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Exam 8: Proprietorships, partnerships, and Corporations

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Question 21

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A distribution by a sole proprietorship to the owner is called a dividend.

A) True
B) False

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Question 22

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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.

A) True
B) False

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Question 23

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Discuss some of the information items normally included in a corporation's articles of incorporation.

Which of the following is a negative or contra stockholders' equity account?

Which of the following is a reason why a corporation may choose not to pay cash dividends?

An appropriation of retained earnings places a limit on the amount of dividends a corporation can declare.

What is the importance of date of record when a corporation declares a dividend?

On January 2,2012,the Hoover Corporation issued 25,000 shares of $10 stated-value common stock for $24 per share.Which of the following statements is true?

A corporation is a legal entity created by the authority of a state government,separate and distinct from its owners.

The corporate charter of Llano Corporation authorizes the issuance of 25,000 shares of 5% cumulative preferred stock,$50 par,and 200,000 shares of $10 par common stock.At the end of the current year,the titles and balances of stockholders' equity accounts are as follows: Llano declared dividends of $400,000 for the current year. Required: a)What is the amount of the annual dividend per share for preferred stock? b)If there are two years of preferred dividends in arrears at the beginning of the current year,what total amount of dividends will be paid to the preferred shareholder? c)What total amount will be paid to the common shareholder if there are two years of preferred dividends in arrears at the beginning of the year?

Which of the following entities would have a "Paid-in Capital in Excess" account in the equity section of the balance sheet?

The stock market crash in 1929 led to the beginning of extensive regulation of corporations.

Which of the following terms designates the maximum number of shares that a corporation may issue?

A low price-earnings ratio generally means that investors are optimistic about a company's future growth.

Which of the following is a disadvantage of a sole proprietorship?

Show the effect of a stock dividend on the accounting equation.

Which type of stock,common or preferred,must all corporations have?

Which form of business organization is established as a separate legal entity from its owners?

Describe sole proprietorships,partnerships and corporations,indicating advantages and disadvantages of each form of organization.

Tyrone Gonzales started a sole proprietorship by depositing $30,000 cash in a business checking account.During the accounting period the business earned $16,000 of net income and Gonzales withdrew $10,000 cash from the business.Based on this information,at the end of the accounting period,Gonzales' capital account contained a balance of: