E. Multiple Choice
Instructions: Place the best answer for each of the following questions in the blank at the left.
	1. Which of the following is not a characteristic of the corporate form of organization?
	a. ownership represented by shares of stock
	b. separate legal existence
	c. unlimited liability of stockholders
	d. earnings subject to the federal income tax
	2. The amount printed on a stock certificate is known as:
	a. stated value
	b. premium
	c. discount
	d. par value
	3. Assume that a corporation has outstanding 5,000 shares of $6 cumulative preferred stock of $100 par
	and dividends have been passed for the preceding four years. What is the amount of preferred dividends
	that must be declared in the current year before a dividend can be declared on common stock?
	a. $90,000
	b. $120,000
	c. $150,000
	d. $180,000
	4. When a corporation purchases its own stock, what account is debited for the cost of the stock?
	a. Common Stock Subscribed
	b. Treasury Stock
	c. Preferred Stock
	d. Common Stock Receivable
	5. The excess of the proceeds from selling treasury stock over its cost should be credited to:
	a. Retained Earnings
	b. Premium on Capital Stock
	c. Gain from Sale of Treasury Stock
	d. Paid-In Capital from Sale of Treasury Stock
	6. The claims of the _____ must first be satisfied upon liquidation of a corporation.
	a. preferred stockholders
	b. cumulative preferred stockholders
	c. common stockholders
	d. creditors
	7. A company with 20,000 authorized shares of $20 par common stock issued 12,000 shares at $50.
	Subsequently, the company declared a 5% stock dividend on a date when the market price was $60 per
	share. What is the amount transferred from the retained earnings account to paid-in capital accounts
	as a result of the stock dividend?
	a. $36,000
	b. $30,000
	c. $12,000
	d. $6,000
	8. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume
	that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number
	of shares outstanding?
	a. 5,000
	b. 55,000
	c. 60,000
	d. 100,000
	9. The entry to record the issuance of common stock at a price above par would include a credit to:
	a. Donated Capital
	b. Retained Earnings
	c. Treasury Stock
	d. Paid-In Capital in Excess of Par-Common Stock
	10. A corporation purchases 10,000 shares of its own $20 par common stock for $35 per share,
	recording it at cost. What will be the effect on total stockholders' equity?