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Exam 11: Proprietorships, partnerships, and Corporations

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Question 41

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Preferred stockholders' claims to a corporation's assets take precedence over the claims of some creditors.

A) True
B) False

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Question 42

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Van Buren Corporation issued 5,000 shares of $6 par common stock for $24 per share.For this transaction,Common Stock should be increased by $120,000.

A) True
B) False

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Question 43

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How will the May 1 payment of the dividend affect the elements of the financial statements?

Which of the following would not be a reason to expect an increase in the market price of the stock of Carlyle Corporation?

What is the expected impact of a 2-for-1 stock split?

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

A corporation must record a liability for cash dividends on the date of record.

Ogilvie Corp.issued 12,000 shares of no-par stock for $40 per share.Ogilvie was authorized to issue 35,000 shares.What effect will this event have on the elements of the company's financial statements?

On January 2,Year 1,Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share.Which of the following statements is true?

Blair Scott started a sole proprietorship by depositing $75,000 cash in a business checking account.During the accounting period,the business borrowed $30,000 from a bank,earned $18,000 of net income,and Scott withdrew $12,000 cash from the business.Based on this information,what is the balance in Scott's capital account at the end of the accounting period?

Napoli Industries had net income for Year 2 of $650,000.Napoli had an average number of shares outstanding at the end of the year of 500,000 shares.On January 1,Year 2,the market price of Napoli's stock was $20 per share.On December 31,Year 2,the market price was $22 per share.What is the price-earnings ratio for Napoli at the end of Year 2?

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

Which of the following statements about Treasury Stock is correct?

Curtain Co.paid dividends of $6,000,$12,000,and $20,000 during Year 1,Year 2,and Year 3,respectively.The company had 1,000 shares of 5%,$200 par value preferred stock outstanding that paid a cumulative dividend.What is the total amount of dividends paid to common shareholders during Year 3?

All corporations are subject to extensive government regulation.

Lack of ease in transferability of ownership is one of the disadvantages of the corporate form of business organization.

At the end of the accounting period,Houston Company had $12,000 of common stock,paid-in capital in excess of par value-common of $11,000,retained earnings of $12,000,and $4,000 of treasury stock.What is the total amount of stockholders' equity?

How would the declaration of a cash dividend affect the calculation of a company's price-earnings ratio? (Hint: Do not consider any change in the market price of the stock that might occur because of the declaration of the dividend.)

The most commonly reported measure of a company's value is earnings per share.

At the time that Kirby Company issued a 2-for-1 stock split,the company had 5,000 shares of $6 par value common stock outstanding.Stockholders' equity also included $15,000 of paid in capital in excess of par value-common and $22,000 of retained earnings.Which of the following statements regarding the impact of the stock split is true?