Chapter 13: Accounting for Corporations Flashcards Preview

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Flashcards in Chapter 13: Accounting for Corporations Deck (23):
1

What are the two types of corporations?

Privately held, does not offer its stock for public sale and usually has few stockholders.

Publicly held, corporation offers its stock for public sale and can have thousands of stockholders.

2

Does a preference for dividends ensure dividends?

No. If the directors do not declare a dividend, neither the preferred nor the common stockholders receive one.

3

Roger owns 100 shares of $10 par, 5% noncumulative preferred stock. There are no dividends declared or paid. What is Roger entitled to?

$0

4

Tyler issues 100 shares of $10 par value preferred stock for $5,000 cash. How do you record this entry

credit; $1,000, because 100 x $10 par value. excess would be credited to Paid-In Capital account.

5

Preferred stock usually carries a preference for dividends, meaning that...

dividends are allocated to preferred shareholders before they are issued to common shareholders.

6

_______ preferred stock confers no right to prior period unpaid dividends.

Noncumulative.

7

Max issues 100 shares of $1 par value preferred stock for $3,000 cash. How would this be recorded?

Credit, $100

8

Stockholders' equity, reported on the balance sheet, consists of which of the following accounts?

Paid-In Capital and Retained Earnings.

9

Anchor authorizes a $.50 cash dividend to its $100,000 shares of common stock issued and outstanding. What would be the journal entry?

Debit, Common Dividend Payable

Credit, Cash

10

What are the disadvantages of the corporate form of business?

Government regulation and corporate taxation.

11

John agrees to contribute equipment with a fair market value of $5,000 in exchange for 100 shares of Rio Inc.'s common stock with a par value of $1 per share, How is this recorded

Paid-In Capital in excess of par value and common stock

12

Niren authorizes $1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this will incude a _____ to Common stock, $1 par for $____.

credit, $100.

13

Rank the following groups with highest to lowest

board of directors
employees
stockholders
president, vp, other officers

Stockholders
Board of Directors
President, Vp. Officers
Employees

14

What are the three important dates when the board of directors authorizes a cash dividend?

date of declaration
date of record
date of payment

15

Advantages of a Corporation

limited liability, ease of capital accumulation, transfer rights, and lack of mutual agency. continuous life.

16

________ value stock is no-par stock to which the directors assigned a certain value per share, This value becomes the minimum legal capital per share in this case,

Stated.

17

The ____ value per share is the price at which a stock is bought and sold.

market.

18

A small stock dividend is a distribution of ___% or less of previously outstanding shares.

25%

19

What is a contra equity account?

treasury stock

20

____stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized.

21

____Value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital.

No-par.

22

____ _____ is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

retained earnings.

23

stockholders' equity reported on the balance sheet consists of which of the following accounts?

Retained earnings, paid-in capital.