1. Brandon Corporation issues 2,000 shares of $40 par common stock for $43 per share. The amount credited to paid-in capital in excess of par is:

A) $80,000.

B) $86,000.

C) $ 6,000.

D) $ 0.

2. The date of declaration creates a(n) ___________ for the corporation.

A) asset

B) liability

C) expense

D) revenue

3. Rick Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20-par, 6% preferred stock and 10,000 shares of $15-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholders on the date of payment?

A) $40,000 preferred, $0 common

B) $0 preferred, $40,000 common

C) $34,000 preferred, $6,000 common

D) $6,000 preferred, $34,000 common

4. A stock dividend affects the debiting and crediting of the following accounts:

A) debit retained earnings, debit common stock; credit paid-in capital in excess of par.

B) credit retained earnings; debit common stock; credit paid-in capital in excess par.

C) debit retained earnings; credit common stock, credit paid-in capital in excess of par.

D) credit retained earnings, credit common stock and credit paid-in capital in excess of par.

5. Henry and Thomas share gains and losses in the ratio of 2:1. After selling all assets for cash and paying all liabilities, the cash account has $12,000 in it. The capital accounts were as follows:Henry $10,000; Thomas $2,000. How much of the $12,000 cash would Henry receive?

A) $2,000

B) $8,000

C) $10,000

D) $12,000

6. A stock dividend will:

A) Increase total equity

B) Not change total equity

C) Decrease total equity

D) Does not affect equity

7. The following are advantages of the corporate form of business EXCEPT:

A) Ease of raising capital

B) Limited liability

C) Double taxation of dividends

D) Perpetual existence

8. Shares repurchased by a corporation are referred to as:

A) Treasury stock

B) Share dividends

C) A stock split

D) Stock options

9. When a corporation sells treasury stock for more than the purchase price:

A) The corporation realizes a loss

B) The corporation realizes a gain

C) The difference becomes part of retained earnings

D) The difference becomes part of Additional Paid in Capital

10. Return on equity can be compared to:

A) Rates of returns on other similar investments

B) Interest rates paid by a bank

C) Return on debt (cost of debt)

D) All of the above