When a corporation sells its stock at a price above par value, they should credit the difference to paid-in capital.
Ch 11 LO.1 & LO.2

Quiz
•
Specialty
•
12th Grade
•
Hard
Lisa Parisi
Used 1+ times
FREE Resource
12 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
True
False
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Dividends can only be paid in cash.
True
False
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Dividends are reported as a percentage of the stock price for common stock.
True
False
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Common shareholders cannot be paid dividends until all preferred shareholders are paid.
True
False
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the below are true about preferred stocks?
They have voting rights and are paid dividends before common stockholders.
They don't have voting rights but are paid dividends before common stockholders.
They don't have voting rights but they are paid before common stockholders in the event of liquidation.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When a corporation buys back shares, it records the purchase at par value.
True
False
Answer explanation
The corporation uses the cost method, so they record the amount that they paid for the stock.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The sale of treasury stock increases shareholders' equity.
True
False
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