ACCT 340 (verified answers and graded A+)

The residual interest in a corporation belongs to the a. management b. creditors c. common stockholders d. preferred stockholders - ANScommon stockholders The pre-emptive right of a common stockholder is the right to a. share proportionately in a corporate asset upon liquidation b. share proportionately in any new issues of stock of the same class c. receive cash dividends before they are distributed to preferred stockholders d. exclude preferred stockholders from voting rights - ANSshare proportionately in any new issues of stock of the same class Total stockholders' equity represents a. a claim to specific assets contributed by the owners b. the maximum amount that can be borrowed by the enterprise c. a claim against a portion of the total assets of an enterprise d. only the amount of earnings that have been retained in the business - ANSa claim against a portion of the total assets of an enterprise When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the a. market value of the services received b. par value of the shares issued c. market value of the shares issued d. any of these provides an appropriate basis for recording the transaction - ANSpar value of the shares issued Direct costs incurred to sell stock such as underwriting costs should be accounted for as 1. a reduction of additional paid-in capital 2. an expense of the period in which the stock is issued 3. an intangible asset a. 1 b. 2 c. 3 d. 1 or 3 - ANS1 In January 2012, Finely Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock of $15 per share. On July 1, 2012, Finely Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares a. decreased total stockholders' equity b. increased total stockholders' equity c. did not change total stockholders' equity d. decreased the number of issued shares - ANSdecreased total stockholders' equity