Question 1:

Which of the following best describes the corporate equity structure?

a) It represents the total value of the company as calculated by the market

price of the stock.

b) It includes the ownership interests in a corporation, such as common

stock and preferred stock.

c) It refers to the total debt obligations of the company, including bonds

and loans.

d) It represents the total assets of the company as reported on the balance

sheet.

Answer: b) It includes the ownership interests in a corporation, such as

common stock and preferred stock.

Rationale: The corporate equity structure encompasses the ownership

interests in a corporation, including common and preferred stock. It

represents the residual interest in the assets of the entity after deducting

liabilities.

Question 2:

When a partnership is created, the initial capital contributed by the

partners is recorded as:

a) Additional paid-in capital.

b) Common stock.

c) Partners' equity.

d) Retained earnings.

Answer: c) Partners' equity.

Rationale: The initial capital contributed by the partners is recorded as

partners' equity, representing their ownership interest in the partnership.

Question 3:

In the event of partnership dissolution, which of the following represents

the order of priority for distributing assets?

a) Payment of partners' salaries and bonuses