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WorksheetsChaper 11 Corporations: Organization, Stock Transactions
Total questions: 16
Worksheet time: 8mins
Which of the following is not a major advantage of a corporate form of organization?
Separate legal existence.
Continuous life.
Government regulations.
Transferable ownership rights.
A major disadvantage of a corporation is:
limited liability of stockholders.
additional taxes.
transferable ownership rights.
separate legal existence.
Which of the following statements is false?
Ownership of common stock gives the owner a voting right.
The stockholders’ equity section begins with a paid-in capital section.
The authorization of capital stock does not result in a formal accounting entry.
Par value and market price of a company’s stock are always the same.
ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to:
Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $2,000.
Common Stock $12,000.
Common Stock $10,000 and Paid-in Capital in Excess of Par $2,000.
Common Stock $10,000 and Retained Earnings $2,000.
Preferred stock may have priority over common stock except in:
dividends.
assets in the event of liquidation.
cumulative dividend features.
voting.
XYZ, Inc. sells 100 shares of $5 par value treasury stock at $13 per share. If the cost of acquiring the shares was $10 per share, the entry for the sale should include credits to:
Treasury Stock $1,000 and Paid-in Capital from Treasury Stock $300.
Treasury Stock $500 and Paid-in Capital from Treasury Stock $800.
Treasury Stock $1,000 and Retained Earnings $300.
Treasury Stock $500 and Paid-in Capital in Excess of Par $800.
In the stockholders’ equity section, the cost of treasury stock is deducted from:
total paid-in capital and retained earnings.
retained earnings.
total stockholders’ equity.
common stock in paid-in capital.
M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2020. No dividends were declared in 2018 or 2019. If M-Bot wants to pay $375,000 of dividends in 2020, common stockholders will receive:
$0.
$295,000.
$215,000.
$135,000.
Entries for cash dividends are required on the:
declaration date and the payment date.
record date and the payment date.
declaration date, record date, and payment date.
declaration date and the record date.
Which of the following statements about small stock dividends is true?
A debit to Retained Earnings for the par value of the shares issued should be made.
A small stock dividend decreases total stockholders’ equity.
Market price per share should be assigned to the dividend shares.
A small stock dividend ordinarily will have an effect on par value per share of stock.
Orlando Company has a beginning balance in retained earnings of $100,000. During the year, it had a net loss of $20,000, paid cash dividends of $3,000, and issued a small stock dividend that had a market value of $7,000 and a par value of $1,000. The ending balance in retained earnings is:
$120,000.
$80,000.
$79,000.
$70,000.
In the stockholders’ equity section of the balance sheet, common stock:
is listed before preferred stock.
is added to total capital stock.
is part of paid-in capital.
is part of additional paid-in capital.
Which of the following is not reported under additional paid-in capital?
Paid-in capital in excess of par.
Common stock.
Paid-in capital in excess of stated value.
Paid-in capital from treasury stock.
Katie Inc. reported net income of $186,000 during 2020 and paid dividends of $26,000 on common stock. It also has 10,000 shares of 6%, $100 par value, noncumulative preferred stock outstanding and paid dividends of $60,000 on preferred stock. Common stockholders’ equity was $1,200,000 on January 1, 2020, and $1,600,000 on December 31, 2020. The company’s return on common stockholders’ equity for 2020 is:
10.0%
9.0%
7.1%
13.3%
When a stockholders’ equity statement is presented, it is not necessary to prepare a (an):
retained earnings statement.
balance sheet.
income statement.
None of the above.
The ledger of JFK, Inc. shows common stock, common treasury stock, and no preferred stock. For this company, the formula for computing book value per share is:
total paid-in capital and retained earnings divided by the number of shares of common stock issued.
common stock divided by the number of shares of common stock issued.
total stockholders’ equity divided by the number of shares of common stock outstanding.
total stockholders’ equity divided by the number of shares of common stock issued.
