test bank for fundamental accounting principles volume2 canadian 15th edition by larson
test bank for fundamental accounting principles volume2 canadian 15th edition by larson
test bank for fundamental accounting principles volume2 canadian 15th edition by larson
test bank for fundamental accoun...
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
Reporting procedures are the same for private and public corporations.
Answer:
True
False
2)
A limited liability company is a corporation for professionals such as lawyers and accountants.
Answer:
True
False
3)
A corporation is a legal entity separate from its owners.
Answer:
True
False
4)
Corporations can be either public or limited.
Answer:
True
False
5)
A privately held corporation has a limited life because it is tied to the physical lives of its owners.
Answer:
True
False
6)
Shares are attractive to investors because shareholders are not liable for the corporation's actions and
debts and because shares are easily transferred.
Answer:
True
False
7)
The income of a corporation is taxed twice, first as corporate income and then as personal income to
shareholders who receive cash dividends.
Answer:
True
False
8)
Authorized shares are the total number of shares outstanding.
Answer:
True
False
9)
Organization costs may be paid for by giving shares to promoters of a corporation in exchange for
their services in organizing the corporation.
Answer:
True
False
10)
An underwriter keeps shareholder records and prepares official lists of shareholders and dividend
payments.
Answer:
True
False
11)
The statement of changes in equity for a corporation shows both how retained earnings and share
capital have changed during the accounting period.
Answer:
True
False
12)
Profits or losses are recorded in a share capital account.
Answer:
True
False
13)
The equity of a corporation changes because of profits or losses, distributions of incomes
(dividends) and shareholder investments.
Answer:
True
False
1Test Bank for Fundamental Accounting Principles Volume 2 Canadian 15th Edition by Larson IBSN 1259087360
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Full all chapters instant download please go to Solutions Manual, Test Bank site: downloadlink.org 14)
Income tax expense is recorded with the operating expenses on the income statement for a
corporation.
Answer:
True
False
15)
The equity section of a corporation's balance sheet is called Corporation Equity.
Answer:
True
False
16)
The two main areas of the equity section of a corporation's balance sheet are share capital and
retained earnings.
Answer:
True
False
17)
The equity section for the single proprietorship can be called owner's equity because the equity
belongs to the owner. The equity section for a corporation can be called shareholders' equity because
the equity belongs to a group of owners known as shareholders.
Answer:
True
False
18)
Whether a business is organized as a corporation or as a proprietorship, the profit reported on the
income statement will be the same.
Answer:
True
False
19)
The main differences between profit reported by a proprietorship and a corporation are income tax
expense and salaries paid to owners.
Answer:
True
False
20)
When a corporation sells shares directly, it pays a brokerage house to issue the shares.
Answer:
True
False
21)
A corporation can issue two general types of shares: common and preferred.
Answer:
True
False
22)
Common shares usually carry a preference for dividends.
Answer:
True
False
23)
Special rights for preferred shares may include a preference in receiving dividends and in the
distribution of assets if the corporation is liquidated.
Answer:
True
False
24)
One of the preference rights for preferred shares is the right to vote.
Answer:
True
False
25)
If a corporation is authorized to issue 1,000 preferred shares, which have a current market value of
$80 per share, it has $80,000 worth of shares outstanding.
Answer:
True
False
26)
Shares are most commonly issued for cash.
Answer:
True
False
2 27)
If shares are issued for non-cash assets, the assets are always recorded at the current market value of
the shares.
Answer:
True
False
28)
Whenever the dividend rate on preferred shares is higher than the rate the corporation earns on its
assets, the effect of issuing preferred shares is to increase the dividend rate earned by common
shareholders.
Answer:
True
False
29)
Corporations issue preferred shares in order to raise capital without sacrificing control of the
corporation and to increase the return earned by common shareholders.
Answer:
True
False
30)
The use of preferred shares to increase return to common shareholders is an example of financial
leverage.
Answer:
True
False
31)
When preferred shares are issued, this will always cause an increase in the future return to common
shareholders.
Answer:
True
False
32)
Preferred shares are seen by some investors as being less risky and having a greater dividend rate
than common shares.
Answer:
True
False
33)
When issuing shares, the initial investment is credited to Retained Earnings.
Answer:
True
False
34)
When issuing common shares, the initial investment is credited to Common Shares.
Answer:
True
False
35)
Dividends represent the distribution of profits to the shareholders of a corporation.
Answer:
True
False
36)
Dividends represent the distribution of profits to the managers of a corporation.
Answer:
True
False
37)
The shareholders can vote to pay themselves a dividend.
Answer:
True
False
38)
The liability for preferred dividends declared is recorded on the date of record.
Answer:
True
False
39)
The date of record is the date the directors vote to pay a dividend to shareholders.
Answer:
True
False
3
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