1. Which of the following is characteristic of a corporation?

a. When stockholders sell their shares, the corporation is dissolved.

b. The corporate Board of Directors manages the day-to-day operations.

c. A corporation cannot own property in its name.

d. The financial loss of shareholders is limited to the amount invested by the stockholder.

2.Excess of Par Common is reported where?

a. Other Expenses on Income Statement c. Stockholders Equity Balance Sheet

b. Income on Income Statement d. Liabilities Balance Sheet

3. The Board of Directors voted to set aside $40,000 cash for the Sinking Fund. What is the effect of the transaction on cash and total assets?

a. Cash increases, total assets increase c. Cash increases, assets decrease

b. Cash decreases, total assets stay the same d. None of the above

4. The primary purpose of a stock split is to

a. increase paid-in-capital.

b. reduce the market price of the stock per share.

c. Increase the market price of the stock per share.

d. Increase retained earnings.

5. If a company purchases <20% of stock of another company what method is used to record dividends?

a. Equity Method c. Straight Line Method

b. Double Declining Method d. Cost Method

6.. For a dividend to NOT be legal

a. the Board of Directors must declare a dividend.

b. there must be retained earnings greater than the amount of the dividend.

c. there must be a notification posted in the newspaper for the meeting.

d. there must be enough cash to cover the dividend on the date of declaration

7. Lamb Corporation owns 75% of Wilcox Inc. During the current year, Wilcox reported net income of $150,000 and Lamb received $40,000 in dividends. How much would the Investment in Wilcox increase for the current year?

a. $0 b. $30,000 c. $72,500 d. $112,500

8. The amortization of Discount results in

a. Decreasing expenses . c. increasing expenses.

b. Decreasing income d. increasing income.

9. The balance in Premium on Bonds Payable that is applicable to bonds should be reported as a(n)

a. current liabilities c. long-term liabilities

b. current assets d. intangible assets

10. Gain on Sale of Investments is considered a(n)

a. excess account c. revenue account

b. premium account d. discount account

11.. At this point have you learned

a. anything about stocks and investments

c. nothing about stocks and investments

d. more than you care to know about stocks and investments

e. not enough about stocks and investments