Question 1

The Common Stock Subscribed account has a(n)____________________ balance.

Accepted Answer

The answer of The Common Stock Subscribed account has a(n)____________________...

Question 2

Organization costs should be

Accepted Answer

A)   treated as an operating expense when incurred.
B)   debited to an intangible asset account when incurred and systematically charged to expense over a period of up to 40 years.
C)   debited to an intangible asset account when incurred and carried at the original amount until the business ceases operations.
D)   debited to an intangible asset account when incurred and carried at the original amount until the business begins to earn a profit.E) A) and B)
F) None of the above

Question 3

A corporation has 10,000 shares of 6 percent,$50 par-value cumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding.Last year,no dividends were paid.This year,the board of directors decided to pay a dividend of $80,000.The common stockholders will receive a dividend of

Accepted Answer

A)   $0.40 a share.
B)   $1.00 a share.
C)   $1.60 a share.
D)   $2.00 a share.E) C) and D)
F) None of the above

Question 4

Stock is issued to investors at the time they sign the stock subscription contract.

Accepted Answer

A) True 
 B)False

Question 5

Assets acquired through the issuance of stock are recorded at their historical cost.

Accepted Answer

A) True 
 B)False

Question 6

A reduction in dividends distributed to shareholders from one year to the next leads to loss of investor confidence and reduced market prices for the stock.

Accepted Answer

A) True 
 B)False

Question 7

Participating preferred stockholders

Accepted Answer

A)   receive dividends only after common stockholders have been paid dividends.
B)   receive preference dividend amounts as well as a share of other dividends paid.
C)   receive cumulative dividends if dividends are passed in previous years.
D)   give up their voting rights in exchange for dividend preferences.E) A) and B)
F) A) and C)

Question 8

Subchapter S corporations

Accepted Answer

A)   are subject to double taxation of profits typical of corporate organizations.
B)   require that shareholders report their share of profits on their partnership tax returns.
C)   are limited liability corporations.
D)   are entities formed as corporations but are treated essentially as a partnership so the corporation pays no income tax.E) B) and C)
F) A) and C)

Question 9

Organization costs are often expensed when incurred.

Accepted Answer

A) True 
 B)False

Question 10

State laws prohibit the issuance of stock at less than par or stated value.

Accepted Answer

A) True 
 B)False

Question 11

The conversion ratio is the number of shares of common stock for which a share of convertible preferred stock may be exchanged.

Accepted Answer

A) True 
 B)False

Question 12

The ___________________ accounts for all stock issued by a corporation and receives all cancelled and newly issued stock certificates from the transfer agent.

Accepted Answer

The answer of The ___________________ accounts for all stock issued...

Question 13

Which of the following statements is correct?

Accepted Answer

A)   Market value is the figure selected by the organizers of the corporation to be assigned to each share of stock for accounting purposes.
B)   If there is only one class of stock,the stock is called preferred stock.
C)   The authorized capital stock is the number of shares that have been issued and are still in the hands of stockholders.
D)   In the event of liquidation,preferred stockholders have a claim on assets before that of common stockholders.E) All of the above
F) None of the above

Question 14

The holder of a share of 12 percent,$100 par-value preferred stock would receive a dividend of ____________________ per share before any dividend was paid to common stockholders.

Accepted Answer

The answer of The holder of a share of 12...

Question 15

The entry to record the issuance of 2,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $28,000 and a credit to Common Stock for

Accepted Answer

A)   $28,000.
B)   $20,000 and a credit to Gain on Sale of Common Stock for $8,000.
C)   $20,000 and a credit to Treasury Stock for $8,000.
D)   $20,000 and a credit to Paid-in Capital in Excess of Par Value-Common Stock for $8,000.E) All of the above
F) B) and D)

Question 16

Which of the following statements is correct?

Accepted Answer

A)   The owners of preferred stock are the only stockholders who have the right to vote.
B)   All stockholders are guaranteed the right to receive annual dividends.
C)   The issuing corporation may retain the right to repurchase shares of preferred stock from the stockholders at a specific price.
D)   In a liquidation,common shareholders are paid before preferred shareholders.E) A) and B)
F) None of the above

Question 17

Callable preferred stock gives the issuing corporation the right to repurchase the preferred shares from its shareholders at a specified price.

