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Exam 8: Proprietorships, Partnerships, and Corporations

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Question 21

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Thad Rives is planning to invest in one of the following companies based on their average performance over the past five years, which is presented below. If Thad is looking for a growth company (with earnings that are growing rapidly and probably will continue to grow rapidly) , which one should he choose?

A) Big Bat, Inc.
B) Bug-lite, Inc.
C) "Mood-blue, Inc".
D) Jones, Inc.

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

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Question 22

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Houston Corporation has the following stock outstanding:

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In 2014, Houston paid $330,000 in divid...

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Question 23

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Which answer would represent the financial statement presentation of stockholders equity after the following transactions? Issued 200 shares of $12 par value common stock for $25 a share. Five hundred shares are authorized. Purchased 75 shares of treasury stock at $22 a share.

The executives that manage a corporation on a daily business are hired by the company's stockholders.

Show the effect of a stock dividend on the accounting equation.

If a corporation decides to reissue, for cash, preferred treasury stock this is which type of transaction type?

Which of the following entities would have a "Paid-in Capital in Excess" account in the equity section of the balance sheet?

Bridge Corporation decides to issue a 15% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will this transaction affect the company's equity accounts?

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. You do not need to enter amounts. $\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$ The stock of the Hamlin Oil Co. was trading at $12 per share on March 27 when the company announced that it had recently discovered a large oil reserve. The stock price immediately went up to $18 per share. The company had 10,000,000 shares outstanding. Indicate the effects of this discovery on Hamlin's financial statements. $\begin{array}{|l|l|l|l|l|l|}\text { Assets Liabilities } & \text { Equity } & \text { Revenues } & \text { Expenses } & \begin{array}{c}\text { Net } \\\text { Income }\end{array} & \begin{array}{c}\text { Cash } \\\text { Flow }\end{array}\\\hline&&&\end{array}$

Ransom Corporation issued 10,000 shares of $5 par common stock for $22 per share. As a result of this transaction, Ransom's legal capital increased by $50,000.

What are the characteristics of preferred stock?

The term "double taxation" refers to which of the following:

Flynn Corp., which is authorized to issue 25,000 shares of no-par common stock, issued 10,000 shares for $150,000. What effect will this event have on the accounting equation?

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. You do not need to enter amounts. $\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$ The Hamilton Corporation began operations by issuing 5,000 shares of $10 stated-value stock at $12. Indicate the effects of this transaction on the financial statements. $\begin{array}{|l|l|l|l|l|l|}\text { Assets Liabilities } & \text { Equity } & \text { Revenues } & \text { Expenses } & \begin{array}{c}\text { Net } \\\text { Income }\end{array} & \begin{array}{c}\text { Cash } \\\text { Flow }\end{array}\\\hline&&&\end{array}$

The corporate charter of Llano Corporation authorizes the issuance of 25,000 shares of 5% cumulative preferred stock, $50 par, and 200,000 shares of $10 par common stock. At the end of the current year, the titles and balances of stockholders' equity accounts are as follows:

Will the number of shares of stock issued and the number of shares of stock outstanding always be the same? Why or why not?

Which of the following statements historically described the term "par value?"

Discuss a reason why a corporation might "split" its common stock.

A distribution by a sole proprietorship to the owner is called a dividend.

A separate capital account is maintained for each partner in a partnership.