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Exam 11: Proprietorships, Partnerships, and Corporations

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Question 81

Multiple Choice

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The term "double taxation" refers to which of the following?

A) A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals.
B) In a partnership, both partners are required to claim their share of net income on their tax returns.
C) Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on their dividends.
D) A sole proprietorship must pay income taxes to both the state government and the federal government.

E) C) and D)
F) All of the above

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Question 82

True/False

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A corporation might buy some of its own stock to help keep the market price from falling.

A) True
B) False

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Question 83

Multiple Choice

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Determine the dollar value of the stock dividend issued by James Corporation.

With respect to the current ratio, the declaration of a cash dividend will:

Ease of transferability of ownership is one of the important advantages of the corporate form of business organization.

Woodruff Corporation has 170,000 shares of $10 par value common stock issued and outstanding. If Woodruff Corporation issued a 2-for-1 stock split, what dollar amount would be shown for common stock on the balance sheet after the stock split?

Coleman Co. purchased 500 shares of its own stock as treasury stock for $30 per share. The no-par stock had originally been issued at $25 per share. Show the effects of the purchase.

What is the importance of record date for a corporation that has declared dividends?

Indicate whether each of the following statements is true or false. _____ a) Double taxation refers to the fact that both a partnership and its partners must pay income tax on the earnings of the partnership. _____ b) A sole proprietorship is an accounting entity separate from its owner. _____ c) Limited liability is a benefit to both corporations and partnerships, but not to sole proprietorships. _____ d) Unlike a partnership, a corporation is not terminated when a major stockholder withdraws his or her investment. _____ e) Corporations are, generally, subject to fewer governmental regulations than sole proprietorships.

The book value of a share of stock is equal to the market or selling price of the stock.

Describe cumulative preferred stock.

In a closely held corporation, exchanges of stock are limited to transactions between individuals.

Calculate the number of shares outstanding after the stock dividend is issued.