Question 1

Franklin Corporation reported net income of $75,000 in Year 1.The company had 100,000 shares of $12 par value common stock outstanding and a market price of $18 per share.What is Franklin's price-earnings ratio?

Accepted Answer

A)   2.4
B)   24
C)   16.6
D)   1.5E) A) and D)
F) B) and C)

Question 2

Which of the following statements about types of business entities is true?

Accepted Answer

A)   For accounting purposes, a sole proprietorship is not a separate entity from its owner.
B)   Ownership in a partnership is represented by having shares of capital stock.
C)   One advantage of the corporation form is the ability to raise capital.
D)   Sole proprietorships are subject to double taxation.E) None of the above
F) A) and B)

Question 3

Which of the following statements about par value is true?

Accepted Answer

A)   Par value dictates the initial price of the stock.
B)   Par value may be revised each time a company issues more shares of stock.
C)   Par value is generally greater than market value.
D)   Par value has little connection to the market value of the stock.E) C) and D)
F) All of the above

Question 4

Which of the following describes,in part,how the declaration of a stock dividend affects the elements of the financial statements?

Accepted Answer

A)   Decreases total assets
B)   Increases total stockholders' equity
C)   Decreases paid-in capital in excess of par value-common
D)   No effect on total stockholders' equityE) A) and C)
F) None of the above

Question 5

Which of the following statements is the most common explanation as to why a company might have a negative amount of total stockholders' equity on its balance sheet?

Accepted Answer

A)   Its total assets exceed its total liabilities.
B)   Its total revenues are less than its total expenses in the current period.
C)   Its cash is segregated in a separate bank account designated for emergency uses.
D)   It has a negative balance in its Retained Earnings account.E) C) and D)
F) A) and C)

Question 6

On June 10,Year 1,Burton Builders,Inc.,a publicly traded company,announced that it had been awarded a contract to build a football stadium at a contract price of $500 million.This contract would increase its projected revenues by 20% over the next three years.Which of the following statements is correct with regard to this announcement?

Accepted Answer

A)   The market price of Burton's stock will probably be higher on June 11, Year 1 than on June 10th.
B)   Burton's net cash flow from operations will increase by 20% over the next three years.
C)   Burton's assets should be increased by $500 million on June 10, Year 1 to recognize this contract.
D)   Burton's net income will increase by 20% over the next three years.E) A) and B)
F) C) and D)

Question 7

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner,and one for the earnings of the business.

Accepted Answer

A) True 
 B)False

Question 8

Preferred stockholders generally have no voting rights in a corporation.

Accepted Answer

A) True 
 B)False

Exam 11: Proprietorships, partnerships, and Corporations

Franklin Corporation reported net income of $75,000 in Year 1.The company had 100,000 shares of $12 par value common stock outstanding and a market price of $18 per share.What is Franklin's price-earnings ratio?

Correct Answer
verified

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner,and one for the earnings of the business.

Correct Answer
verified

Which of the following statements about types of business entities is true?

Correct Answer
verified

Which of the following statements is the most common explanation as to why a company might have a negative amount of total stockholders' equity on its balance sheet?

Correct Answer
verified

Which of the following statements about par value is true?

Correct Answer
verified

Which of the following describes,in part,how the declaration of a stock dividend affects the elements of the financial statements?

Correct Answer
verified

Correct Answer
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Preferred stockholders generally have no voting rights in a corporation.

Correct Answer
verified

Exam 11: Proprietorships, partnerships, and Corporations

Franklin Corporation reported net income of $75,000 in Year 1.The company had 100,000 shares of $12 par value common stock outstanding and a market price of $18 per share.What is Franklin's price-earnings ratio?

Correct AnswerverifiedShow Answer

The balance sheet of a sole proprietorship will report two equity accounts: one for amounts contributed by the owner,and one for the earnings of the business.

Correct AnswerverifiedShow Answer

Which of the following statements about types of business entities is true?

Correct AnswerverifiedShow Answer

Which of the following statements is the most common explanation as to why a company might have a negative amount of total stockholders' equity on its balance sheet?

Correct AnswerverifiedShow Answer

Which of the following statements about par value is true?

Correct AnswerverifiedShow Answer

Which of the following describes,in part,how the declaration of a stock dividend affects the elements of the financial statements?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Preferred stockholders generally have no voting rights in a corporation.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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