48.The directors of a corporation:
A. Are hired by the officers to run the business on a day-to-day basis.
B. May not own stock in the same corporation or be officers of the same corporation.
C. Are responsible for formulating corporate policy and for hiring corporate officers.
D. Are elected by the shareholders to run day-to-day operations.
49.Shares that have been sold and are in the hands of stockholders are called:
A. Outstanding.
B. Issued.
C. Treasury.
D. Underwritten.
50.Which of the following is
not
an addition to total paid-in-capital?
A. Preferred stock.
B. Common stock.
C. Preferred stock and treasury stock.
D. Retained earnings and treasury stock.
51.The term paid-in capital means:
A. All assets other than retained earnings.
B. Legal capital plus retained earnings.
C. Total stockholders' equity minus retained earnings.
D. Legal capital minus retained earnings.
52.Which of the following best describes retained earnings?
A. Cash available for dividends.
B. The amount initially invested in the business by stockholders.
C. Cash available for expansion and growth.
D. Income that has been reinvested in the business rather than distributed as dividends to stockholders.
53.Which of the following would usually be the greatest amount?
A. The number of shares authorized.
B. The number of shares issued.
C. The number of shares outstanding.
D. The number of shares of Treasury Stock.
54.Which of the following best describes the relationship between revenue and retained earnings?
A. Revenue increases net income, which in turn increases retained earnings.
B. Revenue represents a cash receipt; retained earnings is an element of stockholders' equity.
C. Revenue represents the price of goods sold or services rendered; retained earnings represents cash available for paying dividends.
D. Retained earnings is equal to assets minus expenses.
55.If a corporation has only common stock outstanding, which of the following constitutes legal capital at a particular date?
A. The amount in the Common Stock account.
B. The sum of the Common Stock account and any additional paid-in capital.
C. The total amount of stockholders' equity.
D. The sum of the Common Stock account and retained earnings.
56.The entry to record the issuance of common stock at a price above its par value includes:
A. A credit to Cash.
B. A credit to a liability account for the difference between the price paid by the stockholders and the par value of the stock.
C. A credit to Additional Paid-in Capital: Common Stock.
D. A debit to Common Stock.
57.When a corporation issues capital stock at a price higher than the par value:
A. The amount received over par value increases retained earnings.
B. The entire issue price is credited to the Capital Stock account.
C. The amount received in excess of par value constitutes profit to the issuing corporation.
D. The amount received in excess of par value becomes part of paid-in capital.