1. The purchase of treasury stock:

decreases total assets and increases total stockholders' equity.

increases total assets and decreases total stockholders' equity.

increases total assets and increases total stockholders' equity.

decreases total assets and decreases total stockholders' equity.

2. Treasury stock is reported in the balance sheet as a deduction from:

paid-in capital and retained earnings.

retained earnings.

additional paid-in capital.

capital stock.

3. Ownership of common stock ordinarily carries the right to:

declare dividends.

vote on corporate actions that require stockholder approval.

enter into contracts for the corporation.

establish a drawing account.

4. A corporation is formed when:

it receives a charter from its president.

None of the other choices are correct.

it is granted by-laws by the federal government.

it borrows money

5. Which of the following may either increase or decrease retained earnings?

Prior period adjustments.

Stock dividends.

Disposals of treasury stock.

Net income.

6. The account Unrealized Loss—Income is reported:

in the other expenses and losses section of the income statement.

in the operating section of the income statement.

as a contra account in the stockholders' equity section of the balance sheet.

as a contra account in the current asset section of the balance sheet.

Copper Inc. accounts for its investment in Ridge Corporation using the fair value method. Copper bought 3,000 shares (5%) of Ridge's outstanding common stock for $28 per share on January 1, 2014. Ridge earned $3 per share for 2014, declared and paid cash dividends of $1 per common share, and had a closing fair value of $24 per share on December 31. The reported balance sheet value of Copper's investment in Ridge at December 31, 2014 is: