Question 1

Treasury Stock is a(n)

Accepted Answer

A) contra asset account. 
B) retained earnings account. 
C) asset account. 
D) contra stockholders' equity account. 
A) contra asset account. 
B) retained earnings account. 
C) asset account. 
D) contra stockholders' equity account.

Question 2

Sandoz Corporation was organized on January 1, 2015, with authorized capital of 500,000 shares of $10 par value common stock. During 2015, Sandoz issued 30,000 shares at $12 per share, purchased 3,000 shares of treasury stock at $13 per share, and sold 3,000 shares of treasury stock at $14 per share. What is the amount of additional paid-in capital at December 31, 2015?

Accepted Answer

A) $0 
B) $3,000 
C) $60,000 
D) $63,000 
A) $0 
B) $3,000 
C) $60,000 
D) $63,000

Question 3

Which of the following would not be true of a privately held corporation?

Accepted Answer

A) It is sometimes called a closely held corporation. 
B) Its shares are regularly traded on the New York Stock Exchange. 
C) It does not offer its shares for sale to the general public. 
D) It is usually smaller than a publicly held company. 
A) It is sometimes called a closely held corporation. 
B) Its shares are regularly traded on the New York Stock Exchange. 
C) It does not offer its shares for sale to the general public. 
D) It is usually smaller than a publicly held company.

Question 4

A major difference between IFRS and GAAP relates to the

Accepted Answer

A) Retained Earnings account. 
B) Revaluation Surplus account. 
C) Share Capital account. 
D) Share Premium account. 
A) Retained Earnings account. 
B) Revaluation Surplus account. 
C) Share Capital account. 
D) Share Premium account.

Question 5

Under IFRS, the term reserves relates to each of the following except

Accepted Answer

A) asset revaluations. 
B) contributed (paid-in) capital. 
C) fair value differences. 
D) retained earnings. 
A) asset revaluations. 
B) contributed (paid-in) capital. 
C) fair value differences. 
D) retained earnings.

Question 6

The return on common stockholders' equity is computed by dividing

Accepted Answer

A) net income by ending common stockholders' equity. 
B) net income by average common stockholders' equity. 
C) net income minus preferred dividends by ending common stockholders' equity. 
D) net income minus preferred dividends by average common stockholders' equity. 
A) net income by ending common stockholders' equity. 
B) net income by average common stockholders' equity. 
C) net income minus preferred dividends by ending common stockholders' equity. 
D) net income minus preferred dividends by average common stockholders' equity.

Question 7

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Accepted Answer

A) Legal Expense for $10,000. 
B) Legal Expense for $30,000. 
C) Organization Expense for $10,000. 
D) Organization Expense for $30,000. 
A) Legal Expense for $10,000. 
B) Legal Expense for $30,000. 
C) Organization Expense for $10,000. 
D) Organization Expense for $30,000.

Question 8

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 9

Paid-in capital from treasury stock would appear on a balance sheet under the category

Accepted Answer

A) capital stock. 
B) treasury stock. 
C) additional paid-in capital. 
D) contra to stockholders' equity. 
A) capital stock. 
B) treasury stock. 
C) additional paid-in capital. 
D) contra to stockholders' equity.

Question 10

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

Corporations generally issue stock dividends in order to

Accepted Answer

A) increase the market price per share. 
B) exceed stockholders' dividend expectations. 
C) increase the marketability of the stock. 
D) decrease the amount of capital in the corporation. 
A) increase the market price per share. 
B) exceed stockholders' dividend expectations. 
C) increase the marketability of the stock. 
D) decrease the amount of capital in the corporation.

Question 12

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

Accepted Answer

A) $6 per share 
B) $600 in total 
C) $6,000 in total 
D) $.06 per share 
A) $6 per share 
B) $600 in total 
C) $6,000 in total 
D) $.06 per share

Question 13

The retained earnings statement

Accepted Answer

A) is the owners' equity statement for a corporation. 
B) will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year. 
C) will not reflect net losses. 
D) will, in some cases, fail to reconcile the beginning and ending retained earnings balances. 
A) is the owners' equity statement for a corporation. 
B) will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year. 
C) will not reflect net losses. 
D) will, in some cases, fail to reconcile the beginning and ending retained earnings balances.

