1.A corporation should account for the declaration of a 10 percent stock dividend by: a. transferring from retained earnings to contributed capital an amount equal to the legal capital represented by the dividend shares. b. transferring from retained earnings to contributed capital an amount equal to the market value of the dividend shares. c. transferring from retained earnings to contributed capital whatever amount the board of directors deems appropriate. d. making only a memorandum entry in the general journal. 2. A partner invests into a partnership a building with a $70,000 carrying value and $90,000 fair market value. The related mortgage payable of $30,000 is assumed by the partnership. The entry to record the investment in partnership is: a. Building  90,000 Capital   90,000 b. Building  70,000  Mortgage Payable   30,000  Capital   40,000 c. Capital   90,000  Mortgage Payable   30,000  Building   60,000 d. Capital   70,000  Mortgage Payable   35,000 

• Building 35,000

Which of the following partnership characteristics is a disadvantage? a. Participation in partnership income b. Ease of dissolution c. Unlimited liability d. Voluntary association Claim to the partners' personal assets by creditors if the partnership cannot pay its debts refers to: a. liquidation b. mutual agency c. unlimited liability d. dissolution Which of the following does not result in the dissolution of a partnership? a. Death of a partner b. Admission of a new partner c. Withdrawal of a partner d. Sale of partnership assets Income taxes expense represents the amount of income taxes: a. computed in accordance with the income tax code. b. applicable to the amount of taxable income for the period. c. applicable to the amount of income from continuing operations for the period. d. actually payable to the IRS for the period. The following facts pertain to Neverready Corporation for 2019: Retained Earnings balance, January 1, 2019 $400,000 Cash dividends declared and paid in 2019 66,000 Retained Earnings balance (after closing), December 31, 2019 520,000 Net income for 2019 ? Based on the above facts, what was the net income for 2019 for the company? a. $166,000. b. $146,000. c. $186,000. d. $206,000. A partnership agreement most likely will stipulate that assets be reappraised when: a. a new partner is admitted to the partnership b. a partner leaves the partnership c. profits and losses are being distributed d. the partnership is liquidated 

An excess of income taxes expense over income taxes payable for a period is associated with a(n): a. excess of taxable income over accounting income. b. excess of taxes paid over taxes owed. c. debit to the Deferred Income Taxes account. d. excess of accounting income over taxable income. 

The amount of income taxes expense appearing on a corporation's income statement must be calculated in accordance with the matching principle. True or False 

Kirk invests $60,000 for a one-third interest in a partnership in which two other partners, Steve and Paul had capitals totaling $60,000 before admitting Kirk. What amount will be credited to Kirk's capital account ? a. $30,000 b. $60,000 c. $40,000 d. $90,000 

Creative Corporation had the following shares of stock outstanding on December 31, 2019 : Common stock, $25 par value, 100,000 shares outstanding Preferred stock, 8 percent, $50 par value, cumulative, 10,000 shares outstanding Dividends were in arrears for 2017and 2018. On December 31, 2019 , total cash dividends of $200,000 were declared. The total amounts payable to preferred stockholders and common stockholders, respectively, on that date were: a. $100,000 and $100,000. b. $80,000 and $120,000. c. $120,000 and $80,000. d. $40,000 and $160,000. 

In a liquidation, the liabilities of the partnership should be paid: a. after a revaluation of assets b. before any sales of assets c. before the distribution of cash to partners d. before the distribution of gains and losses on the disposal of assets A company issued 7,000 shares of stock in exchange for equipment that had a fair market value of $160,000. The par value of the stocks were $20 per share. However, the shares were quoted on the stock exchange on that day for $30. The entry to record the transaction is: a. Equipment  210,000  Common Stock  210,000 b. Equipment 140,000  Common Stock  140,000 c. Equipment 160,000  Common Stock  140,000  Additional Paid-in-Capital 20,000 d. Equipment  210,000  Common Stock  140,000  Additional Paid-in Capital   70,000 Delta has bought Gamma's interest in the Alpha &Beta Partnership for a $120,000 direct payment to Beta. The capital balances before the sale were $74,000 and $86,000, respectively. The entry to record the purchase of interest in partnership is: a. Beta, Capital  120,000  Delta, Capital   120,000 b. Beta, Capital  86,000  Delta, Capital   86,000 c. Beta, Capital  86,000  Cash   86,000 d. Cash 120,000  Delta, Capital   120,000 

