Question 1

The dividend yield ratio is dividends per share divided by the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 2

A company reported total stockholders' equity of $170,000 on its balance sheet dated December 31, 2014. During the year ended December 31, 2015, 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, 2015?

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 3

Watson Company has provided the following data about its common stock: • Par value is $1 per share
• 10,000,000 authorized shares
• 4,300,000 shares are outstanding
• 4,700,000 shares are issued
How many shares of treasury stock are there?

Accepted Answer

A)  0. 
B)  400,000. 
C) 5,300,000. 
D) 5,700,000. 
A)  0. 
B)  400,000. 
C) 5,300,000. 
D) 5,700,000.

Question 4

Which of the following is a correct statement about cumulative and noncumulative preferred stock?

Accepted Answer

A)  They both receive dividends in arrears. 
B)  Cumulative stock's undeclared dividends accumulate each year until paid while noncumulative stock's right to receive dividends is forfeited in any year that dividends are not declared. 
C) Cumulative preferred stock is guaranteed to receive its dividends. 
D) Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared while noncumulative stock's undeclared dividends accumulate each year until paiD.Cumulative preferred stockholders have the right to receive dividends in arrears when dividends are subsequently declared. 
A)  They both receive dividends in arrears. 
B)  Cumulative stock's undeclared dividends accumulate each year until paid while noncumulative stock's right to receive dividends is forfeited in any year that dividends are not declared. 
C) Cumulative preferred stock is guaranteed to receive its dividends. 
D) Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared while noncumulative stock's undeclared dividends accumulate each year until paiD.Cumulative preferred stockholders have the right to receive dividends in arrears when dividends are subsequently declared.

Question 5

Davidson Company has 10,000,000 common shares issued and 500,000 shares of treasury stock. The stock's par value is $2 per share and its current market price is $25 per share. Which of the following is correct when a 15% stock dividend is declared and distributed?

Accepted Answer

A)  Retained earnings will decrease $37.5 million. 
B)  Retained earnings will decrease $35.625 million. 
C) Retained earnings will decrease $3 million. 
D) Retained earnings will decrease $2.85 million. 
A)  Retained earnings will decrease $37.5 million. 
B)  Retained earnings will decrease $35.625 million. 
C) Retained earnings will decrease $3 million. 
D) Retained earnings will decrease $2.85 million.

Question 6

A company reported total stockholders' equity of $540,000 on its balance sheet dated December 31, 2014. During the year ended December 31, 2015, the company reported net income of $60,000, declared and paid a cash dividend of $18,000, declared and distributed a 10% stock dividend with a $15,000 total market value, sold treasury stock costing $12,000 for $15,000, and issued additional common stock for $70,000. What is total stockholders' equity as of December 31, 2015?

Accepted Answer

A)  $640,000. 
B)  $670,000. 
C) $667,000. 
D) $655,000. 
A)  $640,000. 
B)  $670,000. 
C) $667,000. 
D) $655,000.

Question 7

Which of the following is not a primary advantage of a general partnership relative to a corporation?

Accepted Answer

A)  The ease of formation. 
B)  The limited liability for the owners. 
C) The business is not taxed separate from the partners. 
D) The complete control of the business given to the partners. 
A)  The ease of formation. 
B)  The limited liability for the owners. 
C) The business is not taxed separate from the partners. 
D) The complete control of the business given to the partners.

Question 8

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 9

A stock split results in the reduction of the par or stated value per share and a proportionate increase in the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 10

Slickers, Inc. had the following capital structure during 2014: Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for 2012 and 2013.
Common stock, $100 par value, 2,000 shares issued and outstanding.
The total dividends declared and paid during 2014 totaled $25,000. How much of the dividend is paid to the common stockholders during 2014 assuming the preferred stock is cumulative?

Accepted Answer

A)  $3,500. 
B)  $7,000. 
C) $22,500. 
D) $14,500. 
A)  $3,500. 
B)  $7,000. 
C) $22,500. 
D) $14,500.

Question 11

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following does not correctly describe preferred stock?

Accepted Answer

A)  Preferred stock has a higher priority status relative to common stock. 
B)  Preferred shareholders 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 higher priority status relative to common stock. 
B)  Preferred shareholders 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 13

Earnings per share is calculated by dividing net income by the number of outstanding shares of common stock at year-end.

