1. Brandon Corporation issues 2,000 shares of $40 par common stock for $43 per share. The amount credited to paid-in capital in excess of par is:
A) $80,000.
B) $86,000.
C) $ 6,000.
D) $ 0.
2. The date of declaration creates a(n) ___________ for the corporation.
A) asset
B) liability
C) expense
D) revenue
3. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20-par, 6% preferred stock and 10,000 shares of $15-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholders on the date of payment?
A) $40,000 preferred, $0 common
B) $0 preferred, $40,000 common
C) $34,000 preferred, $6,000 common
D) $6,000 preferred, $34,000 common
4. A stock dividend affects the debiting and crediting of the following accounts:
A) debit retained earnings, debit common stock; credit paid-in capital in excess of par.
B) credit retained earnings; debit common stock; credit paid-in capital in excess par.
C) debit retained earnings; credit common stock, credit paid-in capital in excess of par.
D) credit retained earnings, credit common stock and credit paid-in capital in excess of par.
5. Henry and Thomas share gains and losses in the ratio of 2:1. After selling all assets for cash and paying all liabilities, the cash account has $12,000 in it. The capital accounts were as follows:Henry $10,000; Thomas $2,000. How much of the $12,000 cash would Henry receive?
A) $2,000
B) $8,000
C) $10,000
D) $12,000
6. A stock dividend will:
A) Increase total equity
B) Not change total equity
C) Decrease total equity
D) Does not affect equity
7. The following are advantages of the corporate form of business EXCEPT:
A) Ease of raising capital
B) Limited liability
C) Double taxation of dividends
D) Perpetual existence
8. Shares repurchased by a corporation are referred to as:
A) Treasury stock
B) Share dividends
C) A stock split
D) Stock options
9. When a corporation sells treasury stock for more than the purchase price:
A) The corporation realizes a loss
B) The corporation realizes a gain
C) The difference becomes part of retained earnings
D) The difference becomes part of Additional Paid in Capital
10. Return on equity can be compared to:
A) Rates of returns on other similar investments
B) Interest rates paid by a bank
C) Return on debt (cost of debt)
D) All of the above