Circle the letter of the best response

1) A corporation:

is like an artificial person legally.

a separate legal entity.

has double taxation.

is all of the above.

2)Which of the following is NOT an advantage of the corporate form of business?

Easy to raise capital

Limited liability

Corporate taxation

Continuity of life

3) An entity is authorized to sell 50,000 shares of $10 par, 6% cumulative preference shares and 100,000 shares of $7 par ordinary shares. There are 25,000 shares of preference shares outstanding and 60,000 shares of ordinary shares outstanding. A $40,000 cash dividend has been declared by the board of directors. There are no dividends in the arrears. What is the total amount to be given to the preferred share holder?

$40,000

$30,000

$25,000

$20,000

4) Refer to Question 3. How much is the total ordinary shares dividend?

$10,000

0

$15,000

$20,000

5) Refer to Question 3. If there were $15,000 of preferred dividends in the arrears, how much would the preferred shareholders receive, common shareholders receive, and arrears as a result of this dividend?

$40,000/0/0

$40,000/10,000/0

$30,000/10,000/0

$40,000/0/5,000

6) The entry to sell 50 shares of $10 par ordinary shares at $16 per share would include a:

500 debit to cash.

500 debit to share capital.

500 credit to share capital.

500 credit to cash.

7) Which of the following statements are NOT true regarding Treasury Shares?

It is issued shares that have been reacquired by the issuing corporation.

The treasury shares account is a contra asset account.

It is sometimes used to give employees as part of their compensation package.

In recording preference shares, the share capital account is not used.

8) When no par shares is sold,:

sometimes a stated value is given to the shares.

paid in capital in excess of par is debited.

paid in capital in excess of par is credited.

none of the above is true.

9) In calculating total shareholders equity which account is not included?

Paid in capital

Share capital

Preference shares

Accounts payable

10) On June 5^th, the Lloyd Corporation declared a $100,000 cash dividend to be given to all July 1^st shareholders. The dividend is to be paid on August 1^st. Which of the answers give the date of declaration, date of record, and date of payment respectively?

August 1/June 5/July 1

July 1/August 1/June 5

June 5/July 1/August 1

July 1/June 5/August 1

11) Treasury Shares are recorded at:

Cost

Par value

Neither

12) Treasury shares are an asset carried at market value on the balance sheet:

True

False