Accepted Answer

A) True 
 B)False

Question 14

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Accepted Answer

A) True 
 B)False

Question 15

During 2014, Thomas Corporation repurchased some shares of its own common stock. What effect did this transaction have on 2014 stockholders' equity and earnings per share, respectively? $\begin{array}{lll}&\underline{\text { Stockholders' Equity }}&\underline{\text { Earnings Per Share }}\
\text { A. } & \text { Decrease } & \text { No effect } \
\text { B. } & \text { Increase } & \text { No effect } \
\text { C. } & \text { Decrease } & \text { Decrease } \
\text { D. } & \text { Decrease } & \text { Increase }
\end{array}$

Accepted Answer

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

Question 16

Which of the following does not represent a description of shares of stock presented on the balance sheet?

Accepted Answer

A)  Authorized shares. 
B)  Issued shares. 
C) Outstanding shares. 
D) Contributed shares. 
A)  Authorized shares. 
B)  Issued shares. 
C) Outstanding shares. 
D) Contributed shares.

Question 17

When a company issues common stock in exchange for cash, a cash inflow from a financing activity is reported.

Accepted Answer

A) True 
 B)False

Question 18

Total stockholders' equity of Grasse Company is not affected when a stockholder sells shares of Grasse Company stock to another stockholder.

Accepted Answer

A) True 
 B)False

The dividend yield ratio is dividends per share divided by the number of shares outstanding.

Watson Company has provided the following data about its common stock: • Par value is $1 per share • 10,000,000 authorized shares • 4,300,000 shares are outstanding • 4,700,000 shares are issued How many shares of treasury stock are there?

Which of the following is a correct statement about cumulative and noncumulative preferred stock?

Davidson Company has 10,000,000 common shares issued and 500,000 shares of treasury stock. The stock's par value is $2 per share and its current market price is $25 per share. Which of the following is correct when a 15% stock dividend is declared and distributed?

Which of the following is not a primary advantage of a general partnership relative to a corporation?

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

A stock split results in the reduction of the par or stated value per share and a proportionate increase in the number of shares outstanding.

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Which of the following does not correctly describe preferred stock?

Earnings per share is calculated by dividing net income by the number of outstanding shares of common stock at year-end.

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

During 2014, Thomas Corporation repurchased some shares of its own common stock. What effect did this transaction have on 2014 stockholders' equity and earnings per share, respectively? A. Decrease No effect B. Increase No effect C. Decrease Decrease D. Decrease Increase

Which of the following does not represent a description of shares of stock presented on the balance sheet?

When a company issues common stock in exchange for cash, a cash inflow from a financing activity is reported.

Total stockholders' equity of Grasse Company is not affected when a stockholder sells shares of Grasse Company stock to another stockholder.

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 Bonds

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 11: Reporting and Interpreting Owners Equity

The dividend yield ratio is dividends per share divided by the number of shares outstanding.

Watson Company has provided the following data about its common stock: • Par value is $1 per share • 10,000,000 authorized shares • 4,300,000 shares are outstanding • 4,700,000 shares are issued How many shares of treasury stock are there?

Which of the following is a correct statement about cumulative and noncumulative preferred stock?

Davidson Company has 10,000,000 common shares issued and 500,000 shares of treasury stock. The stock's par value is $2 per share and its current market price is $25 per share. Which of the following is correct when a 15% stock dividend is declared and distributed?

Which of the following is not a primary advantage of a general partnership relative to a corporation?

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

A stock split results in the reduction of the par or stated value per share and a proportionate increase in the number of shares outstanding.

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Which of the following does not correctly describe preferred stock?

Earnings per share is calculated by dividing net income by the number of outstanding shares of common stock at year-end.

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

During 2014, Thomas Corporation repurchased some shares of its own common stock. What effect did this transaction have on 2014 stockholders' equity and earnings per share, respectively? A. Decrease No effect B. Increase No effect C. Decrease Decrease D. Decrease Increase

Which of the following does not represent a description of shares of stock presented on the balance sheet?

When a company issues common stock in exchange for cash, a cash inflow from a financing activity is reported.

Total stockholders' equity of Grasse Company is not affected when a stockholder sells shares of Grasse Company stock to another stockholder.

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 Bonds

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters