Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
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Page 21
b.
False
ANSWER:
False
RATIONALE:
Market value of the stock after the split = $150 / 4 = $37.50
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–04 – LO: 12–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
56. A stock split results in a transfer at market value from retained earnings to paid-in capital.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–04 – LO: 12–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
57. If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per
common share.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–07 – LO: 12–07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
Copyright Cengage Learning. Powered by Cognero.
Page 23
d.
requirement to stock
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–01 – LO: 12–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.BB.01 – Industry
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
61. A disadvantage of the corporate form of business entity is
a.
single taxation of dividends
b.
unlimited liability for stockholders
c.
corporations are subject to more governmental regulations
d.
the ease of transfer of ownership
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–01 – LO: 12–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.BB.01 – Industry
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
62. Under the corporate form of business organization,
a.
ownership rights are easily transferred
b.
a stockholder is personally liable for the debts of the corporation
c.
corporations are not subject to the Sarbanes-Oxley Act
d.
stockholders wishing to sell their corporate shares must get the approval of other stockholders
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 25
65. Which of the following is not true of a corporation?
a.
It may enter into binding legal contracts in its own name.
b.
It may sue and be sued.
c.
The acts of its owners bind the corporation.
d.
It may buy, own, and sell property.
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–01 – LO: 12–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.BB.03 – Legal
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
66. The ability of a corporation to obtain capital is
a.
less than the ability of a partnership
b.
about the same as the ability of a partnership
c.
restricted because of the limited life of the corporation
d.
enhanced because of limited liability and ease of share transferability
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–01 – LO: 12–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.BB.01 – Industry
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
67. Which of the following statements concerning taxation is accurate?
a.
Corporations pay federal income taxes but not state income taxes.
b.
Corporations pay federal, and often state, income taxes.
c.
Only the owners must pay taxes on corporate income.
d.
Corporations pay income taxes but their owners do not.
ANSWER:
b
POINTS:
1
Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
Copyright Cengage Learning. Powered by Cognero.
Page 28
b.
minimum amount the stockholder will receive when the corporation is liquidated
c.
dollar amount assigned to each share
d.
amount of dividends per share to be received each year
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–02 – LO: 12–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
73. Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The
journal entry to record the stock issuance would include a credit to Common Stock for
a.
$30,000
b.
$45,000
c.
$15,000
d.
$3,000
ANSWER:
a
RATIONALE:
Amount of common stock issued = Number of shares issued × Par value of each share
= 3,000 × $10 = $30,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–02 – LO: 12–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
74. The excess of issue price over par of common stock is termed a(n)
a.
discount
b.
income
c.
dividend
d.
premium
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
