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1. Twenty percent of all businesses in the United States are corporations, and they account for 80% of the total business dollars generated.
a. True
b. False
2.
A corporation is a separate
entity for accounting purposes but not for legal purposes.
a. True
b. False
3. The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.
a. True
b. False
4.
Under the Internal Revenue Code, corporations are required to pay federal income taxes.
a. True
b. False
5. Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied
to partnerships.
a. True
b. False
6. The initial owners of stock of a newly formed corporation are called directors.
a. True
b. False
7. While some businesses have been granted charters under state laws, most businesses receive their charters under federal laws.
a. True
b. False
8. Organizational expenses are classified as intangible assets on the balance sheet.
a. True
b. False
9. The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.
a. True
b. False
10. Retained Earnings represents past net income less past dividends, therefore any balance in this account would be listed on the income statement.
a. True
b. False
11. The net increase or decrease in Retained Earnings for a period is recorded by closing entries.
a. True
b. False
12. The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.
a. True
b. False
13.
A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet.
a. True
b. False
14. When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.
a. True
b. False
15. The par value of common stock must always be equal to its market value on the date the stock is issued.
a. True
b. False
16.
For accounting purposes, stated value is treated the same way as par value.
a. True
b. False
17. The issuance of common stock affects both paid-in capital and retained earnings.
a. True
b. False
18. The main source of paid-in capital is from issuing stock.
a. True
b. False
19. The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.
a. True
b. False
20. The amount of capital paid in by the stockholders of the corporation is called legal capital.
a. True
b. False
21. If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.
a. True
b. False
22. If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000.
a. True
b. False
23. Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.
a. True
b. False
24. If a corporation is liquidated, preferred stockholders are paid before the creditors and before the common stockholders.
a. True
b. False
25.
Paid-in capital may originate from real estate transactions.
a. True
b. False
26. The par value of stock is an assigned per share amount defined in many states as legal capital.
a. True
b. False
27. A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.
a. True
b. False
28. When common stock is issued in exchange for land, the land should be recorded in the accounts at the par value of the stock issued.
a. True
b. False
29. When a corporation issues stock at a premium,
it reports the premium as an other income item on the income statement.
a. True
b. False
30. When no-par stock is issued, Common Stock is credited for the selling price of the stock issued.
a. True
b. False
31.
A large retained earnings account means that there is cash available to pay dividends.
a. True
b. False
32. When the board of directors declares a cash or stock dividend, this action decreases retained earnings.
a. True
b. False
33. If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend
of $1 per share would amount to $15,000.
a. True
b. False
34.
The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.
a. True
b. False
35. One of the prerequisites to paying a cash dividend is sufficient retained earnings.
a. True
b. False
36. Cash dividends become a liability to a corporation on the date of record.
a. True
b. False
37. The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity.
a. True
b. False
38. The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.
a. True
b. False
39. Before a stock dividend can be declared or paid, there must be sufficient cash.
a. True
b. False
40.
The day on which the board of directors of the corporation distributes a dividend is called the declaration date.
a. True
b. False
41. A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.
a. True
b. False
42. The stock dividends distributable account is listed in the current liability section of the balance sheet.
a. True
b. False
43.
Cash dividends are normally paid on shares of treasury stock.
a. True
b. False
44. The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.
a. True
b. False
45. Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.
a. True
b. False
46. If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported on the income statement.
a. True
b. False
47. A sale of treasury stock may result in a decrease
in paid-in capital. All decreases should be charged to Paid-In Capital from Sale of Treasury
Stock.
a. True
b. False
48. Treasury Stock is listed in the stockholders' equity section on the balance sheet.
a. True
b. False
49.
A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific purpose.
a. True
b. False
50. A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.
a. True
b. False
51. The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial
statements.
a. True
b. False
52.
The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders’ equity.
a. True
b. False
53. The retained earnings statement may be combined with the income statement.
a. True
b. False
54. If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.
a. True
b. False
55. A corporation has 10,000 shares of $100 par stock outstanding.
If the corporation issues a 5-for-1
stock split, the number of shares outstanding after the split will be 40,000.
a. True
b. False
56. The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors
to enter the market for the company's shares.
a. True
b. False
57. The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional
shares, is called a stock split.
a. True
b. False
58. A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $50.
a. True
b. False
59. A stock split results in a transfer
at market value from retained earnings to paid-in capital.
a. True
b. False
60. If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.
a. True
b. False
61.
Which
of the
following is not a characteristic of a corporation?
a. The financial loss that a stockholder may suffer from owning stock in a public company is limited.
b. Cash dividends paid by a corporation are deductible as expenses by the corporation.
c. A corporation can own property in its name.
d. Corporations are required to file federal income tax returns.
62. Characteristics of a corporation include
a. shareholders who are mutual agents
b. direct management by the shareholders (owners)
c. its inability to own property
d. shareholders who have limited liability
63. One of the main disadvantages of the corporate form is the
a. professional management
b. double taxation of dividends
c. charter
d. requirement to stock
64.
A disadvantage of the corporate form of business entity is
a. mutual agency for stockholders
b. unlimited liability for stockholders
c. corporations are subject to more governmental regulations
d. the ease of transfer of ownership
65. Under the corporate form of business organization,
a. ownership rights are easily transferred
b. a stockholder is personally liable for the debts of the corporation
c. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation
d. stockholders wishing to sell their corporate shares must get the approval of other stockholders
66. Those most responsible for the major policy decisions of a corporation are the
a. management
b. board of directors
c. employees
d. stockholders
67.
Which one of the following would not be considered an advantage of the corporate form of organization?
a. government regulation
b. separate legal existence
c. continuous life
d. limited liability of stockholders
68.
Which of the
following is not true of a corporation?
a. It may enter into binding legal contracts in its own name.
b. It may sue and be sued.
c. The acts of its owners bind the corporation.
d. It may buy, own, and sell property.
69. The ability of a corporation to obtain capital is
a. less than the ability of a partnership
b. about the same as the ability of a partnership
c. restricted because of the limited life of the corporation
d. enhanced because of limited liability and ease of share transferability
70.
Which of the following statements concerning taxation is accurate?
a. Corporations pay federal income taxes but not state income taxes.
b. Corporations pay federal and state income taxes.
c. Only the owners must pay taxes on corporate income.
d. Corporations pay income taxes but their owners do not.
71. The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?
a. Retained Earnings
b. Treasury Stock
c. Organizational Expenses
d. Common Stock
72. Stockholders' equity
a. is usually equal to cash on hand
b. includes paid-in capital and liabilities
c. includes retained earnings and paid-in capital
d. is shown on the income statement
73. The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called
a. treasury stock
b. issued stock
c. outstanding stock
d. authorized stock
74.
Which
of
the following is not a right possessed
by common stockholders of a corporation?
a. the right to vote in the election of the board of directors
b. the right to receive a minimum amount of dividends
c. the right to sell their stock to anyone they choose
d. the right to share in assets upon liquidation
75. The charter of a corporation provides for the issuance of 100,000 shares of common stock.
Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired.
What is the number of shares outstanding? a. 10,000
b. 40,000
c. 30,000
d. 50,000
76.
The par value per share of common stock represents the
a.
minimum selling price of the stock established by the articles of incorporation.
b.
minimum amount the stockholder will receive when the corporation is liquidated
c.
dollar amount assigned to each share
d.
amount of dividends per share to be received each year
77. Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for
a. $30,000 b.
$45,000 c. $15,000 d.
$3,000
78. The excess of issue price over par of common stock is termed a(n)
a.
discount
b.
income
c.
deficit
d.
premium
79. The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to
a. Organizational Expenses
b. Goodwill
c. Common Stock
d. Cash
80. The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?
a. the financial condition, earnings record, and dividend record of the corporation
b. investor expectations of the corporation's earning power
c. how high the par value is
d. general business and economic conditions and prospects
81. The entry to record the issuance of common stock at a price above par includes a debit to
a. Organizational Expenses
b. Common Stock
c. Cash
d. PaidIn Capital in Excess of Par—Common Stock
82. Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building
be recorded by Kansas Company?
a. $60,000 b. $180,000 c. $210,000 d.
$120,000
83. The charter of a corporation provides for the issuance of 100,000 shares of common stock.
Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired.
What is the number of shares outstanding? a. 35,000
b. 70,000
c. 25,000
d. 30,000
84. Par value
a. is the monetary value assigned per share in the corporate charter
b. represents what a share of stock is worth
c. represents the original selling price for a share of stock
d. is established for a share of stock after it is issued
85.
The authorized stock of a corporation
a. must be recorded in a formal accounting entry
b. only reflects the initial capital needs of the company
c. is indicated in its by-laws
d. is indicated in its charter
86. If Dakota Company issues 1,500 shares of $6 par common stock for $75,000,
a. Common Stock will be credited for $75,000
b. Paid-In Capital in Excess of Par will be credited for $9,000
c. Paid-In Capital in Excess of Par will be credited for $66,000
d. Cash will be debited for $66,000
87. If common stock is issued for an amount greater than par value, the excess should be credited to
a. Retained Earnings
b. Cash
c. Legal Capital
d. Paid-In Capital in Excess of Par
88. The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000
and a credit or credits to
a. Preferred Stock for $750,000
b. Preferred Stock for $500,000 and PaidIn Capital in Excess of Par—Preferred Stock for $250,000
c. Preferred Stock for $500,000 and Retained Earnings for $250,000
d. Paid-In Capital from Preferred Stock for $750,000
89. Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. When the transaction is recorded, credits are made to
a. Common Stock, $14,000
b. Common Stock, $10,000, and Paid-In Capital in Excess of Par, $4,000
c. Common Stock, $4,000, and Paid-In Capital in Excess of Stated Value, $10,000
d. Common Stock, $10,000, and Retained Earnings, $4,000
90. Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded,
credits are made to:
a. Common Stock, $15,000, and Paid-In Capital in Excess of Par, $7,000
b. Common Stock, $22,000, and Retained Earnings, $15,000
c. Common Stock, $7,000, and Paid-In Capital in Excess of Stated Value, $15,000
d. Common Stock, $22,000
91. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock.
The following
amounts were distributed as dividends:
|
Year 1:
|
$10,000
|
|
Year 2:
|
45,000
|
|
Year 3:
|
90,000
|
Determine the dividends per share for preferred and common stock for the first year. a. $0.50 and $0.10 b. $0.00 and $0.10
c. $0.50 and $0.00 d. $2.00 and $0.00
92. When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 share of $10 par value common stock.
The following
transaction was among those engaged in by the corporation during its first month of operation:
The corporation issued 8,500 shares of stock at a price of $16 per share.
The entry to record the above transaction would include a
a. debit to Cash for $85,000
b. credit to Common Stock for $136,000
c. credit to Paid in Capital in Excess of Par for $51,000
d. debit to Common Stock for $85,000
93. 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 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?
a. $60,000 b. $20,000 c. $120,000 d. $100,000
94. The charter of a corporation provides for the issuance of 100,000 shares of common stock.
Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired.
What is the amount of cash dividends
to be paid if a $2 per share dividend is declared?
a. $80,000 b. $10,000 c. $90,000 d. $100,00
95.
The date on which a cash dividend becomes a binding legal obligation
is on the
a. declaration date
b. date of record
c. payment date
d. last day of fiscal year
96. The cumulative effect of the declaration and payment of a cash dividend on a company’s
financial statements is to
a. decrease total liabilities and stockholders' equity.
b. increase total expenses and total liabilities
c. increase total assets and stockholders'
equity
d. decrease total assets and stockholders' equity
97. Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?
a. Retained Earnings
Cash
b. Cash Dividends Payable
Cash
c. PaidIn Capital
Cash Dividends Payable
d. Cash Dividends
Cash Dividends Payable
98. Texas Inc. has 10,000 shares of 6%, $125 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?
a. $75 per share
b. $75,000 in total
c. $10,000 in total
d. $0.75 per share
99.
Which of
the following
is
not a prerequisite to paying a cash dividend?
a. formal action by the board of directors
b. market value in excess of par value per share
c. sufficient cash
d. sufficient retained earnings
100. The liability for a dividend is recorded on which of the following dates?
a. the date of record
b. the date of payment
c. the last day of the fiscal year
d. the date of declaration
101. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8.
Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share.
What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
a. $3,200
b. $6,400
c. $4,800
d. $8,800
102. A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9.
Subsequently, the company declared
a 2% stock dividend
on a date when the market price was $10 a share.
The effect of the declaration and issuance of the stock dividend is to
a.
decrease retained earnings, increase common stock, and increase paid-in capital
b.
increase retained earnings, decrease common stock, and decrease paid-in capital
c.
increase retained earnings, decrease common stock, and increase paid-in capital
d.
decrease retained earnings, increase common stock, and decrease paid-in capital
103. A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8.
Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share.
What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
a. $12,800
b. $19,200
c. $32,000
d. $48,800
104. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock.
The following
amounts were distributed as dividends:
|
Year 1:
|
$10,000
|
|
Year 2:
|
45,000
|
|
Year 3:
|
90,000
|
Determine the dividends per share for preferred and common stock for the second year. a. $2.25 and $0.00 b. $2.25 and $0.45
c. $0.00 and $0.45 d. $2.00 and $0.45
105. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock.
The following
amounts were distributed as dividends:
|
Year 1:
|
$10,000
|
|
Year 2:
|
45,000
|
|
Year 3:
|
90,000
|
Determine the dividends per share for preferred and common stock for the third year. a. $4.50 and $0.25 b. $3.25 and $0.25
c. $4.50 and $0.90 d. $2.00 and $0.25
106. Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock.
The following
amounts were distributed as dividends:
|
Year 1:
|
$10,000
|
|
Year 2:
|
45,000
|
|
Year 3:
|
90,000
|
Determine the dividends in arrears for preferred stock for the second year. a. $25,000 b. $10,000
c. $0 d. $30,000
107.
When a stock dividend is declared, which of the following accounts is credited?
a. Common Sock
b. Dividend Payable
c. Stock Dividends Distributable
d. Retained Earnings
108. Treasury stock shares are
a. shares held by the U.S. Treasury Department
b. part of the total outstanding shares but not part of the total issued shares of a corporation
c. unissued shares that are held by the treasurer of the corporation
d. issued shares that have been reacquired by a corporation
109. On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share.
On February
1, Vermont purchased 3,750 shares of treasury
stock for $24 per share and later sold the treasury shares for $21 per share on March 1.
The journal entry to record the purchase of the treasury shares on February 1, would include a
a. credit to Treasury Stock for $90,000
b. debit to Treasury Stock for $90,000
c. debit to a loss account for $112,500
d. credit to a gain account for $112,500
110.
Which statement below is not a reason for a corporation to buy back its own stock.
a. resale to employees
b. bonus to employees
c. for supporting the market price of the stock
d. to increase the shares outstanding
111. How is treasury stock shown on the balance sheet?
a. as an asset
b. as a decrease in stockholders' equity
c. as an increase in stockholders' equity
d. treasury stock is not shown on the balance sheet
112. The excess of sales price of treasury stock over its cost should be credited to
a. Treasury Stock Receivable
b. Premium on Capital Stock
c. Paid-In Capital from Sale of Treasury Stock
d. Income from Sale of Treasury Stock
113.
Treasury stock that was purchased for $3,000 is sold for $3,500.
As a result of these two transactions combined
a.
income will be increased by $500
b.
stockholders' equity will be increased by $3,500
c.
stockholders' equity will be increased by $500
d.
stockholders' equity will not change
114. Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to
a.
Treasury Stock for $8,500
b.
Paid-In Capital from Sale of Treasury Stock for $8,500
c.
PaidIn Capital in Excess of Par—Common Stock for $2,900
d.
Paid-In Capital from Sale of Treasury Stock for $2,900
115. A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?
a.
$0
b. $5,000
c. $2,500
d. $10,000
116. A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?
a.
increase, $100,000
b.
increase, $350,000
c.
decrease, $100,000
d.
decrease, $350,000
117. What is the total stockholders' equity based on the following account balances?
Common Stock $375,000
Paid-In Capital in Excess of Par 90,000
Retained Earnings 190,000
Treasury Stock 15,000
a. $670,000 b. $655,000 c. $640,000 d.
$565,000
118.
In which section of the financial statements would PaidIn Capital from Sale of Treasury Stock be reported?
a. other expense on income statement
b. intangible asset on the balance sheet
c. stockholders' equity on balance sheet
d. other income on income statement
119.
Which of
the following
is
not classified as paid-in capital on the balance sheet?
a. common stock
b. common stock distributable
c. excess of issue price over par
d. treasury stock
120.
All of the following are normally found in a corporation's stockholders' equity section except
a. Common Stock
b. Paid-In Capital in Excess of Par
c. Dividends in Arrears
d. Retained Earnings
121.
Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?
a. the number of shares of common stock outstanding
b. the number of shares of common stock issued
c. the number of shares of common stock authorized
d. all of the above
122. Significant changes in stockholders' equity are reported in
a. income statement
b. retained earnings statement
c. statement of stockholders' equity
d. statement of cash flows
123. Retained earnings
a. is the same as contributed capital
b. cannot have a debit balance
c. changes are summarized in the retained earnings statement
d. is equal to cash on hand
124.
Which of the following would appear as a prior period adjustment?
a.
loss resulting from the sale of fixed assets
b.
difference between the actual and estimated uncollectible accounts receivable
c.
error in the computation of depreciation expense in the preceding year
d.
loss from the restructuring of assets
125. A restriction/appropriation of retained earnings
a.
decreases total assets
b.
increases total retained earnings
c.
decreases total retained earnings
d.
has no effect on total retained earnings
126. The Dayton Corporation began the current year with a retained earnings balance of $32,000.
During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared
cash dividends of $7,000.
Compute the year-end
retained earnings balance.
a. $34,000
b. $37,000
c. $41,000
d. $44,000
127.
What is the total stockholders' equity based on the following data?
Common Stock $360,000
Excess of Issue Price Over Par 735,000
Retained Earnings (Deficit) (56,000)
a. $1,095,000 b.
$1,151,000 c. $1,039,000 d.
$679,000
128. The two main sources of stockholders' equity are
a.
investments by stockholders and net income retained in the business
b.
investments by stockholders and dividends paid
c.
net income retained in the business and dividends paid
d.
investments by stockholders and purchases of assets
129.
Treasury stock should be reported in the financial statements of a corporation as a(n)
a. investment
b. liability
c. current asset
d. deduction from stockholders' equity
130. A reduction of par or stated value of stock results from a
a. liquidating dividend
b. stock split
c. stock option
d. preferred dividend
131. A corporation has 50,000 shares of $25 par stock outstanding.
If the corporation issues a 3-for-1
stock split, the number of shares outstanding after the split will be
a. 150,000 shares
b. 50,000 shares
c. 100,000 shares
d. 16,666 shares
132.
When a corporation completes a 3-for-1 stock split
a. the ownership interest of current stockholders is decreased
b. the market price per share of the stock is decreased
c. the par value per share is decreased
d. b and c
133. A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately
a. $7.00
b. $112.00
c. $37.50
d. $600.00
134. The primary purpose of a stock split is to
a. increase paid-in capital
b. reduce the market price of the stock per share
c. increase the market price of the stock per share
d. increase retained earnings
135.
Which of the following statements is not true about a 2-for-1 split?
a. Par value per share is reduced to half of what it was before the split.
b. Total contributed capital increases.
c. The market price will probably decrease.
d. A stockholder with ten shares before the split owns twenty shares after the split.
136. A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately
a. $25
b. $150
c. $5
d. $30
137. A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be
a. $5
b. $60
c. $25
d. $24
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