Question 1

A stock dividend decreases the market price of the company's stock.

Accepted Answer

A) True 
 B)False

Question 2

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Accepted Answer

A) True 
 B)False

Question 3

A proxy is:

Accepted Answer

A) A document that delegates a stockholder's voting rights to an agent. 
B) A contractual commitment by an investor to purchase unissued shares of stock. 
C) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
D) The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation. 
E) An arbitrary amount assigned to no-par stock by the corporation's board of directors. 
A) A document that delegates a stockholder's voting rights to an agent. 
B) A contractual commitment by an investor to purchase unissued shares of stock. 
C) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
D) The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation. 
E) An arbitrary amount assigned to no-par stock by the corporation's board of directors.

Question 4

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Accepted Answer

A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

Question 5

A stock dividend is recorded with a transfer from:

Accepted Answer

A) Contributed capital to retained earnings. 
B) Retained earnings to paid-in capital. 
C) Retained earnings to assets. 
D) Contributed capital to assets. 
E) Assets to contributed capital. 
A) Contributed capital to retained earnings. 
B) Retained earnings to paid-in capital. 
C) Retained earnings to assets. 
D) Contributed capital to assets. 
E) Assets to contributed capital.

Question 6

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Accepted Answer

A) Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500. 
B) Debit Common Dividends Payable $104,500; credit Cash $104,500. 
C) Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100. 
D) Debit Common Dividends Payable $100,100; credit Cash $100,100. 
E) Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000. 
A) Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500. 
B) Debit Common Dividends Payable $104,500; credit Cash $104,500. 
C) Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100. 
D) Debit Common Dividends Payable $100,100; credit Cash $100,100. 
E) Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000.

Question 7

A company paid a cash dividend of $0.88 per share during the current year,and reported 18,000 shares of common stock issued,and 2,000 common shares in treasury stock during the current year.The year-end market price per share was $27.50.Calculate the following: (1)total amount of cash dividends paid to common shareholders,and (2)dividend yield.

Accepted Answer

(1)$0.88 * (18,000 shares − 2,

Question 8

Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:

Accepted Answer

A) Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000. 
B) Debit Common Dividends Payable $4,000; credit Cash $4,000. 
C) Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500. 
D) Debit Common Dividends Payable $4,500; credit Cash $4,500. 
E) Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000. 
A) Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000. 
B) Debit Common Dividends Payable $4,000; credit Cash $4,000. 
C) Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500. 
D) Debit Common Dividends Payable $4,500; credit Cash $4,500. 
E) Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.

Question 9

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average)common stock.

Accepted Answer

A) True 
 B)False

Question 10

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Accepted Answer

A) True 
 B)False

Question 11

Par value of a stock refers to the:

Accepted Answer

A) Issue price of the stock. 
B) Value assigned per share by the corporate charter. 
C) Market value of the stock on the date of the financial statements. 
D) Maximum selling price of the stock. 
E) Dividend value of the stock. 
A) Issue price of the stock. 
B) Value assigned per share by the corporate charter. 
C) Market value of the stock on the date of the financial statements. 
D) Maximum selling price of the stock. 
E) Dividend value of the stock.

Question 12

Changes in retained earnings are commonly reported in the:

Accepted Answer

A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement. 
A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement.

Question 13

Companies report prior period adjustments,net of any income tax effects in the:

Accepted Answer

A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Income statement. 
E) No disclosure is required. 
A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Income statement. 
E) No disclosure is required.

Question 14

A company issued 70 shares of $30 par value preferred stock for $4,000 cash.The journal entry to record the issuance is:

Accepted Answer

A) Debit Cash $2,100; credit Preferred Stock $2,100. 
B) Debit Investment in Preferred Stock $2,100; credit Cash $2,100. 
C) Debit Cash $4,000; credit Preferred Stock $4,000. 
D) Debit Preferred Stock $2,100,debit Investment in Preferred Stock $1,900; credit Cash $4,000. 
E) Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value,Preferred Stock $1,900,credit Preferred Stock $2,100. 
A) Debit Cash $2,100; credit Preferred Stock $2,100. 
B) Debit Investment in Preferred Stock $2,100; credit Cash $2,100. 
C) Debit Cash $4,000; credit Preferred Stock $4,000. 
D) Debit Preferred Stock $2,100,debit Investment in Preferred Stock $1,900; credit Cash $4,000. 
E) Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value,Preferred Stock $1,900,credit Preferred Stock $2,100.

Question 15

Stock that was reacquired and is still held by the issuing corporation is called:

Accepted Answer

A) Capital stock. 
B) Treasury stock. 
C) Redeemed stock. 
D) Preferred stock. 
E) Callable stock. 
A) Capital stock. 
B) Treasury stock. 
C) Redeemed stock. 
D) Preferred stock. 
E) Callable stock.

Question 16

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Accepted Answer

A) True 
 B)False

Question 17

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Accepted Answer

A) Noncumulative preferred stock. 
B) Participating preferred stock. 
C) Callable preferred stock. 
D) Cumulative preferred stock. 
E) Convertible preferred stock. 
A) Noncumulative preferred stock. 
B) Participating preferred stock. 
C) Callable preferred stock. 
D) Cumulative preferred stock. 
E) Convertible preferred stock.

Question 18

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the reissuance of treasury stock on July 20?

Accepted Answer

A) Debit Common Stock $2,300; credit Cash $2,300. 
B) Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300. 
C) Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital,Treasury Stock $300. 
D) Debit Cash $2,300; credit Paid-in Capital,Treasury Stock $300; credit Treasury Stock $2,000. 
E) Debit Cash $2,300; credit Treasury Stock $2,300. 
A) Debit Common Stock $2,300; credit Cash $2,300. 
B) Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300. 
C) Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital,Treasury Stock $300. 
D) Debit Cash $2,300; credit Paid-in Capital,Treasury Stock $300; credit Treasury Stock $2,000. 
E) Debit Cash $2,300; credit Treasury Stock $2,300.

Question 19

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

Accepted Answer

A) 1.15. 
B) 0.87. 
C) 19.2. 
D) 10.0. 
E) 11.46. 
A) 1.15. 
B) 0.87. 
C) 19.2. 
D) 10.0. 
E) 11.46.

Question 20

Book value per common share is computed by:

Accepted Answer

A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares. 
A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares.

A stock dividend decreases the market price of the company's stock.

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

A proxy is:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

A stock dividend is recorded with a transfer from:

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average)common stock.

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Par value of a stock refers to the:

Changes in retained earnings are commonly reported in the:

Companies report prior period adjustments,net of any income tax effects in the:

A company issued 70 shares of $30 par value preferred stock for $4,000 cash.The journal entry to record the issuance is:

Stock that was reacquired and is still held by the issuing corporation is called:

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

Book value per common share is computed by:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 11: Reporting and Analyzing Equity

A stock dividend decreases the market price of the company's stock.

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

A proxy is:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

A stock dividend is recorded with a transfer from:

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average)common stock.

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Par value of a stock refers to the:

Changes in retained earnings are commonly reported in the:

Companies report prior period adjustments,net of any income tax effects in the:

A company issued 70 shares of $30 par value preferred stock for $4,000 cash.The journal entry to record the issuance is:

Stock that was reacquired and is still held by the issuing corporation is called:

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

Book value per common share is computed by:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters