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Accounting Questions

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User Generated
Subject
Accounting
Type
Homework
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Accounting questions
Question one
A corporation is a separate legal entity because it can own property, enter into bidding
contracts, borrow money, sue and be sued, and pay taxes separately from the directors. The
owners of the business are treated as different persons from the business. Also, a corporation is
considered as a separate legal entity because it enjoys most rights and responsibilities that an
individual enjoys.
Question two
The common stock with $20 par value per share is not a better investment than the
common stock with par value of $5 per share. This is because the par value of a stock is the
value per share in the issuing of company charter. Therefore, in this case, it is the minimum
amount that investors must pay per share so as to finance the company which turns out to be $5.
Question three
Number of outstanding shares after split = 10000*3/1
=30000 shares
Market price per share after the split = 120/3
= $40 per share
Question four
a. There is no effect on the net income
b. Total assets will decrease by 11000 dollars

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Accounting questions Question one A corporation is a separate legal entity because it can own property, enter into bidding contracts, borrow money, sue and be sued, and pay taxes separately from the directors. The owners of the business are treated as different persons from the business. Also, a corporation is considered as a separate legal entity because it enjoys most rights and responsibilities that an individual enjoys. Question two The common stock with $20 par value per share is not a better investment than the common stock with par value of $5 per share. This is because the par value of ...
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