41. Which of the following entities would report income tax expense on its income statement?
A. A sole proprietorship.
B. A corporation.
C. A partnership.
D. All of these answer choices are correct.
42. The term "Retained Earnings" is best explained by which of the following statements?
A. Money set aside for the redemption of bonds.
B. The difference between total revenue and total expenses in an accounting period.
C. Cash retained in a separate bank account designated for emergency uses.
D. A measure of capital generated through operating activities.
43. Which of the following statements about types of business entities is true?
A. For accounting purposes a soleproprietorship is not a separate entity from its owner.
B. Ownership in a partnership is represented by having shares of capital stock.
C. One advantage of a corporation is ability to raise capital.
D. Soleproprietorships are subject to doubletaxation.
44. Blair Scott started a sole proprietorship by depositing $75,000 cash in a business checking account. During the accounting period the business borrowed $30,000 from a bank, earned $18,000 of net income, and Scott withdrew $12,000 cash from the business. Based on this information, at the end of the accounting period Scott’s capital account contained a balance of:
A. $93,000.
B. $111,000.
C. $72,000.
D. $81,000.
45. Which of the following terms designates the maximum number of shares of stock that a corporation may issue?
A. Number of shares issued
B. Number of shares authorized
C. Par value
D. Number of shares outstanding
46. Which of the following statements best describes the term "par value?"
A. The number of shares currently in the hands of stockholders.
B. The amount that must be paid to purchase a share of stock.
C. Determined by dividing total stockholder's equity by the number of shares of stock.
D. An amount used in determining a corporation's legal capital.
47. Which of the following is
not
normally a preference given to the holders of preferred stock?
A. The right to receive a specified amount of dividends prior any being paid to common stockholders.
B. The right to vote before the common stockholders at the corporation's annual meeting.
C. The right to receive preference over common stockholders as to the distribution of assets during a liquidation process.
D. All of these are preferences given to preferred stock.
48. The par value of a company's stock
A. dictates the initial price of the stock.
B. may be revised each time a company issues more shares of stock.
C. is generally greater than market value.
D. has little connection to the market value of the stock.
49. Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?
A. Increase assets by $1,400,000, increase equity by $1,400,000.
B. Increase assets by $480,000, increase equity by $480,000.
C. Increase cash flow from investing activities by $480,000.
D. None of these answer choices are correct.
50. On January 2, 2016, Torres Corporation issued 20,000 shares of $10 par-value common stock for $11 per share. Which of the following statements is true?
A. The Common Stock account will increase by $220,000.
B. The Cash account will increase by $200,000.
C. Total equity will increase by $200,000.
D. The Paid-in Capital in Excess of Par Value account will increase by $20,000.