1a.) A disadvantage of the corporate form of business entity is: unlimited liabi
ID: 2470100 • Letter: 1
Question
1a.) A disadvantage of the corporate form of business entity is:
unlimited liability for stockholders
mutual agency for stockholders
the ease of transfer of ownership
corporations are subject to more governmental regulations
1b.) 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 5,000 were subsequently reacquired. What is the number of shares outstanding?
35,000
55,000
5,000
45,000
1c.) The par value per share of common stock represents:
the minimum selling price of the stock established by the articles of incorporation
the amount of dividends per share to be received each year
an arbitrary amount established in the articles of incorporation
the minimum amount the stockholder will receive when the corporation is liquidated
1d.) A corporation issues 1,000 shares of common stock for $ 20,000. The stock has a par value of $5 per share. The journal entry to record the stock issuance would include a credit to Common Stock for:
$1,000
$5,000
$20,000
$15,000
1e.) In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?
other income on income statement
other expense on income statement
stockholders' equity on balance sheet
intangible asset on balance sheet
unlimited liability for stockholders
mutual agency for stockholders
Explanation / Answer
1a Under corporate form of business entity, the corporations are subject to more government regulations. They becomes bounded by them Hence the correct option is D. Corporations are bounded by more regulations 1b Originally Issued 40000 Less: Reacquired -5000 Shares Outstanding 35000 The correct option is A. 35000 1c The par value is the artitraty amount established in the AOP The correct option is C. The arbitrary amount established in the Association of Persons 1d The journal entry would include Credit of common stock by $ 5000 The correct option is B. $ 5000
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