Exam 1 ACCT 211

Black Hills State University 211 (Accounting 2) With the textbook: Accounting Principles 14 Edition using WileyPlus Professor: Scott Hawkins Created: 2023

A partner's share in a partnership is taxed

at personal tax rates

Corporations have ____ life. Partnerships have ____ life:

Unlimited, limited

Partners have ____ liability, partnerships have ____ life

Unlimited, limited

Which type of alternative partnership is designed to protect innocent partners from other partners' malpractice or negligence:

limited liability partnership

Which type of alternative partnership is designed to have limited liability like a corporation, but not be taxed as a separate entity like a partnership:

Limited liability corporation

During partnership formation, investments are recorded at:

Fair Value

While forming a partnership, one partner contributed the following: Cash 5k, Equipment historical cost 10k, accumulated depreciation 2k, equipment fair value 6k - what was their contributed capital value:

11k

A partnership of 2 people reported net income of $10k. Partners A & B have a 50/50 income ratio, and had drawings of 4k and 2k respectively. What was the net effect to Partner A's capital account:

increase 1k

During partnership liquidation, the cash is distributed according to:

each partner’s capital balance.

Adding a partner through the purchase of a partner's interest results in:

Net assets are the same, total capital is the same.

Adding a partner through new partner investment results in:

Net assets increase, total capital increases.

When a withdrawing partner is paid from partner's personal assets, that results in:

Personal assets decrease, total capital stays the same.

Which is not a characteristic of a corporation:

Limited life.

Which is a characteristic of a corporation:

Raise capital with stock issuance.

Double taxation occurs when:

Corporations pay corporate income tax and stockholders pay taxes on dividends.

 Stock ownership allows stockholders to vote for the board of directors:

True.

Which is not a right of stockholders:

Have a claim on assets during liquidation.

Which of these stock formulas are correct:

Issued= Outstanding + Treasury Stock

Stockholder's equity is made up of two parts:

Paid in capital, common stock.

A company issued 1000 shares at $5 par, what was the journal entry:

Cash 5000

—Common Stock 5000

Preferred stock have a priority in dividends, but do not generally have voting rights:

True, true.

A company issued 1000 shares of 10 DOLLARS preferred stock for $12:

Cash 12000

—APIC-PS 2000

—Preferred Stock 2000

Company buys 1000 of its own shares at $6 a share:

Treasury Stock 6000

—Cash 6000

The majority of dividends are cash, some are stock dividends, and there are a couple of other uncommon types:

True.

Which of these is not required to pay a cash dividend:

Current net income must be greater than the dividend.

Which of these dates do not pertain to the dividend process:

Date of cash reserves measurement.

The journal entry format for the date of declaration is:

Cash Dividend

—Dividend Payable

The journal entry format for the date of record is:

No entry required.

The journal entry format for the date of payment is:

Dividend Payable

—Cash

If dividends are declared, preferred stockholders receive dividends before common stockholders:

True.

Which type of preferred stock has a set dividend amount: Cumulative or non-cumulative

Both.

Company has 1000 shares of 8% 100 DOLLARS par non-cumulative preferred stock outstanding, and 5000 shares of 1 DOLLARS par common stock. The company issues a $15k cash dividend, how much was the total preferred stock dividend:

8,000.

When a stock dividend is issued the retained earning ____ and the total stockholder's equity ____:

Goes down, stays the same.

A "small" stock dividend values the new stock at:

Market price.

A "large" stock dividend values the new stock at:

Par value.

In a stock split the number of shares is ____, and the par value is proportionately ____:

Increased, decreased.

A company has 10k shares of $20 par common stock and declares a 4 for 1 stock split, what are the # of shares and par value after the split:

40k shares, $5 per share.

Which of these ratio descriptions is for earning per share:

Net income by each share of outstanding stock.

Debt investments are investments in:

Government and other corporation’s bonds.

 

A company purchased 20 Nike Inc. 6% 10-year $1000 bonds:

Debt Investment 20,000

—Cash 20,000

Stock investments are investments in other company's:

Stock shares.

If a company owns less than 20% of another company's stock, it is recorded using the:

Cost method.

If a company owns between 20% and 50% of another company's stock, it gets recorded according to the:

Equity method.

If a company owns over 50% of another company's stock, it gets recorded according to the:

Consolidated method.

A company buys 1000 shares at $4 a share. This share buy represents 10% of the purchased company's total shares:

Stock Investment 4000

—Cash 4000

A company previously purchased 1000 shares of another company's stock (10% of total stock) for 4 DOLLAR a share, and is now receiving a 2 DOLLAR per share cash dividend:

Cash 2000

—Dividend Revenue 2000

 

Purchased 30% of another company's stock for 60k

Stock Investment 60,000

—Cash 60,000

Trading securities are described as:

Bonds that are bought with the intention to sell in the short term.

Available for sale securities are

Bonds that are bought with the intention to sell at some point in the future.

When reporting investments, an unrealized gain comes from:

The fair value is greater than the historical cost of held securities.