Managerial Accounting Quiz 1 - Questions With
Focused Answers
1. Which of the following is not a major advantage of a corporation?
a. Separate legal existence.
b. Continuous life.
c. Government regulations.
d. Transferable ownership rights. Right Ans - c. Government regulations.
2. A major disadvantage of a corporation is:
a. limited liability of stockholders.
b. additional taxes.
c. transferable ownership rights.
d. None of the above. Right Ans - b. additional taxes.
3. Which of the following statements is not considered a disadvantage of the
corporate form of organization?
a. Additional taxes
b. Government regulations
c. Limited liability of stockholders
d. Separation of ownership and management Right Ans - c. Limited liability
of stockholders
4. The ability of a corporation to obtain capital is
a. enhanced because of limited liability and ease of share transferability.
b. less than a partnership.
c. restricted because of the limited life of the corporation.
d. about the same as a partnership. Right Ans - a. enhanced because of
limited liability and ease of share transferability.
5. Costs incurred in the formation of a corporation:
a. do not include legal fees.
b. are expensed as incurred.
c. are recorded as an asset.
d. provide future benefits whose amounts and timing are Right Ans - b. are
expensed as incurred.
6. Which of the following statements is true?
,a. Ownership of common stock gives the owner a voting right.
b. The stockholders' equity section begins with paid-in -capital.
c. The authorization of capital stock does not result in a formal accounting
entry.
d. All of the above. Right Ans - d. All of the above.
7. Preferred stock may have priority over common stock except in:
a. dividends.
b. assets in the event of liquidation.
c. cumulative dividend features.
d. voting. Right Ans - d. voting.
8. Which stock has the voting rights?
Common
Preferred
Participating
Authorized Right Ans - Common
9. Which of the following factors does not affect the initial market price of a
stock?
a. The company's anticipated future earnings
b. The par value of the stock
c. The current state of the economy
d. The expected dividend rate per share Right Ans - b. The par value of the
stock
10. The officer who is generally responsible for maintaining the cash position
of the corporation, arranging lending with bank, bond and stock financing, is
the
a. controller.
b. treasurer.
c. cashier.
d. internal auditor. Right Ans - b. treasurer.
11. The chief accounting officer in a corporation is the
a. treasurer.
b. president.
c. controller.
d. vice-president of finance. Right Ans - c. controller.
, 12. Total stockholders' equity is composed of the two main categories of:
a. Total Paid-in Capital + Retained earnings.
b. Paid-in capital + Capital stock + Retained earnings.
c. Capital stock + Additional paid-in capital + Retained
earnings.
d.Common stock + Retained earnings. Right Ans - a. Total Paid-in Capital +
Retained earnings.
13. The Paid-in-Capital category of the Stockholders' Equity section of the
balance sheet consists of the two main classifications of:
a. Capital Stock (Common and Preferred) accounts and Additional
Paid- in- Capital accounts
b. common stock and treasury stock accounts
c. preferred stock and treasury stock accounts
d. common stock and preferred stock accounts Right Ans - a. Capital Stock
(Common and Preferred) accounts and Additional
Paid- in- Capital accounts
14. The two main classes of authorized and issued capital stock in the
Stockholders' Equity section of the balance sheet are:
A. additional paid-in capital and common stock.
B. common stock and treasury stock.
C. common stock, preferred stock, and treasury stock.
D. common stock and preferred stock. Right Ans - D. common stock and
preferred stock.
15. In the stockholders' equity section of the balance sheet, common stock:
a. is listed before preferred stock.
b. is added to total capital stock.
c. is part of paid-in capital.
d. is part of additional paid-in capital. Right Ans - c. is part of paid-in
capital.
16. The Additional Paid-in-Capital part of the Stockholders' Equity section of
the balance sheet consists of:
a. Paid-in capital in excess of par on common
b. Paid-in capital in excess of par on preferred
c. Paid-in capital from treasury stock.
