1. The equity section of the corporate balance sheet is called:
a. Owner's Equity
b. Contributed Capital
c. Retained earnings
d. Stockholder's Equity
2. Which one of the following is a public corporation?
a. Elmo Company has stock listed on a stock exchange.
b. Toner Supplies is a proprietorship.
c. Amy's Supplies is a company with several owners that belong to the same family, who have no intentions of selling stock on a stock exchange.
d. Vicayo LLP is a partnership.
3. On November 20, Sun Incorporated has just announced that a cash dividend of $10,000 will be paid to all stockholders on December 15 of the current year. The journal entry to record this transaction on the date of declaration would include:
a. A Credit to Cash for $10,000
b. A Credit to Retained Earnings for $10,000
c. A Credit to Accounts Payable for $10,000
d. A Credit to Common Stock for $10,000
4. Which of the following is an important date that an accountant must keep track of with respect to the payment of dividends:
a. All of these date are important
b. The date of declaration
c. The date of payment
d. The date of record
5. When dividends are declared and payable in the future, the journal entry for the company that is issuing the dividends includes a debit to:
a. Dividends Payable a credit to retained earnings
b. Retained earnings and a credit to dividends payable
c. Retained earnings and a credit to cash
d. Dividends Payable and a credit to cash
6. Company Corporate Inc. issued common stock in exchange for land with an original cost of $1,500,000. The directors of the corporation feel as though they got a great deal, as they feel the land is worth a lot of money due to the current real estate trend in the area. An independent appraise has valued the land at $2,000,000 which represents its fair value. Which of the following is the correct value to be included in the books for the stock issued?
a. $2000,000
b. $500,000
c. $1,500,000
d. the value decided on by the directors of the corporation
7. Alco Inc. has assets of $100,000 and multiple bonds payable. Which of the following has the senior claim to Alco Inc.'s assets in the event of bankruptcy?
a. Preferred stockholders
b. Common stockholders
c. Bondholders
d. Owners
8. The date on which the directors announce a future dividend payment to stockholders is called the:
a. Dividend Date
b. Date of declaration
c. Date of record
d. Date of payment
9. When previously declared dividends are paid, they represent a( n ) ______ for the issuing company
a. Expense
b. Increase in equity
c. Reduction in equity
d. None of the available choices
10. Model Inc. is in its second year of operations. Over the course of the year, the company suffered a net loss of $50,000 and paid out $50,000 in dividends. The beginning retained earnings balance was $250,000. What is the balance of retained earnings at the end of year 2?
a. $250,000
b. $150,000
c. $300,000
d. $350,000
11. Choose the best solution. In a corporation, the interests of the stockholders are protected by:
a. The Chief Financial Officer
b. The proprietorship
c. The board of directors
d. The Chief Executive Officer
12. A private corporation:
a. has stock traded on stock exchange
b. always has only a few owners
c. is a branch of the government
d. is also known as a closed corporation
13. Igloon Incorporated is authorized to issue an unlimited number of $10 par value common shares. Suppose 1,000 of these shares are issued for $15 each. The entry to record the issuance of the stock would include:
a. A Debit to Cash for $10,000
b. A Credit to Common Stock for $5,000
c. None of the available choices
d. A Credit to Common Stock for $15,000
14. Trojon Inc. is in its first year of operations. Over the course of the year, the company suffered a net loss of $200,000. What would be the ending balance of retained earnings on the balance sheet?
a. $0
b. $200,000 Debit
c. $200,000 Credit
d. none of the available choices
15. True or False: Insider trading involves one of the greatest violations of information integrity at the corporate level by revealing facts to public individuals that should be disclosed only within the corporation
True
False
16. Zemz Incorporated is authorized to issue an unlimited number of $10 par value common shares. Suppose 1,000 of these shares are issued for $5 each. The entry to record the issuance of the stock would include:
a. A Debit to Additional Paid-in Capital for $5,000
b. A Debit to Discount on Capital Stock for $5,000
c. A Credit to Discount on Capital Stock for $5,000
d. A Credit to Common Stock for $5,000
17. Which one of the following is a private corporation?
a. Claya Inc. has its stock listed on a stock exchange.
b. Acupo Tools is a company with several owners. Recently, the company raised large sums of money by issuing shares of stock to the public.
c. Hita's Convenience store has no stock listed on a stock exchange.
d. Levizo Company offers its stock to the general public.
18. Insider trading involves:
a. buying and selling stocks using information that has been released to the general public
b. the trading of assets between departments within a company
c. buying and selling stocks using information that has yet to be released to the general public
d. trading liabilities between corporations
19. True or False: The shares of stock of all corporations are traded on a stock market.
True
False
20. The buying and selling of stock on the stock market:
a. Would cause a change to the value of the stock shown on the balance sheet
b. Always impacts the cash account of the corporation
c. Does not affect the number of shares shown as outstanding on the financial statements
d. Affects the number of shares shown as outstanding on the financial statements