an entity that is separate and distinct from its owners.

Accepted Answer

A) True 
 B)False

Question 11

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000.The bill was for services performed in helping the company incorporate.Crain should record this transaction by debiting

Accepted Answer

A)  Legal Expense for $10,000.
B)  Legal Expense for $30,000.
C)  Organization Expense for $10,000.
D)  Organization Expense for $30,000.E) A) and D)
F) All of the above

Question 12

The following data is available for Blaine Corporation at December 31, 2021:  Based on the data, how many shares of common stock have been issued?

Accepted Answer

A)  30,000
B)  25,000
C)  29,940
D)  24,940E) A) and B)
F) All of the above

Question 13

A stock split

Accepted Answer

A)  may occur in the absence of retained earnings.
B)  will increase total paid-in capital.
C)  will increase the total par value of the stock.
D)  will have no effect on the par value per share of stock.E) C) and D)
F) A) and D)

Question 14

Aim, Inc.has 10,000 shares of 4%, $100 par value, noncumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2021.There were no dividends declared in 2020.The board of directors declares and pays a $120,000 dividend in 2021.What is the amount of dividends received by the common stockholders in 2021?

Accepted Answer

A)  $0
B)  $40,000
C)  $60,000
D)  $80,000E) A) and D)
F) B) and C)

Question 15

The following selected amounts are available for Clark Company.  What is its ending retained earnings balance?

Accepted Answer

A)  $750
B)  $800
C)  $550
D)  $700E) A) and B)
F) A) and C)

Question 16

Accepted Answer

Darman Company issued 700 shares of no-par common stock for $7,700.Which of the following journal entries would 1.  ) undefined
 ) undefined

Question 17

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Accepted Answer

A)  fair value.
B)  cost.
C)  zero.
D)  a nominal amount.E) A) and B)
F) None of the above

Question 18

Under the cost method, Treasury Stock is debited for the price paid to reacquire the shares and the same amount is credited to Treasury Stock when the shares are sold.

Accepted Answer

A) True 
 B)False

Question 19

Treasury Stock is a contra stockholders' equity account.

Accepted Answer

A) True 
 B)False

Question 20

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

Accepted Answer

A) True 
 B)False

Exam 11: Corporations: Organisations, Stock Transactions and Stockholders Equity

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Correct Answer
verified

The numerator in the payout ratio is

Correct Answer
verified

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Correct Answer
verified

Correct Answer
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A corporation is not an entity that is separate and distinct from its owners.

Correct Answer
verified

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000.The bill was for services performed in helping the company incorporate.Crain should record this transaction by debiting

Correct Answer
verified

Correct Answer
verified

Retained earnings that are restricted are unavailable for dividends.

Correct Answer
verified

The retained earnings statement

Correct Answer
verified

Correct Answer
verified

What is ordinarily the first step in the formation of a corporation?

Correct Answer
verified

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Correct Answer
verified

The following data is available for Blaine Corporation at December 31, 2021: Based on the data, how many shares of common stock have been issued?

Correct Answer
verified

Under the cost method, Treasury Stock is debited for the price paid to reacquire the shares and the same amount is credited to Treasury Stock when the shares are sold.

Correct Answer
verified

Correct Answer
verified

Treasury Stock is a contra stockholders' equity account.

Correct Answer
verified

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

Correct Answer
verified

The numerator of the return on common stockholders' equity is

Correct Answer
verified

If stock is issued for less than par value, the account

Correct Answer
verified

A stock split

Correct Answer
verified

Exam 11: Corporations: Organisations, Stock Transactions and Stockholders Equity

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Correct AnswerverifiedShow Answer

The numerator in the payout ratio is

Correct AnswerverifiedShow Answer

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A corporation is not an entity that is separate and distinct from its owners.

Correct AnswerverifiedShow Answer

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000.The bill was for services performed in helping the company incorporate.Crain should record this transaction by debiting

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Retained earnings that are restricted are unavailable for dividends.

Correct AnswerverifiedShow Answer

The retained earnings statement

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is ordinarily the first step in the formation of a corporation?

Correct AnswerverifiedShow Answer

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Correct AnswerverifiedShow Answer

The following data is available for Blaine Corporation at December 31, 2021: Based on the data, how many shares of common stock have been issued?

Correct AnswerverifiedShow Answer

Under the cost method, Treasury Stock is debited for the price paid to reacquire the shares and the same amount is credited to Treasury Stock when the shares are sold.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Treasury Stock is a contra stockholders' equity account.

Correct AnswerverifiedShow Answer

Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

Correct AnswerverifiedShow Answer

The numerator of the return on common stockholders' equity is

Correct AnswerverifiedShow Answer

If stock is issued for less than par value, the account

Correct AnswerverifiedShow Answer

A stock split

Correct AnswerverifiedShow Answer

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