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Exam 13: Accounting for Corporations

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Question 21

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Which of the following is involved in assisting a corporation with its initial public offering (IPO) ?

A) Registrar.
B) Underwriter.
C) Transfer agent.
D) Incorporator.

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Question 22

Multiple Choice

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The following facts pertain to Alameda Corporation for 20x5: Based on the above facts,net income for 20x5 for Alameda Corporation amounted to

A) $207,500.
B) $182,500.
C) $232,500.
D) $257,500.

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Question 23

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Dividends in arrears on cumulative preferred stock are not paid until after dividends are paid on common stock.

Shares of treasury stock are

When treasury stock is sold at a price below its cost,the entry to record the sale has the effect of reducing total stockholders' equity.

The preparation of a statement of stockholders' equity makes which other financial statement unnecessary?

The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5.The effects of the entry to record the payment of the dividend on July 15,20x5,are to

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.

A corporation has all of the following except

The price/earnings (P/E) ratio is measured in terms of

The liability of a stockholder is usually limited to the stockholder's investment in the corporation.

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

Which of the following phrases is not descriptive of the corporate form of business?

On July 1,20x5,Blaylock Corporation had 40,000 shares of its $100 par value common stock outstanding.On July 2,20x5,Blaylock declared a 15 percent stock dividend to be distributed on August 6,20x5,to shareholders of record on July 16,20x5.What amount of retained earnings should be transferred to contributed capital because of this dividend?

An advantage of the corporate form is the separation of ownership and control.

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

To form a corporation,most states require persons called underwriters to sign and file it with proper state official.This application contains the articles of incorporation.

Use the following information to answer the question below. The following accounts appear in the ledger of Pepper Corporation on December 31,20x5 A balance sheet prepared on December 31,20x5 ,would report total contributed capital of

Treasury stock is reported as an asset on the balance sheet because treasury shares may be sold later.

In recent years,Redbird Corporation,a small manufacturer of jet skis for the leisure industry,has followed the practice of issuing a 10 percent stock dividend annually.Although the company's net income has been almost $4 million in each of the past three years,retained earnings have declined from about $10 million to about $6 million.What is the probable motivation for management's decision to issue an annual 10 percent stock dividend? What is the most likely explanation for the decrease in retained earnings? Given your explanation,would stockholders' equity also decrease by a like amount?