MCQs_Company Shares

1.

The stockholders of a corporation have unlimited liability.

2.

Which of these is not a major advantage of a corporation?

3.

Which one of the following is a major disadvantage of a corporation?

4.

Which of the following is not a characteristic of a corporation?

5.

Which of the following is a disadvantage of the corporate business form?

6.

Which of the following is not a stockholder's right?

7.

Ernest, an individual, receives $100 from Vernon Corp. in dividends and is in the 28% tax bracket. Vernon Corp. already paid corporate taxes on the $100 at a 20% tax rate. How much in personal taxes will Ernest need to pay?

8.

The par value of corporate shares issued represents a corporation's legal capital.

9.

Which of these statements is false?

10.

If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital?

11.

Which of the following represents the amount per share of stock that must be retained in the business for the protection of corporate creditors?

12.

Which of the following represents the maximum number of shares a corporation can issue?

13.

DT Inc. issued 3,000 shares of $5 par value common stock for $6 per share. Which of the following is one part of the journal entry to record the issuance?

14.

Wynola, Inc. issued 1,000 shares of common stock at $10 per share. If the stock has a par value of $4 per share, which of the following will be part of the journal entry to record the issuance?

15.

Harrison, Inc. issued 4,000 shares of common stock at $12 per share. If the stock has a par value of $0.50 per share, which of the following will be part of the journal entry to record the issuance?

16.

Harrison, Inc. issued 600 shares of common stock at $10 per share. If the stock was no-par value stock, which of the following will be part of the journal entry to record the issuance?

17.

The 13th Street Grill issued 10,000 of $1 par value common stock for $5 per share. Which of the following will be part of the journal entry to record the issuance?

18.

Dynatech issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, which accounts are credited?

19.

When treasury stock is purchased, the number of outstanding shares decreases.

20.

For what reason might a company acquire treasury stock?

21.

Which one of the following decreases when a corporation purchases treasury stock?

22.

What method is normally used to account for treasury stock?

23.

If 1,000 shares of $5 par common stock are reacquired by a corporation for $12 a share, by how much will total stockholders' equity be reduced?

24.

A corporation sold 1,000 shares of its $2.00 par value common stock for $10.00 per share and later repurchased 100 of those shares for $12.00 per share. Which of the following will be debited to record the repurchase of the 100 shares?

25.

Which of the following increases when a corporation purchases treasury stock?

26.

A cumulative dividend feature means that preferred stockholders must be paid only current-year dividends before common stockholders receive dividends.

27.

Dividends in arrears are reported as a current liability on the balance sheet.

28.

A corporation has cumulative preferred stock on which it pays dividends of $20,000 per year. The dividends are in arrears for two years. If the corporation plans to distribute $90,000 as dividends in the current year, how much will the common stockholders receive?

29.

Which one of the following statements is incorrect?

30.

Which one of the following is nota right of preferred stockholders?

31.

Which of the following is a feature associated only with preferred stock?

32.

M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2014. No dividends were declared in 2012 or 2013. If M-Bot wants to pay $375,000 of dividends in 2014, how much will common stockholders receive?

33.

How are dividends in arrears reported in the financial statements?