Question 1

Common Stock Subscribed is an equity account.

Accepted Answer

Common Stock Subscribed is a type of equity account that represents the amount of money pledged by investors to purchase shares of a company's common stock. This account is typically used during the initial public offering (IPO) process when a company is seeking to raise capital by issuing shares of stock to the public. The funds collected from the sale of common stock subscribed are recorded as part of the company's equity on the balance sheet.

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

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...

Question 4

The number of shares of common stock that can 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 5

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

Accepted Answer

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

Question 6

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 their fair market value at the time of issuance, not their historical cost.

Question 7

The owners of a corporation are called----------- .

Accepted Answer

The answer of The owners of a corporation are called-----------...

Question 8

In respect to corporate debt, stockholders have----------- liability.

Accepted Answer

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

Question 9

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

Accepted Answer

The statement is true. The stockholders' ledger is a subsidiary ledger that provides details about the ownership of a particular class of stock. The total number of shares shown in the subsidiary ledger should agree with the number of shares in the capital stock account for that particular class. This reconciliation helps to ensure the accuracy of the accounting records related to the stockholders' equity section of the balance sheet.

Question 10

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

Accepted Answer

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

Question 11

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 12

Ari Hightower owns 250 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share of preferred stock surrendered. If she surrenders all her preferred stock, she will receive------------ shares of common stock.

Accepted Answer

The answer of Ari Hightower owns 250 shares of preferred...

Question 13

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

Accepted Answer

State laws typically require corporations to issue stock at par or a stated value, which is the minimum price at which the stock can be sold. This is intended to protect shareholders by ensuring that the company receives a fair value for its shares and to prevent the issuance of "watered-down" or undervalued stock.

Question 14

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

Accepted Answer

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

Question 15

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 in the general ledger for each common stockholder of a corporation. Rather, there is typically one Common Stock account in the general ledger that represents the total shares of common stock issued by the corporation.

Question 16

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 17

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 to...

Question 18

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

Accepted Answer

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

Question 19

If a corporation sells 700 shares of 8 percent, $80 par-value preferred stock for $96 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 700 shares of...

Question 20

Profit distribution to stockholders is called-------- .

Accepted Answer

The answer of Profit distribution to stockholders is called-------- ....

Quiz 20: Corporations: Formation and Capital Stock Transactions