ACCOUNTING 202 MULTIPLE CHOICE QUESTIONS

ACCOUNTING 202 MULTIPLE CHOICE QUESTIONS

11. Ed Stone has invested $400,000 in a privately held family corporation. The corporation does not dowell and must declare bankruptcy. What amount does Stone stand to lose?a. Up to his total investment of $400,000.b. Zero.c. The $400,000 plus any personal assets the creditors demand.d. $200,000.12. Which of the following statements reflects the transferability of ownership rights in a corporation?a. If a shareholder decides to transfer ownership, he must transfer all of his shares.b. A shareholder may dispose of part or all of his shares.c. A shareholder must obtain permission from the board of directors before selling shares.d. A shareholder must obtain permission from at least three other stockholders before selling shares.13. A corporate board of directors doesnotgenerallya. select officers.b. formulate operating policies.c. declare dividends.d. execute policy.14. The ability of a corporation to obtain capital isa. enhanced because of limited liability and ease of share transferability.b. less than a partnership.c. restricted because of thelimited life of the corporation.d. about the same as a partnership.Everett Community College Tutoring Center15. Becker Companyis a publicly held corporation whose $1 par value stock is actively traded at $20 pershare. The company issued 1,000 shares of stock to acquire land recently advertised at $25,000. Whenrecording this transaction, Becker Company willa. debit Land for $25,000.b. credit Common Stock for $20,000.c. debit Land for $20,000.d. credit Paid-In Capital in Excess of Par Value for $24,000.16. Simon Company issued 4,000 shares of its $5 par value common stock in payment of its attorneys billof $30,000. The bill was for services performed in helping the company incorporate. Simon shouldrecord this transaction by debitinga. Legal Expense for $20,000.b. Legal Expense for $30,000.c. Organization Expense for $20,000.d. Organization Expense for $30,000.17. Trailhead Inc.s December 31, 2005 trial balance includes the following balances: Common stock,$14,000; Paid in Capital in Excess of Par, $36,000, Retained Earnings, $32,000; and Treasury stock,$3,200. Total stockholders equity at December 31 2005 isa. $46,800b. $50,000c. $78,800d. $85,20018. Two thousand shares of treasury stock of Meyer, Inc., previously acquired at $12 per share, are sold at$18 per share. The entry to recordthis transaction will include aa. credit to Treasury Stock for $36,000.b. debit to Paid-In Capital from Treasury Stock for $12,000.c. debit to Treasury Stock for $24,000.d. credit to Paid-In Capital from Treasury Stock for $12,000.19. Rancho Corporation sold 100 shares of treasury stock for $40 per share. The cost for the shares was$30. The entry to record the sale will includea. a credit to Gain on Sale of Treasury Stock for $3,000.b. a credit to Paid-in Capital from Treasury Stock for $1,000.c. a debit to Paid-in Capital in Excess of Par Value for $1,000.d. a credit to Treasury Stock for $4,000.20. Roberson Corporation was organized on January 1, 2005, with authorized capital of 500,000 shares of$10 par value common stock. During 2005, Roberson issued 20,000 shares at $12 per share, purchased2,000 shares of treasury stock at $13 per share, and sold 2,000 shares of treasury stock at $14 pershare. What is the amount of additional paid-in capital at December 31, 2005?a. $0.b. $2,000.c. $40,000.d. $42,000


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