1916. Twenty percent of all businesses in the United States are
corporations and they account for 80% of the total business dollars
generated.
a.
... [Show More] True
*b. False
1917. A corporation is a separate entity for accounting purposes but
not for legal purposes.
a. True
*b. False
1918. The financial loss that each stockholder in a corporation can
incur is usually limited to the amount invested by the stockholder.
*a. True
b. False
1919. Under the Internal Revenue Code, corporations are required to pay
federal income taxes.
*a. True
b. False
1920. Double taxation is a disadvantage of a corporation because the
same party has to pay taxes twice on the income.
a. True
*b. False
1921. The initial owners of stock of a newly formed corporation are
called directors.
a. True
*b. False
1922. While some businesses have been granted charters under state
laws, most businesses receive their charters under federal laws.
a. True
*b. False
1923. Organizational expenses are classified as intangible assets on
the balance sheet.
a. True
*b. False
1924. When no-par common stock with a stated value is issued for cash,
the common stock account is credited for an amount equal to the cash
proceeds.
a. True
*b. False
1925. The par value of common stock must always be equal to its market
value on the date the stock is issued.
a. True
*b. False
1926. For accounting purposes, stated value is treated the same way as
par value.
*a. True
b. False
1927. The issuance of common stock affects both paid-in capital and
retained earnings.
a. True
*b. False
1928. The main source of paid-in-capital is from issuing stock.
*a. True
b. False
1929. The number of shares of outstanding stock is equal to the number
of shares authorized minus the number of shares issued.
a. True
*b. False
1930. The amount of capital paid in by the stockholders of the
corporation is called legal capital.
a. True
*b. False
1931. If the dividend amount of preferred stock, $50 par value, is
quoted as 8%, then the dividends per share would be $4.
*a. True
b. False
1932. If 50,000 shares are authorized, 41,000 shares are issued, and
2,000 shares are reacquired, the number of outstanding shares is
43,000.
a. True
*b. False
1933. Preferred stockholders must receive their current year dividends
before the common stockholders can receive any dividends.
*a. True
b. False
1934. If a corporation is liquidated, preferred stockholders are paid
before the creditors and before the common stockholders.
a. True
*b. False
1935. Paid-in capital may originate from real estate donated to
the corporation.
*a. True
b. False
1936. The par value of stock is an arbitrary per share amount defined
in many states as legal capital.
*a. True
b. False
1937. A large public corporation normally uses registrars and transfer
agents to maintain records of the stockholders.
*a. True
b. False
1938. When common stock is issued in exchange for land, the land should
be recorded in the accounts at the par amount of the stock issued.
a. True
*b. False [Show Less]
