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Exam 8: Proprietorships, Partnerships, and Corporations

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Question 41

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Explain any differences in recording the initial issue of stock for a) par-value, b) stated-value, and c) no-par common stock.

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a) With par value stock, the par value i...

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Question 42

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Summer Corporation registers an issuance of Common Stock class B with agreed upon par value of $5. Another term sometimes used in place of "par" is _______________.

A) current market value
B) most recent issue price
C) lower of cost or market
D) par or stated value

E) A) and B)
F) All of the above

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Question 43

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The par value of common stock

Reissuance of treasury stock for cash is what kind of transaction?

Which of the following statements about types of business entities is true?

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. $\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$ Shaffer Co. declared and distributed a 5 percent stock dividend. $\begin{array}{|l|l|l|l|l|l|}\text { Assets Liabilities } & \text { Equity } & \text { Revenues } & \text { Expenses } & \begin{array}{c}\text { Net } \\\text { Income }\end{array} & \begin{array}{c}\text { Cash } \\\text { Flow }\end{array}\\\hline&&&\end{array}$

On what date do dividends become a legal liability of a corporation?

Mitchell Company was authorized to issue 50,000 shares of common stock. The company issued 27,000 shares of stock and later purchased 5,000 shares of treasury stock. The number of outstanding shares of common stock is:

On January 12, 2014, the Picard Corporation issued 750 shares of $12 par-value common stock for $15 per share. Which of the following answers describes the effect of the January 12, 2014 transaction?

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner and one for the business's earnings.

One consequence of the Sarbanes-Oxley Act is that some of the largest corporations in the United States are taking their companies' stock off the stock exchanges.

On March 1, 2014 Garrison, Incorporated declared the annual cash dividend on its 1,500 outstanding shares of $5 par value, 5% noncumulative preferred stock. The dividend will be paid on May 1, 2014, to the stockholders of record as of April 1, 2014. What effect will payment of the dividend on May 1 have on Garrison's financial statements?

The Securities and Exchange Commission was established in response to the accounting scandals that occurred in 2001 and 2002.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. $\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$ On May 15, 2014, the board of directors of Roskos Co. declared a cash dividend. $\begin{array}{|l|l|l|l|l|l|}\text { Assets Liabilities } & \text { Equity } & \text { Revenues } & \text { Expenses } & \begin{array}{c}\text { Net } \\\text { Income }\end{array} & \begin{array}{c}\text { Cash } \\\text { Flow }\end{array}\\\hline&&&\end{array}$

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. $\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$ Dave Saba, who had held 12% of Rusch Company's outstanding common stock, agreed to purchase another 8% of Rusch Company's outstanding common stock from Julie Ganz, another major stockholder of Rusch's. Indicate the effect of this event on Rusch's financial statements. $\begin{array}{|l|l|l|l|l|l|}\text { Assets Liabilities } & \text { Equity } & \text { Revenues } & \text { Expenses } & \begin{array}{c}\text { Net } \\\text { Income }\end{array} & \begin{array}{c}\text { Cash } \\\text { Flow }\end{array}\\\hline&&&\end{array}$

Articles of incorporation, prepared by a business that wishes to incorporate, normally include the corporation's name and purpose, its location, and provisions for capital stock.

A corporation's board of directors declares a dividend to common shareholders. This dividend consists of a specified amount of additional shares of common. This is what type of transaction?

The Harlan-Wells Company was started on January 1, 2012 as a partnership. The initial investments from the two partners were $20,000 each. During 2012, the Harlan-Wells Company earned $30,000 in cash revenue and paid $20,000 in cash expenses and the partners withdrew $1,000 each for their personal use. The partnership agreement calls for equal sharing of net income or loss. Using only the above information, prepare an income statement, a capital statement, and a balance sheet for the Harlan-Wells Company.

Which of the following would not be a reason for the market price of Bishop Corporation stock to decrease?

On December 31, 2014, before closing the accounts, Rampart Corporation had a balance in Retained Earnings of $30,000. Rampart's net income for the year was $12,000. On that date, the board of directors approved an appropriation of retained earnings in the amount of $10,000 because the company planned to expand its facilities. The corporation had 1,000 shares of $10 par common stock outstanding and a balance in Paid in Capital in Excess of Par Value of $18,000. Required: a) Indicate the effect of the appropriation of retained earnings on the financial statements.