The par value of stock constitutes the legal capital of a corporation. True or False 

The entry to close the Dividends account at the end of an accounting period which has a balance of $25,000 is: a. Dividends 25,000 Cash  25,000 b. Retained Earnings 25,000  Cash  25,000 c. Dividends 25,000  Retained Earnings  25,000 d. Retained Earnings 25,000 Dividends  25,000 

A liquidation differs from a dissolution is that in a liquidation: a. the business will not continue b. assets may be revalued c. gains and losses are distributed according to the partnership agreement d. there may be an adjustment of partners' Capital accounts 

Which of the following statements is not true about a 3-for-1 stock split? a. Total contributed capital increases. b. Par value per share is reduced to half of what it was before the split. c. A stockholder with ten shares before the split owns twenty shares after the split. d. The market price probably will decrease. 

At the beginning of 2020, Hobbits Corporation had 34,000 shares of $10 par value common stock issued and outstanding. During January 2020, the company declared and distributed a 10 percent stock dividend. The market value of the company's stock was $24 throughout the month of January. The entry to be recorded for the declaration of stock dividend is: a. Stock Dividends   81,600  Common Stock Distributable   34,000 Additional Paid-in Capital   47,600 b. Common Stock Distributable   81,600  Common Stock    81,600 c. Common Stock Distributable   81,600  Common Stock    34,000  Retained Earnings   47,600 d. Stock Dividends  68,000  Cash   68,000 

When a partner invests assets other than cash into a partnership, those assets should be listed on the balance sheet at: a. their original cost b. their carrying (book) value c. their fair market value d. the value the investing partner assigns to them 

The number of authorized shares should always equal or exceed the number of outstanding shares. True or False 

Riseup and Shine Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000 shares of $10 par value common stock outstanding during its first five years of operation. The Corporation paid cash dividends as follows: 2016, $10,500; 2017, $0; 2018, $65,000; 2019, $30,000; 2020, $15,000. The amount of dividends in arrears at the end of 2017 was: a. $31,500. b. $21,000 c. $17,500. d. $10,500 

Both restructurings and write-downs reduce current operating income. True or False 

Which of the following would be used in the computation of earnings per share for a company with a simple capital structure? a. Income from continuing operations before taxes. b. Income from continuing operations after taxes c. Income from continuing operations plus income/loss from discontinued operations d. None of the above 

On January 1, 2020, Grasser Corporation purchased 2,000 shares of treasury stock for $18 per share. On March 2, 2020 sold 800 of the treasury stock for $25 per share. On June 5, 2020 sold 500 shares of treasury stock for $15 per share. The entry to record the sale of the treasury stock on June 5, 2020, is: a. Cash 20,000 Treasury Stock-Common  20,000 b. Cash 7,500 Treasury Stock-Common  7,500 c. Cash 7,500 Retained Earnings  1,500  Treasury Stock-Common  9,000 d. Cash 7,500 Retained earnings 5,000  Treasury Stock- Common  12,500 

A company had the following amounts of common stock outstanding: 9,000 shares from January through April, 15,000 shares from May through October, and 25,000 shares from November through December. What is the weighted-average number of shares rounded to nearest dollar used in earnings per share calculations? a. 25,000 b. 13,917 c. 49,000 d. 14,667 

In a partnership, Partners Roscoe, Tanner and Jess were sharing profits and losses in the ratio of 5 : 3: 2. The partners decided to liquidate the business. On liquidation of the business, after all assets were realized and liabilities paid off, Jess had a debit balance in his capital account amounting to $24,000. All partners are solvent. What is the appropriate journal entry to be recorded before any cash can be distributed between the partners? a. Roscoe Capital15,000 Tanner Capital 9,000 Jess Capital 24,000 b.Cash24,000  Roscoe Capital 15,000  Tanner Capital 9,000 c. Jess Capital24,000  Cash 24,000 d. Cash24,000  Jess Capital 24,000 

Creative Corporation had the following shares of stock outstanding on December 31, 2019 : Common stock, $25 par value, 100,000 shares outstanding Preferred stock, 8 percent, $50 par value, cumulative, 10,000 shares outstanding Dividends were in arrears for 2017and 2018. On December 31, 2019 , total cash dividends of $200,000 were declared. The total amounts payable to preferred stockholders and common stockholders, respectively, on that date were: a. $100,000 and $100,000. b. $80,000 and $120,000. c. $120,000 and $80,000. d. $40,000 and $160,000.