Question 14

The term residual claim refers to a stockholders' right to

Accepted Answer

A) receive dividends. 
B) share in assets upon liquidation. 
C) acquire additional shares when offered. 
D) exercise a proxy vote. 
A) receive dividends. 
B) share in assets upon liquidation. 
C) acquire additional shares when offered. 
D) exercise a proxy vote.

Question 15

If preferred stock is cumulative, the

Accepted Answer

A) preferred dividends not declared in a given year are called dividends in arrears. 
B) preferred stockholders and the common stockholders receive equal dividends. 
C) preferred stockholders and the common stockholders receive the same total dollar amount of dividends. 
D) common stockholders will share in the preferred dividends. 
A) preferred dividends not declared in a given year are called dividends in arrears. 
B) preferred stockholders and the common stockholders receive equal dividends. 
C) preferred stockholders and the common stockholders receive the same total dollar amount of dividends. 
D) common stockholders will share in the preferred dividends.

Question 16

Which of the following statements is not considered a disadvantage of the corporate form of organization?

Accepted Answer

A) Additional taxes 
B) Government regulations 
C) Limited liability of stockholders 
D) Separation of ownership and management 
A) Additional taxes 
B) Government regulations 
C) Limited liability of stockholders 
D) Separation of ownership and management

Question 17

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

Accepted Answer

A) True 
 B)False

Question 18

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about a cash dividend is incorrect?

Accepted Answer

A) The legality of a cash dividend depends on state corporation laws. 
B) The legality of a dividend does not indicate a company's ability to pay a dividend. 
C) Dividends are not a liability until declared. 
D) Shareholders usually vote to determine the amount of income to be distributed in the form of a dividend. 
A) The legality of a cash dividend depends on state corporation laws. 
B) The legality of a dividend does not indicate a company's ability to pay a dividend. 
C) Dividends are not a liability until declared. 
D) Shareholders usually vote to determine the amount of income to be distributed in the form of a dividend.

Question 20

Dividends in arrears on cumulative preferred stock

Accepted Answer

A) are shown in stockholders' equity of the balance sheet. 
B) must be paid before common stockholders can receive a dividend. 
C) should be recorded as a current liability until they are paid. 
D) enable the preferred stockholders to share equally in corporate earnings with the common stockholders. 
A) are shown in stockholders' equity of the balance sheet. 
B) must be paid before common stockholders can receive a dividend. 
C) should be recorded as a current liability until they are paid. 
D) enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

Treasury Stock is a(n)

Which of the following would not be true of a privately held corporation?

A major difference between IFRS and GAAP relates to the

Under IFRS, the term reserves relates to each of the following except

The return on common stockholders' equity is computed by dividing

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Retained earnings that are restricted are unavailable for dividends.

Paid-in capital from treasury stock would appear on a balance sheet under the category

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Corporations generally issue stock dividends in order to

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

The retained earnings statement

The term residual claim refers to a stockholders' right to

If preferred stock is cumulative, the

Which of the following statements is not considered a disadvantage of the corporate form of organization?

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Which of the following statements about a cash dividend is incorrect?

Dividends in arrears on cumulative preferred stock

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Treasury Stock is a(n)

Which of the following would not be true of a privately held corporation?

A major difference between IFRS and GAAP relates to the

Under IFRS, the term reserves relates to each of the following except

The return on common stockholders' equity is computed by dividing

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Retained earnings that are restricted are unavailable for dividends.

Paid-in capital from treasury stock would appear on a balance sheet under the category

Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders' equity section of the balance sheet.

Corporations generally issue stock dividends in order to

eris, Inc. has 1,000 shares of 6%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2015. What is the annual dividend on the preferred stock?

The retained earnings statement

The term residual claim refers to a stockholders' right to

If preferred stock is cumulative, the

Which of the following statements is not considered a disadvantage of the corporate form of organization?

As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.

The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.

Which of the following statements about a cash dividend is incorrect?

Dividends in arrears on cumulative preferred stock

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters