Question 1

The two primary sources of equity shown in a balance sheet are:

Accepted Answer

A) Residual equity and debt equity. 
B) Capital equity and residual equity. 
C) Contributed capital and earned capital. 
D) Unearned capital and earned capital. 
A) Residual equity and debt equity. 
B) Capital equity and residual equity. 
C) Contributed capital and earned capital. 
D) Unearned capital and earned capital. C

Question 2

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Accepted Answer

A) True 
 B)False  False

Question 3

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding
• Common stock,$100 par value,2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
-
How much of the 2019 dividend payment was paid to the common stockholders assuming the preferred stock is cumulative?

Accepted Answer

A) $12,000. 
B) $50,000. 
C) $47,000. 
D) $38,000. 
A) $12,000. 
B) $50,000. 
C) $47,000. 
D) $38,000. D

Question 4

Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 5

Which of the following transactions does not result in an increase in stockholders' equity?

Accepted Answer

A) Sale of no-par common stock for cash. 
B) Declaration and distribution of a common stock dividend. 
C) Sale of preferred stock for cash at par value. 
D) Sale of treasury stock for cash at a price less than its cost. 
A) Sale of no-par common stock for cash. 
B) Declaration and distribution of a common stock dividend. 
C) Sale of preferred stock for cash at par value. 
D) Sale of treasury stock for cash at a price less than its cost.

Question 6

The charter of Delta Corporation specified a maximum of 25,000 shares of common stock.At the current date,5,000 shares remain unissued,and 2,000 of the issued shares have been repurchased and are still held by Delta.
Calculate the number of shares that are:
A.Authorized
B.Issued
C.Held in the treasury
D.Outstanding

Accepted Answer

A.Authorized shares = 25,000 = number in

Question 7

A company has 10 million common shares authorized and 2.5 million shares issued.The par value is $1 per share and the market price is $30 when the company declares a 4-for-1 stock split.Which of the following is correct?

Accepted Answer

A) There will be a transfer of $2.5 million from retained earnings to the common stock account. 
B) For every one share of stock owned,a shareholder will receive four shares and will now own 5 shares of stock. 
C) The shares issued and outstanding will all quadruple while the par value will be reduced to $0.25 per share. 
D) The company will be unable to declare a 4-for-1 split because it does not have enough authorized shares to issue the split. 
A) There will be a transfer of $2.5 million from retained earnings to the common stock account. 
B) For every one share of stock owned,a shareholder will receive four shares and will now own 5 shares of stock. 
C) The shares issued and outstanding will all quadruple while the par value will be reduced to $0.25 per share. 
D) The company will be unable to declare a 4-for-1 split because it does not have enough authorized shares to issue the split.

Question 8

Which of the following does not correctly describe preferred stock?

Accepted Answer

A) Preferred stock has a dividend preference relative to common stock. 
B) Preferred stockholders are guaranteed to receive dividends. 
C) Preferred stock does not grant voting rights. 
D) Preferred stockholders receive dividends in arrears only if the shares are cumulative. 
A) Preferred stock has a dividend preference relative to common stock. 
B) Preferred stockholders are guaranteed to receive dividends. 
C) Preferred stock does not grant voting rights. 
D) Preferred stockholders receive dividends in arrears only if the shares are cumulative.

Question 9

Which of the following statements is false?

Accepted Answer

A) Common stockholders have a residual claim on assets in the event of liquidation. 
B) Shares of stock held in the treasury are subtracted from the number of issued shares in the determination of the number of outstanding shares. 
C) Common stockholders have voting rights at annual stockholder meetings. 
D) Corporations are governed by their stockholders. 
A) Common stockholders have a residual claim on assets in the event of liquidation. 
B) Shares of stock held in the treasury are subtracted from the number of issued shares in the determination of the number of outstanding shares. 
C) Common stockholders have voting rights at annual stockholder meetings. 
D) Corporations are governed by their stockholders.

Question 10

Which of the following statements does not correctly describe preferred stock?

Accepted Answer

A) Preferred shareholders have a preference with respect to dividend payments. 
B) Preferred shareholders have a preference with respect to assets in the event of dissolution. 
C) Preferred shareholders have voting rights on a per share basis. 
D) Preferred stock typically has a fixed dividend rate. 
A) Preferred shareholders have a preference with respect to dividend payments. 
B) Preferred shareholders have a preference with respect to assets in the event of dissolution. 
C) Preferred shareholders have voting rights on a per share basis. 
D) Preferred stock typically has a fixed dividend rate.

Question 11

The following information is available for Bradford Bikes for the years 2020 and 2019:
   A.Calculate the dividend yield ratio for both 2020 and 2019.
B.Interpret the yield ratio in terms of whether it is high or low,or whether it indicates a steady dividend policy,and whether Bradford Bikes appears to be growing or to be stagnant.

Accepted Answer

A.Dividend yield in 2020 is 1.6% = $.85

Question 12

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

Accepted Answer

A) True 
 B)False

Question 13

On December 31,2019,Brave Corporation reported the following on its balance sheet:
   Prepare the stockholders' equity section of the balance sheet.

Accepted Answer

The answer of On December 31,2019,Brave Corporation reported the following...

Question 14

Irish Corporation issued (sold)10,000 shares of common stock for $70 per share.The bylaws established a stated value of $10 per share.What is the amount of increase in the common stock account as a result of this transaction?

Accepted Answer

A) $0. 
B) $600,000. 
C) $100,000. 
D) $700,000. 
A) $0. 
B) $600,000. 
C) $100,000. 
D) $700,000.

Question 15

The following information is available for Italiano Ices for the years 2020 and 2019:
   A.Calculate the dividend yield for both 2020 and 2019.
B.What caused the change in the dividend yield ratio from 2019 to 2020?
C.Comment on the payout of dividends relative to the net income earned over the two years.What does your choice indicate about the company's strategy with regard to paying dividends?

Accepted Answer

A.The 2020 dividend yield was 2.6% = $1.

Question 16

On January 1,2019,the accounts of Mac Corporation showed the following:
   During 2019,the following transactions occurred which affected stockholders' equity (in the order given):
   The stockholders' equity section of the balance sheet for the company must be prepared for the December 31,2019 balance sheet.The format is provided below with certain amounts missing.Supply the missing amounts by entering them in the blanks.

Accepted Answer

@#IMG-DLM& (1a)Additional paid-in capital = $60,00

Question 17

The declaration and payment of a cash dividend on common stock results in a reduction of the issuing corporation's total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 18

The following information is provided for Slickers,Inc.for year 2019: • Preferred stock,7%,$50 par value,1,000 shares issued and outstanding
• Common stock,$100 par value,2,000 shares issued and outstanding
• Dividends in arrears for 2017 and 2018
• Total dividends declared and paid during 2019 totaled $25,000
-
How much of the dividend was paid to the preferred stockholders during 2019 assuming the preferred stock is noncumulative?

Accepted Answer

A) $3,500. 
B) $7,000. 
C) $10,500. 
D) $14,500. 
A) $3,500. 
B) $7,000. 
C) $10,500. 
D) $14,500.

Question 19

A company reported total stockholders' equity of $170,000 on its balance sheet dated December 31,2018.During the year ended December 31,2019,the company reported net income of $20,000,declared and paid a cash dividend of $4,000,declared and distributed a 10% stock dividend with a $5,000 total market value,and issued additional common stock for $40,000.What is total stockholders' equity as of December 31,2019?

Accepted Answer

A) $234,000. 
B) $226,000. 
C) $231,000. 
D) $221,000. 
A) $234,000. 
B) $226,000. 
C) $231,000. 
D) $221,000.

Question 20

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding
• Common stock,$100 par value,2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
-
How much of the 2019 dividend payment was paid to the preferred stockholders assuming the preferred stock is cumulative?

Accepted Answer

A) $12,000. 
B) $3,000. 
C) $47,000. 
D) $38,000. 
A) $12,000. 
B) $3,000. 
C) $47,000. 
D) $38,000.

The two primary sources of equity shown in a balance sheet are:

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

Which of the following transactions does not result in an increase in stockholders' equity?

A company has 10 million common shares authorized and 2.5 million shares issued.The par value is $1 per share and the market price is $30 when the company declares a 4-for-1 stock split.Which of the following is correct?

Which of the following does not correctly describe preferred stock?

Which of the following statements is false?

Which of the following statements does not correctly describe preferred stock?

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

On December 31,2019,Brave Corporation reported the following on its balance sheet: Prepare the stockholders' equity section of the balance sheet.

Irish Corporation issued (sold)10,000 shares of common stock for $70 per share.The bylaws established a stated value of $10 per share.What is the amount of increase in the common stock account as a result of this transaction?

The declaration and payment of a cash dividend on common stock results in a reduction of the issuing corporation's total stockholders' equity.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 11: Reporting and Interpreting Stockholders Equity

The two primary sources of equity shown in a balance sheet are:

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

Which of the following transactions does not result in an increase in stockholders' equity?

A company has 10 million common shares authorized and 2.5 million shares issued.The par value is $1 per share and the market price is $30 when the company declares a 4-for-1 stock split.Which of the following is correct?

Which of the following does not correctly describe preferred stock?

Which of the following statements is false?

Which of the following statements does not correctly describe preferred stock?

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

On December 31,2019,Brave Corporation reported the following on its balance sheet: Prepare the stockholders' equity section of the balance sheet.

Irish Corporation issued (sold)10,000 shares of common stock for $70 per share.The bylaws established a stated value of $10 per share.What is the amount of increase in the common stock account as a result of this transaction?

The declaration and payment of a cash dividend on common stock results in a reduction of the issuing corporation's total stockholders' equity.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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