accountiong mcqs

Question 1
A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend?
Answer
$12,800
$19,200
$32,000
$48,800
2 points 

Question 2
A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $150. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately:
Answer
$25
$150
$5
$30
2 points 

Question 3
A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be:
Answer
$5
$60
$25
$24
2 points 
Question 4


A corporation issues 1,500 shares of common stock for $ 32,000. 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
Answer

$15,000

$32,000

$17,000

$2,000
2 points 
Question 5


A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?
Answer

$0

$5,000

$2,500

$10,000
2 points 
Question 6


A disadvantage of the corporate form of business entity is
Answer

mutual agency for stockholders

unlimited liability for stockholders

corporations are subject to more governmental regulations

the ease of transfer of ownership
2 points 
Question 7


A restriction/appropriation of retained earnings 
Answer

decreases total assets

increases total retained earnings

decreases total retained earnings

has no effect on total retained earnings
2 points 
Question 8


Characteristics of a corporation include
Answer

shareholders who are mutual agents

direct management by the shareholders (owners)

its inability to own property

shareholders who have limited liability
2 points 
Question 9


Earnings per share
Answer

is the net income per common share

must be reported by publicly traded companies

helps compare companies of different sizes

all of the above
2 points 
Question 10


How is treasury stock shown on the balance sheet?
Answer

as an asset

as a decrease in stockholders' equity

as an increase in stockholders' equity

treasury stock is not shown on the balance sheet
2 points 
Question 11


If common stock is issued for an amount greater than par value, the excess should be credited to
Answer

Retained Earnings.

Cash.

Legal Capital.

Paid-in Capital in Excess of Par Value.
2 points 
Question 12


Miriah Inc. has 6,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?
Answer

$50 per share

$30,000 in total

$300 in total

$0.50 per share
2 points 
Question 13


One of the main disadvantages of the corporate form is the
Answer

professional management

double taxation of dividends

charter

corporation must issue stock
2 points 
Question 14


Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels’ earnings per share for 2011 is
Answer

$4.00

$5.25

$6.50

$5.00
2 points 
Question 15


Stockholders' equity
Answer

is usually equal to cash on hand

includes paid-in capital and liabilities

includes retained earnings and paid-in capital

is shown on the income statement
2 points 
Question 16


The authorized stock of a corporation
Answer

must be recorded in a formal accounting entry.

only reflects the initial capital needs of the company.

is indicated in its by-laws.

is indicated in its charter.
2 points 
Question 17


The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?
Answer

5,000

45,000

40,000

50,000
2 points 
Question 18


The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $1 per share dividend is declared?
Answer

$60,000

$5,000

$100,000

$55,000
2 points 
Question 19


The date on which a cash dividend becomes a binding legal obligation is on the
Answer

declaration date.

date of record.

payment date.

last day of the fiscal year end.
2 points 
Question 20


The excess of issue price over par of common stock is termed a(n)
Answer
discount
income
deficit
premium

2 points 

Question 21
The liability for a dividend is recorded on which of the following dates?
Answer
the date of record
the date of payment
the date of announcement
the date of declaration

2 points 
Question 22
The par value per share of common stock represents
Answer

the minimum selling price of the stock established by the articles of incorporation.

the minimum amount the stockholder will receive when the corporation is liquidated

an arbitrary amount established in the articles of incorporation

the amount of dividends per share to be received each year
2 points 
Question 23


Which of the following is not a right possessed by common stockholders of a corporation?
Answer

the right to vote in the election of the board of directors

the right to receive a minimum amount of dividends

the right to sell their stock to anyone they choose

the right to share in assets upon liquidation
2 points 
Question 24


What is the total stockholders' equity based on the following account balances?
Common Stock
$450,000
Paid-In Capital in Excess of Par
90,000
Retained Earnings
190,000
Treasury Stock
10,000
Answer

$740,000

$730,000

$720,000

$640,000
2 points 
Question 25


Those most responsible for the major policy decisions of a corporation are the
Answer

management.

board of directors.

employees.

stockholders.