WorksheetsACCOUNTING EXAM CH. 10
Total questions: 34
Worksheet time: 17mins
Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred, over and beyond the investment they have made.
True
False
A corporation has limited liability and attracting outside investment is easier relative to sole proprietorships and partnerships.
True
False
A corporation is an entity that is (1) legally separate from its owners and (2) not required to pay its own income taxes.
True
False
We record treasury stock at the cost of the shares acquired.
True
False
Total assets, total liabilities, and total stockholders' equity do not change as a result of a stock dividend.
True
False
All publicly held corporations in the United States are regulated by the Securities and Exchange Commission.
True
False
Authorized stock is the number of shares that have been sold to investors.
True
False
Retained earnings represent the earnings of the corporation that have not been distributed as dividends to stockholders.
True
False
Treasury stock is the purchase of a company's own issued stock.
True
False
When we resell treasury stock, we report the difference between its cost and the cash received as an increase or a decrease in additional paid-in capital.
True
False
Par value has a direct relationship to the market value of the common stock.
True
False
A company’s assets arise from one of two forms of financing: debt financing or equity financing.
True
False
Dividends are paid on all shares issued by the company including treasury stock.
True
False
If a company has expenses that are more than revenues, the net loss decreases retained earnings.
True
False
Outstanding stock is the number of shares held by investors.
True
False
The return on equity measures the ability of company management to generate profits from the resources provided by owners.
True
False
The number of shares outstanding is equal to the number of shares issued by the company minus the number of the company’s own shares that it has purchased.
True
False
A company credits Additional Paid-in Capital for the portion of the cash proceeds above par value received for the issuance of stock.
True
False
Limited liability means that even in the event of bankruptcy, stockholders in a corporation can lose no more than the amount they invested in the company.
True
False
Shares held by investors
Authorized stock
Issued stock
Outstanding stock
Preferred stock
Treasury stock
Shares that have been sold to investors
Authorized stock
Issued stock
Outstanding stock
Preferred stock
Treasury stock
Shares of a company's own stock that it has purchased
Authorized stock
Issued stock
Outstanding stock
Preferred stock
Treasury stock
Shares available to sell, stated in the company's articles of incorporation
Authorized stock
Issued stock
Outstanding stock
Preferred stock
Treasury stock
Shares that have preference over common stockholders to receive dividends
Authorized stock
Issued stock
Outstanding stock
Preferred stock
Treasury stock
Which of the following statements regarding the corporate form of business is correct?
The disadvantages are that generating capital is difficult and that owners have limited liability.
Disadvantages are that the business is subject to government regulations and double taxation on its income.
One disadvantage is that ownership is easy to transfer.
All of the other answer choices are correct.
A company acquires 1,000 shares of its own $1 par common stock for $15 per share. This purchase would be recorded with a:
Debit to Treasury Stock for $15,000.
Debit to Additional Paid-in Capital for $14,000.
Credit to Treasury Stock for $1,000.
Credit to Treasury Stock for $15,000.
The statement of stockholders' equity shows:
Only the beginning balance in each stockholders' equity account.
Less information than the stockholders' equity section in the balance sheet.
Only the ending balance in each stockholders' equity account.
How each equity account changed over time.
The Retained Earnings balance reported in the balance sheet typically is affected by:
Net income.
Net loss.
Dividends paid.
All of the other answer choices are correct.
The purchase of treasury stock can boost earnings per share by:
Reducing the number of shares outstanding.
Decreasing the company’s obligation to pay dividends.
Increasing the number of shares outstanding.
Increasing profits.
Common stockholders usually have all of the following rights except:
To share in the distribution of assets.
To receive dividends when declared.
To elect board of directors.
To participate in the day-to-day operations.
Authorized common stock refers to the total number of shares:
Issued.
That can be issued.
Issued and outstanding.
Outstanding.
The articles of incorporation describe:
The nature of the firm’s business activities.
The shares of stock to be issued.
The initial board of directors.
All of the other answer choices are correct.
Why would a corporation purchase its own stock?
To distribute surplus cash without paying dividends.
To boost earnings per share.
To satisfy employee stock ownership plans.
All of the other answer choices are correct.
When a company issues 32,000 shares of $2 par value common stock for $20 per share, the journal entry for this issuance would include a:
Debit to Cash for $64,000.
Credit to Additional Paid-in Capital for $576,000.
Debit to Additional Paid-in Capital for $64,000.
Credit to Common Stock for $640,000.