Focused Answers
1. Which of the following is not a major advantage of a corporation?
a. Separate legal existence.
b. Continuous life.
c. Government regulations.
d. Transferable ownership rights. Right Ans - c. Government regulations.
2. A major disadvantage of a corporation is:
a. limited liability of stockholders.
b. additional taxes.
c. transferable ownership rights.
d. None of the above. Right Ans - b. additional taxes.
3. Which of the following statements is not considered a disadvantage of the
corporate form of organization?
a. Additional taxes
b. Government regulations
c. Limited liability of stockholders
d. Separation of ownership and management Right Ans - c. Limited liability
of stockholders
4. The ability of a corporation to obtain capital is
a. enhanced because of limited liability and ease of share transferability.
b. less than a partnership.
c. restricted because of the limited life of the corporation.
d. about the same as a partnership. Right Ans - a. enhanced because of
limited liability and ease of share transferability.
5. Costs incurred in the formation of a corporation:
a. do not include legal fees.
b. are expensed as incurred.
c. are recorded as an asset.
d. provide future benefits whose amounts and timing are Right Ans - b. are
expensed as incurred.
6. Which of the following statements is true?
,a. Ownership of common stock gives the owner a voting right.
b. The stockholders' equity section begins with paid-in -capital.
c. The authorization of capital stock does not result in a formal accounting
entry.
d. All of the above. Right Ans - d. All of the above.
7. Preferred stock may have priority over common stock except in:
a. dividends.
b. assets in the event of liquidation.
c. cumulative dividend features.
d. voting. Right Ans - d. voting.
8. Which stock has the voting rights?
Common
Preferred
Participating
Authorized Right Ans - Common
9. Which of the following factors does not affect the initial market price of a
stock?
a. The company's anticipated future earnings
b. The par value of the stock
c. The current state of the economy
d. The expected dividend rate per share Right Ans - b. The par value of the
stock
10. The officer who is generally responsible for maintaining the cash position
of the corporation, arranging lending with bank, bond and stock financing, is
the
a. controller.
b. treasurer.
c. cashier.
d. internal auditor. Right Ans - b. treasurer.
11. The chief accounting officer in a corporation is the
a. treasurer.
b. president.
c. controller.
d. vice-president of finance. Right Ans - c. controller.
, 12. Total stockholders' equity is composed of the two main categories of:
a. Total Paid-in Capital + Retained earnings.
b. Paid-in capital + Capital stock + Retained earnings.
c. Capital stock + Additional paid-in capital + Retained
earnings.
d.Common stock + Retained earnings. Right Ans - a. Total Paid-in Capital +
Retained earnings.
13. The Paid-in-Capital category of the Stockholders' Equity section of the
balance sheet consists of the two main classifications of:
a. Capital Stock (Common and Preferred) accounts and Additional
Paid- in- Capital accounts
b. common stock and treasury stock accounts
c. preferred stock and treasury stock accounts
d. common stock and preferred stock accounts Right Ans - a. Capital Stock
(Common and Preferred) accounts and Additional
Paid- in- Capital accounts
14. The two main classes of authorized and issued capital stock in the
Stockholders' Equity section of the balance sheet are:
A. additional paid-in capital and common stock.
B. common stock and treasury stock.
C. common stock, preferred stock, and treasury stock.
D. common stock and preferred stock. Right Ans - D. common stock and
preferred stock.
15. In the stockholders' equity section of the balance sheet, common stock:
a. is listed before preferred stock.
b. is added to total capital stock.
c. is part of paid-in capital.
d. is part of additional paid-in capital. Right Ans - c. is part of paid-in
capital.
16. The Additional Paid-in-Capital part of the Stockholders' Equity section of
the balance sheet consists of:
a. Paid-in capital in excess of par on common
b. Paid-in capital in excess of par on preferred
c. Paid-in capital from treasury stock.
