MBA 601 MAIN EXAMINATIO 2026 QUESTIONS AND
ANSWERS GRADED A+
✔✔Alpha Associates was organized on January 1, Year 1. Alpha was organized as a
partnership. Alpha reported $200,000 of before tax income during Year 1 and the
partners withdrew $30,000 from the company. Assuming a corporate income tax rate of
30% and a personal income tax rate of 15%, the total amount of tax collected by the
government is - ✔✔$30,000
$200,000 × .15
✔✔Alpha Associates was organized on January 1, Year 1. Alpha was organized as a
corporation. Alpha reported $200,000 of before tax income during Year 1 and paid a
$30,000 cash dividend to its stockholders. Assuming a corporate income tax rate of
30% and a personal income tax rate of 15%, the total amount of tax collected by the
government is - ✔✔$64,500
Corporation:
$200,000 × .30= $60,000
stockholders:
$30,000 × .15= $4,500
add
✔✔In a business organized as a sole proprietorship, retained earnings and capital
acquired from owners are combined is a single account. This statement is (true/false) -
✔✔true
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $40,000 of capital
from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000 and John Crowe withdrew $15,000 from the business. Based on this
information, the Company would show:
-$5,000 of retained earnings on its Year 1 balance sheet.
-$45,000 of retained earnings on its Year 1 balance sheet.
-$60,000 of retained earnings on its Year 1 balance sheet.
-None of the answers is correct. - ✔✔None of the answers is correct
Proprietorships do not have a retained earnings account. Instead, retained earnings are
included in the capital account
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $40,000 of capital
, from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000 and John Crowe withdrew $15,000 from the business. Based on this
information, the Company would show
-$5,000 in its capital account on the Year 1 balance sheet.
-$40,000 in its capital account on the Year 1 balance sheet.
-$45,000 in its capital account on the Year 1 balance sheet.
-$25,000 in its capital account on the Year 1 balance sheet. - ✔✔$45,000 in its capital
account on the Year 1 balance sheet
Zero Beginning capital balance + $40,000 Owner investment + $20,000 Net income -
$15,000 Withdrawal
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $50,000 of capital
from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000. Based on this information, Crowe can withdraw (assume all transactions are
cash transactions) - ✔✔$70,000 from the business
✔✔A corporation may have issued more shares of stock than it has outstanding. This
statement is (true/false) - ✔✔true
✔✔The number of shares a corporation has outstanding may exceed the amount of
shares authorized. This statement is (true/false) - ✔✔false
✔✔Normally companies sell stock for an amount that is - ✔✔more than the par value
✔✔The par value or stated value of stock represents the amount of legal capital that a
corporation must maintain for the protection of the creditors. This statement is
(true/false) - ✔✔true
✔✔The book value of a share of stock may be
-equal to the market value of the stock.
-less than the market value of the stock.
-more than the market value of the stock.
-All of the answers are correct - ✔✔all of the answers are correct
✔✔In general, common stockholders experience - ✔✔greater risk and greater potential
rewards than preferred stockholders.
✔✔All common stockholders have the same rights and privileges. This statement is
(true/false) - ✔✔false
ANSWERS GRADED A+
✔✔Alpha Associates was organized on January 1, Year 1. Alpha was organized as a
partnership. Alpha reported $200,000 of before tax income during Year 1 and the
partners withdrew $30,000 from the company. Assuming a corporate income tax rate of
30% and a personal income tax rate of 15%, the total amount of tax collected by the
government is - ✔✔$30,000
$200,000 × .15
✔✔Alpha Associates was organized on January 1, Year 1. Alpha was organized as a
corporation. Alpha reported $200,000 of before tax income during Year 1 and paid a
$30,000 cash dividend to its stockholders. Assuming a corporate income tax rate of
30% and a personal income tax rate of 15%, the total amount of tax collected by the
government is - ✔✔$64,500
Corporation:
$200,000 × .30= $60,000
stockholders:
$30,000 × .15= $4,500
add
✔✔In a business organized as a sole proprietorship, retained earnings and capital
acquired from owners are combined is a single account. This statement is (true/false) -
✔✔true
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $40,000 of capital
from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000 and John Crowe withdrew $15,000 from the business. Based on this
information, the Company would show:
-$5,000 of retained earnings on its Year 1 balance sheet.
-$45,000 of retained earnings on its Year 1 balance sheet.
-$60,000 of retained earnings on its Year 1 balance sheet.
-None of the answers is correct. - ✔✔None of the answers is correct
Proprietorships do not have a retained earnings account. Instead, retained earnings are
included in the capital account
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $40,000 of capital
, from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000 and John Crowe withdrew $15,000 from the business. Based on this
information, the Company would show
-$5,000 in its capital account on the Year 1 balance sheet.
-$40,000 in its capital account on the Year 1 balance sheet.
-$45,000 in its capital account on the Year 1 balance sheet.
-$25,000 in its capital account on the Year 1 balance sheet. - ✔✔$45,000 in its capital
account on the Year 1 balance sheet
Zero Beginning capital balance + $40,000 Owner investment + $20,000 Net income -
$15,000 Withdrawal
✔✔Crowe Company began operations on January 1, Year 1. The company was
organized as a sole proprietorship. During Year 1, Crowe acquired $50,000 of capital
from John Crowe, the owner. Also, during Year 1 the company earned net income of
$20,000. Based on this information, Crowe can withdraw (assume all transactions are
cash transactions) - ✔✔$70,000 from the business
✔✔A corporation may have issued more shares of stock than it has outstanding. This
statement is (true/false) - ✔✔true
✔✔The number of shares a corporation has outstanding may exceed the amount of
shares authorized. This statement is (true/false) - ✔✔false
✔✔Normally companies sell stock for an amount that is - ✔✔more than the par value
✔✔The par value or stated value of stock represents the amount of legal capital that a
corporation must maintain for the protection of the creditors. This statement is
(true/false) - ✔✔true
✔✔The book value of a share of stock may be
-equal to the market value of the stock.
-less than the market value of the stock.
-more than the market value of the stock.
-All of the answers are correct - ✔✔all of the answers are correct
✔✔In general, common stockholders experience - ✔✔greater risk and greater potential
rewards than preferred stockholders.
✔✔All common stockholders have the same rights and privileges. This statement is
(true/false) - ✔✔false
