1) Which of the following is a characteristic of a​ corporation.docx

1) Which of the following is a characteristic of a​ corporation?
A. Limited liability of stockholders
B. No income tax
C. Mutual agency
D. Both b and c

2) Fair Play​, Inc., issues 250,000 shares of​ no-par common stock for $ 5 per share. The journal entry is which of the​ following?

A. Cash
1,250,000

Common Stock

250,000
Gain on the Sale of Stock

1,000,000
B. Cash
250,000

Common Stock

250,000
C. Cash
1,250,000

Common Stock

1,250,000
D. Cash
1,250,000

Common Stock

500,000
Paid-In Capital in Excess of Par

750,000

3) Stockholders are eligible for a dividend if they own the stock on the date of
A. issuance.
B. payment.
C. record.
D. declaration.

4) Dellanova Company's net income and net sales are $ 25,000 and $ 1,150,000,
​respectively, and average total assets are $ 120,000. What is Dellanova's return on​ assets?
A. 20.8%
B. 2.8%
C. 9.8%
D. 22.8%

5) Preferred stock is least likely to have which of the following​ characteristics?
A. The right of the holder to convert to common stock
B. Preference as to dividends
C. Preference as to voting
D. Preference as to assets on liquidation of the corporation

6) Par value
A. may exist for common stock but not for preferred stock.
B. is an arbitrary amount that establishes the legal capital for each share.
C. represents the original selling price for a share of stock.
D. is established for a share of stock after it is issued.
E. represents what a share of stock is worth.

7) The​ paid-in capital portion of​ stockholders' equity does not include
A. Paid-in Capital in Excess of Par Value.
B. Common Stock.
C. Retained Earnings.
D. Preferred Stock.
E. both c and d.

8) Which of the following classifications represents the most shares of common​ stock?
A. Issued shares
B. Outstanding shares
C. Treasury shares
D. Unissued shares
E. Authorized shares

9) When treasury stock is sold for less than its​ cost, the entry should include a debit to
A. Gain on Sale of Treasury Stock.
B. Loss on Sale of Treasury Stock.
C. Retained Earnings.
D. Paid-in Capital in Excess of Par.

10) Which of the following is not true about a​ 10% stock​ dividend?
A. Retained Earnings decreases.
B. The market value of the stock is needed to record the stock dividend.
C. Total​ stockholders' equity remains the same.
D. Par value decreases.
E. Paid-in Capital increases.

11) Paying off bonds payable is reported on the statement of cash flows under
A. investing activities.
B. noncash investing and financing activities.
C. financing activities.
D. operating activities.

12) The sale of inventory for cash is reported on the statement of cash flows under
A. operating activities.
B. noncash investing and financing activities.
C. financing activities.
D. investing activities.

13) On an indirect method statement of cash​ flows, an increase in a prepaid insurance would be
A. added to increases in current assets.
B. added to net income.
C. deducted from net income.
D. included in paym ...

1. 1) Which of the following is a characteristic of a corporation?
A. Limited liability of stockholders
B. No income tax
C. Mutual agency
D. Both b and c

2) Fair Play, Inc., issues 250,000 shares of no-par common
stock for $ 5 per share. The journal entry is which of the
following?

A. Cash
1,250,000

Common Stock

250,000
Gain on the Sale of Stock

1,000,000
B. Cash
250,000

Common Stock

250,000
C. Cash
1,250,000

Common Stock

1,250,000
D. Cash
1,250,000

2. Common Stock

500,000
Paid-In Capital in Excess of Par

750,000

3) Stockholders are eligible for a dividend if they own the stock
on the date of
A. issuance.
B. payment.
C. record.
D. declaration.

4) Dellanova Company's net income and net sales are $ 25,000
and $ 1,150,000,
respectively, and average total assets are $ 120,000. What is
Dellanova's return on assets?
A. 20.8%
B. 2.8%
C. 9.8%
D. 22.8%

5) Preferred stock is least likely to have which of the following
characteristics?
A. The right of the holder to convert to common stock
B. Preference as to dividends
C. Preference as to voting
D. Preference as to assets on liquidation of the corporation

6) Par value
A. may exist for common stock but not for preferred stock.
B. is an arbitrary amount that establishes the legal capital for
each share.
C. represents the original selling price for a share of stock.
D. is established for a share of stock after it is issued.

3. E. represents what a share of stock is worth.

7) The paid-in capital portion of stockholders' equity does not
include
A. Paid-in Capital in Excess of Par Value.
B. Common Stock.
C. Retained Earnings.
D. Preferred Stock.
E. both c and d.

8) Which of the following classifications represents the most
shares of common stock?
A. Issued shares
B. Outstanding shares
C. Treasury shares
D. Unissued shares
E. Authorized shares

9) When treasury stock is sold for less than its cost, the entry
should include a debit to
A. Gain on Sale of Treasury Stock.
B. Loss on Sale of Treasury Stock.
C. Retained Earnings.
D. Paid-in Capital in Excess of Par.

10) Which of the following is not true about a 10% stock
dividend?
A. Retained Earnings decreases.
B. The market value of the stock is needed to record the stock
dividend.
C. Total stockholders' equity remains the same.
D. Par value decreases.
E. Paid-in Capital increases.

11) Paying off bonds payable is reported on the statement of
cash flows under

4. A. investing activities.
B. noncash investing and financing activities.
C. financing activities.
D. operating activities.

12) The sale of inventory for cash is reported on the statement
of cash flows under
A. operating activities.
B. noncash investing and financing activities.
C. financing activities.
D. investing activities.

13) On an indirect method statement of cash flows, an increase
in a prepaid insurance would be
A. added to increases in current assets.
B. added to net income.
C. deducted from net income.
D. included in payments to suppliers.

14) Camera Co. sold equipment with a cost of $ 18,000 and
accumulated depreciation of
$ 6,000 for an amount that resulted in a gain of $ 4,000. What
amount should Innovations
report on the statement of cash flows as "proceeds from sale of
plant assets"?
A. $ 14,000
B. $ 16,000
C. $ 15,000
D. Some other amount

15) On an indirect method statement of cash flows, a gain on
the sale of plant assets would be
A. reported in the investing activities section.
B. deducted from net income in the operating activities section.
C. ignored, since the gain did not generate any cash.
D. added to net income in the operating activities section.

5. 16) Selling equipment for cash is reported on the statement of
cash flows under
A. operating activities.
B. noncash investing and financing activities.
C. investing activities.
D. financing activities.

17) On an indirect method statement of cash flows, an increase
in accounts payable would be
A. reported in the financing activities section.
B. added to net income in the operating activities section.
C. deducted from net income in the operating activities section.
D. reported in the investing activities section.

18) A company uses the direct method to prepare the statement
of cash flows. Select an activity for each of the following
transactions:
1. Receiving cash dividends is a/an _______________ activity.
2. Paying cash dividends is a/an ________________ activity.

19) Assume Sheehan uses the direct method to prepare the
statement of cash flows. Credit sales totaled $ 850,000,
accounts receivable increased by $ 60,000, and accounts
payable decreased by
$ 20,000. How much cash did the company collect from
customers?
A. $ 850,000
B. $ 910,000
C. $ 790,000
D. $ 810,000

20) Assume Sheehan uses the direct method to prepare the
statement of cash flows. Income tax payable was $ 4,000 at the
end of the year and $ 3,000 at the beginning. Income tax
expense for the year totaled $ 59,700. What amount of cash did

6. the company pay for income tax during the year?
A. $ 58,700 C. $ 60,700
B. $ 62,700 D. $ 59,700