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Exam 8: Proprietorships, Partnerships, and Corporations

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Question 31

True/False

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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 earnings of the business.

A) True
B) False

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Question 32

Multiple Choice

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Vailes Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Which of the following accurately reflects how the reissue of the treasury stock would affect Vailes's financial statements?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

E) B) and C)
F) A) and D)

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Question 33

Multiple Choice

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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?

Which of the following statements about the impact of treasury stock on the amounts reported on the balance sheet is correct?

One of the common reasons that a company purchases its own stock is to decrease its earnings per share.

The book value of a share of stock is equal to the market or selling price of the stock.

A company may retain some or all of the earnings to finance growth and increase its potential for future earnings.

All corporations are subject to extensive government regulation.

Which of the following would not be a reason for the market price of Carlyle Corporation to increase?

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?

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

Indicate whether each of the following statements about stockholders' equity is true or false. _____ a) The balance in the treasury stock account increases total stockholders' equity. _____ b) A company may acquire treasury stock in an effort to increase the market price of its stock. _____ c) The declaration and distribution of a stock dividend reduces retained earnings. _____ d) A 2-for-1 stock split will probably double the monetary value of each investor's holdings on the date the split takes effect.

Which of the following entities would have a paid-in capital in excess of par (or stated) value account in the equity section of the balance sheet?

Treasury Stock is reported on the balance sheet between liabilities and equity.

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 company's financial statements?

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

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

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

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 contained $15,000 of additional paid-in capital and $22,000 of retained earnings. Immediately after the stock split the:

Which of the following statements about types of business entities is true?