FINANCE

Multiple Choice Question 219

The trial balance of Houston Inc. includes the following balances: Common Stock, $28,000; Paid-in Capital in Excess of Par, $64,000; Treasury Stock, $6,000; Preferred Stock, $30,000. Capital stock totals

 

$122,000.

$128,000.

$58,000.

$96,000.

 

Multiple Choice Question 56

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

 

corporation’s temporary accounts are closed at the end of the accounting period.

corporation is organized for the purpose of making a profit.

corporation is subject to more federal and state government regulations.

corporation is an accounting economic entity.

 

Multiple Choice Question 138

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

 

last day of the fiscal year-end.

payment date.

declaration date.

date of record.

 

Multiple Choice Question 207

In the stockholders’ equity section of the balance sheet,

 

Common Stock Dividends Distributable will be classified as part of additional paid-in capital.

Additional Paid-in Capital appears under the subsection Paid-in Capital.

Dividends in arrears will appear as a restriction of Retained Earnings.

Common Stock Dividends Distributable will appear in its own subsection of the stock- holders’ equity.

 

Multiple Choice Question 167

When stock dividends are distributed,

 

Retained Earnings is decreased.

Common Stock Dividends Distributable is decreased.

Paid-in Capital in Excess of Par is debited if it is a small stock dividend.

no entry is necessary if it is a large stock dividend.

 

Multiple Choice Question 198

A prior period adjustment that corrects income of a prior period requires that an entry be made to

 

an income statement account.

the retained earnings account.

an asset account.

a current year revenue or expense account.

 

Multiple Choice Question 58

The concept of an “artificial being” refers to which form of business organization?

 

Corporation

Limited partnership

Partnership

Sole proprietorship

 

Multiple Choice Question 60

The two ways that a corporation can be classified by ownership are

 

publicly held and privately held.

stock and non-stock.

majority and minority.

inside and outside.

 

Multiple Choice Question 79

If an investment firm underwrites a stock issue, the

 

investment firm has guaranteed profits on the sale of the stock.

issuance of stock is likely to be directly to creditors.

risk of being unable to sell the shares stays with the issuing corporation.

corporation obtains cash immediately from the investment firm.

 

Multiple Choice Question 133

Vega Corporation’s December 31, 2013 balance sheet showed the following:

8% preferred stock, $20 par value, cumulative, 10,000 shares

authorized; 7,500 shares issued$150,000

Common stock, $10 par value, 1,000,000 shares authorized;

975,000 shares issued, 960,000 shares outstanding9,750,000

Paid-in capital in excess of par—preferred stock30,000

Paid-in capital in excess of par—common stock13,500,000

Retained earnings3,750,000

Treasury stock (15,000 shares)315,000

 

Vega declared and paid a $48,000 cash dividend on December 15, 2013. If the company’s dividends in arrears prior to that date were $10,000, Vega’s common stockholders received

 

$26,000.

$38,000.

$22,000.

no dividend.

 

Multiple Choice Question 109

A corporation purchases 20,000 shares of its own $15 par common stock for $30 per share, recording it at cost. What will be the effect on total stockholders’ equity?

 

Increase by $300,000

Increase by $600,000

Decrease by $300,000

Decrease by $600,000

 

Multiple Choice Question 234

When the selling price of treasury stock is greater than its cost, the company credits the difference to

 

Paid-in Capital from Treasury Stock.

Treasury Stock.

Paid-in Capital in Excess of Par.

Gain on of Treasury Stock.

 

Multiple Choice Question 90

A separate paid-in capital account is used to record each of the following except the issuance of

 

treasury stock above cost.

par value stock.

no-par stock.

stated value stock.

 

Multiple Choice Question 64

Which of the following statements reflects the transferability of ownership rights in a corporation?

 

A stockholder must obtain permission from the board of directors before selling shares.

A stockholder must obtain permission from at least three other stockholders before selling shares.

If a stockholder decides to transfer ownership, he must transfer all of his shares.

A stockholder may dispose of part or all of his shares.

 

Multiple Choice Question 151

Which of the following is not a significant date with respect to dividends?

 

The incorporation date

The record date

The declaration date

The payment date

 

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