Partial Test _2 - Partial Test #2 Accounting Principles II...

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Partial Test #2 Name ___________________________ Accounting Principles II Instructor ________________________ Course __________ Date __________ PART I — MULTIPLE CHOICE (50 points) Instructions: Designate the best answer for each of the following questions. ____ 1. A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a a. corporation is organized for the purpose of making a profit. b. corporation is subject to numerous federal and state government regulations. c. corporation is an accounting economic entity. d. corporation’s temporary accounts are closed at the end of the accounting period. ____ 2. Which one of the following would not be considered an advantage of the corporate form of organization? a. Limited liability of owners b. Separate legal existence c. Continuous life d. Double Taxation ____ 3. Ed Stone has invested $400,000 in a corporation. The corporation does not do well and must declare bankruptcy. What amount does Stone stand to lose? a. Up to his total investment of $400,000. b. Zero. c. The $400,000 plus any personal assets the creditors demand. d. $200,000. ____ 4. Which one of the following is not an ownership right of a stockholder in a corporation? a. To vote in the election of directors b. To declare dividends on the common stock c. To share in assets upon liquidation d. To share in corporate earnings ____ 5. If Vickers Company issues 1,000 shares of $5 par value common stock for $70,000, a. Common Stock will be credited for $70,000. b. Paid-In Capital in Excess of Par Value will be credited for $5,000. c. Paid-In Capital in Excess of Par Value will be credited for $65,000. d. Cash will be debited for $65,000. ____ 6. Simon Company issued 4,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting a. Stock Expense for $20,000. b. Bond Expense for $50,000. c. Organization Expense for $20,000. d. Organization Expense for $30,000.
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____ 7. Treasury stock is a. stock issued by the U.S. Treasury Department. b. stock purchased by a corporation and held as an investment in its treasury. c. corporate stock issued by the treasurer of a company. d. a corporation's own stock which has been reacquired but not canceled. ____ 8. The acquisition of treasury stock by a corporation a. increases its total assets and total stockholders' equity. b. decreases its total assets and total stockholders' equity. c. has no effect on total assets and total stockholders' equity. d.
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This note was uploaded on 08/17/2011 for the course ACCO 501 taught by Professor Rosa during the Spring '11 term at American University - Puerto Rico.

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Partial Test _2 - Partial Test #2 Accounting Principles II...

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