1. which of the following is not characteristic of a corporation?
a. the financial loss that a stockholder may suffer from owning stock in a public company is limited.
b. cash dividends paid by a corporation are deductible as expenses by the corporation.
c. a corporation can own property in its name.
d. corporations are required to file federal income tax returns.
2. characteristics of a corporation include
a. shareholders who are mutual agents
b. direct management by the shareholders (owners)
c. its inability to own property
d. shareholders who have limited liability
3. one of the main disadvantages of the corporate form is the
a. professional management
b. double taxation of dividends
c. charter
d. corporation must issue stock
4. under the corporate form of business organization
a. ownership rights are easily transferred.
b. a stockholder is personally liable for the debts of the corporation.
c. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.
d. stockholders wishing to sell their corporation shares must get the approval of other stockholders.
5. those most responsible for the major policy decisions of a corporation are the
a. management.
b. board of directors.
c. employees.
d. stockholders.
6. stockholders' equity
a. is usually equal to cash on hand
b. includes paid-in capital and liabilities
c. includes retained earnings and paid-in capital
d. is shown on the income statement
7. the price at which a stock can be sold depends upon a number of factors. which statement below is not one of those factors?
a. the financial condition, earnings record, and dividend record of the corporation
b. investor expectations of the corporation's earning power
c. how high the par value
d. general business and economic conditions and prospects
8. which of the following accounts below is reported in the paid-in capital/stockholders' equity section of the corporate balance sheet?
a. cash
b. stock dividends
c. organizational expenses
d. preferred stock
9. the excess of issue price over par of common stock is termed a(n)
a. discount
b. income
c. deficit
d. premium
10. the charter of a corporation provides for the issuance of 100,000 shares of common stock. assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. what is the number of shares outstanding?
a. 40,000
b. 70,000
c. 50,000
d. 60,000
11. on april 1, 10,000 shares of $5 par common stock were issued at $22, and on april 7, 5,000 shares of $50 par preferred stock were issued at $104. journalize the entries for april 1 and 7.