Name: __________________________
ACG 302
Quiz Chapter 11
Spring 2013
Multiple Choice: Choose the most correct answer. Provide work if possible
1. Which one of the following would not be considered an advantage of the corporate form
of organization?
A) Limited liability of stockholders.
B) Separate legal existence.
C) Continuous life.
D) Government regulation.
2. Which one of the following is not an ownership right of a stockholder in a corporation?
A) To vote in the election of directors.
B) To declare dividends on the common stock.
C) To share in assets upon liquidation.
D) To share in corporate earnings.
3. The authorized stock of a corporation
A) only reflects the initial capital needs of the company.
B) is indicated in its by-laws.
C) is indicated in its charter.
D) must be recorded in a formal accounting entry.
4. If Norben Company issues 2,000 shares of $5 par value common stock for $140,000, the
account
A) Common Stock will be credited for $140,000.
B) Paid-in Capital in Excess of Par Value will be credited for $10,000.
C) Paid-in Capital in Excess of Par Value will be credited for $130,000.
($140,000-(2,000 shs*$5/sh par))
D) Cash will be debited for $130,000.
5. Paid-in Capital in Excess of Par Value
A) is credited when no-par stock does not have a stated value.
B) is reported as part of paid-in capital on the balance sheet.
C) represents the amount of legal capital.
D) normally has a debit balance.
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6. Cey, Inc. issued 5,000 shares of stock at a stated value of $10/share. The total issue of
stock sold for $15/share. The journal entry to record this transaction would include a
A) debit to Cash for $50,000.
B) credit to Common Stock for $50,000. (5,000 shs * $10/sh stated)
C) credit to Paid-in Capital in Excess of Par Value for $25,000.
D) credit to Common Stock for $75,000.
7. Treasury stock is
A) stock issued by the U.S. Treasury Department.
B) stock purchased by a corporation and held as an investment in its treasury.
C) corporate stock issued by the treasurer of a company.
D) a corporation's own stock, which has been reacquired and held for future use.
8. The board of directors of Yancey Company declared a cash dividend of $1.50 per share
on 42,000 shares of common stock on July 15, 2012. The dividend is to be paid on August
15, 2012, to stockholders of record on July 31, 2012. The correct entry to be recorded on
July 15, 2012, will include a
A) debit to Dividends Payable.
B) debit to Cash Dividends.
C) credit to Cash.
D) credit to Cash Dividends.
9. A corporation records a dividend-related liability
A) on the record date.
B) on the payment date.
C) when dividends are in arrears.
D) on the declaration date.
10. Alt Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the
transaction is recorded, credits are made to:
A) Common Stock $20,000 and Paid-in Capital in Excess of Stated Value $8,000.
B) Common Stock $28,000.
C) Common Stock $20,000 and Paid-in Capital in Excess of Par Value $8,000. (2,000
shs * $10/sh); (2,000 shs * ($14 - $10))
D) Common Stock $20,000 and Retained Earnings $8,000.
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