Quiz: Warren, Accounting 23e, Chapter 13

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Assignment Name: Warren, Accounting 23e, Chapter 13

Which of the following is a characteristic of a corporation?

a. The stockholders have unlimited liability. 1. b. When stockholders sell their shares, the corporation is dissolved. c. A corporation cannot own property in its name. d. Cash dividends paid by a corporation are taxable to shareholders.

Which one of the following is NOT an advantage of forming a corporation?

a. A corporation exists separately from its owners. b. The corporate form is suited for raising large amounts of money from amounts of capital shareholders. c. A corporation's creditors usually may not go beyond the assets of the corporation to satisfy their claims. d. Corporations must satisfy many requirements such as those required by the Sarbanes-Oxley Act of 2002.

2.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 20,000 shares were originally issued and 2,500 were subsequently reacquired. What is the number of shares outstanding?
3. a. 22,500 b. 17,500 c. 20,000 d. 82,500

The entry to record the declaration of a common stock dividend would include a debit to:
a. Cash. 4. b. Accounts Receivable. c. Stock Dividends. d. Common Stock.

For the corporation named Chutney, Inc., the net income, the amount of earnings retained in the business, and the amount of earnings distributed are:

5.

The corporation has stock outstanding as follows: 20,000 shares of 1% preferred stock of $50 par, and 50,000 shares of $20 par common stock. What would be the dividend distribution for common shareholders in 2007?
a. $0.50 per share

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Quiz: Warren, Accounting 23e, Chapter 13

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b. $0.75 per share c. $0.25 per share d. $0.00 per share

A stock that a corporation has once issued and then reacquired is called:
a. common stock. 6. b. preferred stock. c. treasury stock. d. outstanding stock.

Changes in stockholders' equity is reported in the:

a. income statement. 7. b. balance sheet. c. statement of cash flows. d. statement of stockholders' equity.

To reduce the par or stated value of common stock, a corporation issues a proportionate number of additional shares. This is termed a:
a. stock repurchase. 8. b. stock split. c. cash dividend. d. stock dividend.

Earnings Per Share (EPS) can be calculated as follows:

a. Market price per share of common stock / Dividends per share of common stock. 9. b. Dividends per share of common stock / Market price per share of common stock. c. Stockholders' equity / Market price per share of common stock. d. (Net income - Preferred dividends) / Number of common shares outstanding.

The entry to record the issue for cash of 1,000 shares of $5 par common stock at $25 per share would include:
a. a debit to Cash for $25,000, a credit to Common Stock for $5,000, and a credit to Paid-In Capital in Excess of Par for $20,000. 10. b. a debit to Cash for $25,000 and a credit to Common Stock for $25,000. c. a debit to Cash for $25,000 and a credit to Paid-In Capital in Excess of Par for $25,000. d. a debit to Cash for $5,000 and a credit to Common Stock for $5,000.

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