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Exam 11: Proprietorships,partnerships,and Corporations

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Question 1

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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.Use only one letter for each element.You do not need to enter amounts. -Vancouver Co.paid a $50,000 cash dividend to its shareholders on July 5,2016,which was 2 months after Vancouver declared the dividend.

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(D)(D)(N)(...

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Question 2

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Where is treasury stock reported on a corporation's balance sheet?

A) As an addition to total paid-in capital
B) As a deduction from total stockholders' equity,following Retained Earnings
C) As a deduction from total paid-in capital
D) As a deduction from Retained Earnings

E) A) and C)
F) None of the above

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B

Question 3

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The PCAOB was established in response to the accounting scandals that occurred in 2001 and 2002.

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

What is the importance of record date for a corporation that has declared dividends?

The issuance of a stock dividend will

Indicate whether each of the following statements about stockholders' equity is true or false. _____ a)Preferred stockholders generally have no preference to assets when the company is liquidated. _____ b)Preferred stockholders generally have a preference to dividends. _____ c)Preferred stock carries voting rights that gives the preferred stockholders greater power in the corporation's decision making process than common stockholders have. _____ d)Preferred stockholders generally receive a set or fixed amount of dividends. _____ e)If a corporation has issued non-cumulative preferred stock,common stockholders may receive greater dividends than if the corporation has issued cumulative preferred stock.

Which of the following entities would report income tax expense on its income statement?

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.Use only one letter for each element.You do not need to enter amounts. -Jim Caldwell and Pam Ennis,both CPAs,began their new partnership by each contributing $50,000 to their business.Indicate the effects of this transaction on the financial statements.

On February 2,2016,the Farmer Corporation issued 9,000 shares of no-par stock for $17 per share.Within two hours of the issue,the stock's price jumped on the New York Stock Exchange to $21 per share.Which of the following answers describes the effect of the February 2,2016 transaction?

What is the meaning of "par value" of stock?

Chandler Company declared and paid a cash dividend.Which of the following choices accurately reflects how this event would affect the company's financial statements?

Use the following to answer questions On March 1,2016,Gilmore Incorporated declared a cash dividend on its 1,500 outstanding shares of $50 par value,6% preferred stock.The dividend will be paid on May 1,2016 to the stockholders of record as of April 1,2016. -The entry to record the dividend on March 1 will have which of the following financial statement effects?

Which of the following statements is a reason why a company would buy treasury stock?

During 2016,the Hollowell Corporation and the Chester Corporation reported net incomes of $260,000 and $480,000 respectively.Both companies had 200,000 shares of common stock issued and outstanding.At December 31,2016,the market price per share of Hollowell's stock was $39 and Chester's stock was $36. Required: a)Calculate the price-earnings ratio for each company. b)Based on the price-earnings ratios computed in part (a),which company do investors believe has more potential for future income growth? State your reason.

What is meant by "double taxation?" Which type of organizational form is more likely to be subject to double taxation?

On January 2,2016,Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share.Which of the following statements is true?

Proprietorships are not separate legal entities;their earnings are taxable to the owners and not to the business itself.

The price-earnings ratio is calculated as:

Montana Company was authorized to issue 200,000 shares of common stock.The company had issued 50,000 shares of stock when it purchased 10,000 shares of treasury stock.The number of outstanding shares of common stock was: