21. Assets contributed to a partnership by a partner would be recorded at:
A. Historical cost.
B. Fair market value.
C. Cost less depreciation.
D. Potential value.
22. Salary allowances to partners when dividing net income:
A. Are not expenses of the business.
B. Do not get recorded.
C. Neither A nor B.
D. Both A & B.
23. Which of the following is a characteristic of a corporation?
A. Declaration of a dividend by the stockholders.
B. Appointment of officers by the stockholders.
C. Transferability of shares of stock.
D. Unlimited liability.
24. Net income in a partnership may be distributed to the partners:
A. As a salary allowance.
B. As interest on beginning capital.
C. In a fixed ratio.
D. In any or all of the above.
25. In order to form a corporation, the corporation must obtain a charter from:
A. The federal government.
B. A state government.
C. The Securities and Exchange Commission.
D. The stockholders of the corporation.
26. The Board of Directors of a corporation:
A. Are responsible for hiring other professional managers.
B. Decide whether profits will be distributed to stockholders.
C. Make major policy decisions.
D. All of the above.
27. Paid-in Capital refers to:
A. The lifetime earnings of the corporation.
B. The amount invested by stockholders.
C. Net income less dividends.
D. The amount in excess of the par value of the stock.
28. Income taxes to a partnership:
A. Are an obligation of the partnership.
B. Are an obligation to each partner only when cash is received.
C. Are an obligation to each partner based on their share of profits.
D. Are not an obligation to each partner since a partnership does not pay tax.
29. When deciding the form of organization of a new business the factors to consider would be all of the following except:
A. The need to raise large amounts of capital.
B. The need for continuity in business operations.
C. The potential profits of the organization.
D. The personal liabilities of the owners.
30. When a corporation declares a dividend:
A. Assets decrease, liabilities increase.
B. Retained earnings increase, liabilities increase.
C. Liabilities increase, retained earnings decrease.
D. Retained earnings decrease, assets increase.