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Exam 13: Accounting for Corporations

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Question 41

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Define outstanding stock.

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Outstanding stock is stock tha...

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Question 42

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A disadvantage of the corporate form of business is

A) centralized authority and responsibility.
B) its status as a separate legal entity.
C) government regulation.
D) continuous existence.

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Question 43

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Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Corporations are subject to more government control and regulation than are other forms of business.

The sale of treasury stock cannot result in

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Start-up and organization costs include all of the following except

Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Use this information to answer the following question. Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.The following transactions occurred during the year: Mar. 17 Declared a 10 percent stock dividend to stockholders of record on March 20. Market value of the stock was $22 on March 17. Mar. 30 Distributed the stock dividend. -The entry to record the transaction of March 17 is:

A stock dividend increases the total amount of stockholders' equity.

Indicate on the blanks below the effect (increase,decrease,no effect)of a stock split on each of the items listed.

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Dividends in arrears must be paid when a corporation calls in its preferred stock.

Retained earnings are a component of contributed capital.

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

Which of the following items will not be disclosed on a statement of stockholders' equity?

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 3,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5. -The entry to record the sale of the treasury shares on March 2,20x5 is