Question 1

If the issuing corporation retains the right to repurchase the shares of preferred stock from the stockholders at a specified price,the preferred stock is ___________________.

Accepted Answer

The answer of If the issuing corporation retains the right...

Question 2

The amount paid for stock in excess of par value is called a(n)___________________.

Accepted Answer

The answer of The amount paid for stock in excess...

Question 3

A person who signs a(n)____________________ contract agrees to purchase stock and pay for the shares at a later date.

Accepted Answer

The answer of A person who signs a(n)____________________ contract agrees...

Question 4

Common Stock Subscribed is an equity account.

Accepted Answer

Common Stock Subscribed is an equity account that reflects the amount of money that investors have committed to purchase shares of the company's common stock. It is typically shown on the balance sheet under the stockholders' equity section.

Question 5

If preferred stock is ____________________,its owners must receive the stated dividends for both the current year and any prior years in which the stated dividend was not paid before the common stockholders can receive any dividend.

Accepted Answer

The answer of If preferred stock is ____________________,its owners must...

Question 6

The holder of a share of 12 percent,$100 par-value preferred stock would receive a dividend of ____________________ per share before any dividend was paid to common stockholders.

Accepted Answer

The answer of The holder of a share of 12...

Question 7

Stocks may have a(n)___________________,or stated value.

Accepted Answer

The answer of Stocks may have a(n)___________________,or stated value....

Question 8

The stockholders' ledger for a class of stock is a subsidiary ledger,and the total shares shown must agree with the number of shares in the capital stock account for that class.

Accepted Answer

This statement is true. The stockholders' ledger is a subsidiary ledger that contains individual records for each shareholder in a specific class of stock. The total number of shares recorded in the ledger must match the number of shares in the capital stock account for that specific class.

Question 9

Profits in the form of ____________________ are paid to the stockholders of a corporation.

Accepted Answer

The answer of Profits in the form of ____________________ are...

Question 10

In respect to corporate debt,stockholders have ____________________ liability.

Accepted Answer

The answer of In respect to corporate debt,stockholders have ____________________...

Question 11

The Common Stock Subscribed account has a(n)____________________ balance.

Accepted Answer

The answer of The Common Stock Subscribed account has a(n)____________________...

Question 12

If a corporation sells 400 shares of 12 percent,$100 par-value preferred stock for $105 a share,the entry to record the transaction will include a credit of ____________________ to the Preferred Stock account.

Accepted Answer

The answer of If a corporation sells 400 shares of...

Question 13

Ari Hightower owns 200 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share surrendered.If she surrenders all her preferred stock,she will have _____________________ shares of common stock.

Accepted Answer

The answer of Ari Hightower owns 200 shares of preferred...

Question 14

Assets acquired through the issuance of stock are recorded at their historical cost.

Accepted Answer

Assets acquired through the issuance of stock are recorded at the fair market value of the stock issued, not their historical cost.

Question 15

Stockholders are the ____________________ of a corporation.

Accepted Answer

The answer of Stockholders are the ____________________ of a corporation....

Question 16

Stock that carries special privileges or rights is called ____________________ stock.

Accepted Answer

The answer of Stock that carries special privileges or rights...

Question 17

The balance of the Preferred Stock account represents the ____________________ value of the shares issued.

Accepted Answer

The answer of The balance of the Preferred Stock account...

Question 18

The number of shares of common stock that will be issued for each share of convertible preferred stock is referred to as the ___________________.

Accepted Answer

The answer of The number of shares of common stock...

Question 19

State laws prohibit the issuance of stock at less than par or stated value.

Accepted Answer

This statement is true. Most states require that corporations receiving payment in exchange for shares of stock issue them at a stated value or par value at a minimum. This helps to provide a minimum value for the company's worth and also ensures that shareholders are not receiving stock for less than it is worth.

Question 20

A separate Common Stock account is kept in the general ledger for each common stockholder of a corporation.

Accepted Answer

A separate Common Stock account is not kept for each common stockholder. Instead, a single Common Stock account is maintained in the general ledger to record the total amount of common stock issued by the corporation.

Quiz 20: Corporations: Formation and Capital Stock Transactions