Which of the Following Is Incorrect for Smith Company When

question 7

Multiple Choice

Which of the following is incorrect for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for a building? The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $200,000.

• A) The common stock account increases by $100,000.
• B) The building account increases by $370,000.
• C)Stockholders' equity increases $350,000.
• D)The additional paid-in capital account increases by $100,000.

---

Definitions:

Centralization

The concentration of decision-making authority at the top levels of an organizational hierarchy.

Standardization

The process of developing and implementing technical standards to ensure that materials, products, processes, and services are fit for their purpose.

Specialization

The process of focusing on a specific area of knowledge or skill within a profession or field of study, leading to increased efficiency and expertise.

Formalization

The extent to which rules, procedures, and standards are written and explicitly articulated within an organization, leading to consistency and predictability in behaviors and processes.