Accepted Answer

A) True 
 B)False

Question 18

The transfer of stock between shareholders is

Accepted Answer

A)   recorded in the general journal.
B)   recorded in the capital stock transfer journal.
C)   recorded in the minute book.
D)   not recorded by the corporation.E) B) and C)
F) A) and B)

Question 19

Elsinore Corporation has outstanding 200,000 shares of $100 par-value preferred stock,issued at an average price of $110 a share.The preferred stock is convertible into common stock at the rate of five shares of common stock for each share of preferred stock.Louis Reynault owns 500 shares of the preferred stock.During the current year he decides to convert 225 shares into common stock.How many shares of common stock will he receive?

Accepted Answer

The answer of Elsinore Corporation has outstanding 200,000 shares of...

Question 20

Ari Hightower owns 200 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share surrendered.If she surrenders all her preferred stock,she will have _____________________ shares of common stock.

Accepted Answer

The answer of Ari Hightower owns 200 shares of preferred...

Exam 20: Corporations: Formation and Capital Stock Transactions

Subchapter S corporations

Correct Answer
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Ari Hightower owns 200 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share surrendered.If she surrenders all her preferred stock,she will have _____________________ shares of common stock.

Correct Answer
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The entry to record the issuance of 2,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $28,000 and a credit to Common Stock for

Correct Answer
verified

Correct Answer
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The Common Stock Subscribed account has a(n)____________________ balance.

Correct Answer
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Organization costs are often expensed when incurred.

Correct Answer
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The holder of a share of 12 percent,$100 par-value preferred stock would receive a dividend of ____________________ per share before any dividend was paid to common stockholders.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Callable preferred stock gives the issuing corporation the right to repurchase the preferred shares from its shareholders at a specified price.

Correct Answer
verified

The ___________________ accounts for all stock issued by a corporation and receives all cancelled and newly issued stock certificates from the transfer agent.

Correct Answer
verified

A corporation has 10,000 shares of 6 percent,$50 par-value cumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding.Last year,no dividends were paid.This year,the board of directors decided to pay a dividend of $80,000.The common stockholders will receive a dividend of

Correct Answer
verified

Participating preferred stockholders

Correct Answer
verified

The conversion ratio is the number of shares of common stock for which a share of convertible preferred stock may be exchanged.

Correct Answer
verified

The transfer of stock between shareholders is

Correct Answer
verified

State laws prohibit the issuance of stock at less than par or stated value.

Correct Answer
verified

Organization costs should be

Correct Answer
verified

A reduction in dividends distributed to shareholders from one year to the next leads to loss of investor confidence and reduced market prices for the stock.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Assets acquired through the issuance of stock are recorded at their historical cost.

Correct Answer
verified

Stock is issued to investors at the time they sign the stock subscription contract.

Correct Answer
verified

Exam 20: Corporations: Formation and Capital Stock Transactions

Subchapter S corporations

Correct AnswerverifiedShow Answer

Ari Hightower owns 200 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share surrendered.If she surrenders all her preferred stock,she will have _____________________ shares of common stock.

Correct AnswerverifiedShow Answer

The entry to record the issuance of 2,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $28,000 and a credit to Common Stock for

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Common Stock Subscribed account has a(n)____________________ balance.

Correct AnswerverifiedShow Answer

Organization costs are often expensed when incurred.

Correct AnswerverifiedShow Answer

The holder of a share of 12 percent,$100 par-value preferred stock would receive a dividend of ____________________ per share before any dividend was paid to common stockholders.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Callable preferred stock gives the issuing corporation the right to repurchase the preferred shares from its shareholders at a specified price.

Correct AnswerverifiedShow Answer

The ___________________ accounts for all stock issued by a corporation and receives all cancelled and newly issued stock certificates from the transfer agent.

Correct AnswerverifiedShow Answer

A corporation has 10,000 shares of 6 percent,$50 par-value cumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding.Last year,no dividends were paid.This year,the board of directors decided to pay a dividend of $80,000.The common stockholders will receive a dividend of

Correct AnswerverifiedShow Answer

Participating preferred stockholders

Correct AnswerverifiedShow Answer

The conversion ratio is the number of shares of common stock for which a share of convertible preferred stock may be exchanged.

Correct AnswerverifiedShow Answer

The transfer of stock between shareholders is

Correct AnswerverifiedShow Answer

State laws prohibit the issuance of stock at less than par or stated value.

Correct AnswerverifiedShow Answer

Organization costs should be

Correct AnswerverifiedShow Answer

A reduction in dividends distributed to shareholders from one year to the next leads to loss of investor confidence and reduced market prices for the stock.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Assets acquired through the issuance of stock are recorded at their historical cost.

Correct AnswerverifiedShow Answer

Stock is issued to investors at the time they sign the stock subscription contract.

Correct AnswerverifiedShow Answer

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