Question 1

When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.

Accepted Answer

A) True 
 B)False  False

Question 2

A corporation acts under its own name rather than in the name of its stockholders.

Accepted Answer

A) True 
 B)False  True

Question 3

The per share amount normally assigned by the board of directors to a small stock dividend is

Accepted Answer

A) the market value of the stock on the date of declaration. 
B) the average price paid by stockholders on outstanding shares. 
C) the par or stated value of the stock. 
D) zero. 
A) the market value of the stock on the date of declaration. 
B) the average price paid by stockholders on outstanding shares. 
C) the par or stated value of the stock. 
D) zero. A

Question 4

Dividends in arrears are dividends on

Accepted Answer

A) cumulative preferred stock that have been declared but have not been paid. 
B) non-cumulative preferred stock that have not been declared for a given period of time. 
C) cumulative preferred stock that have not been declared for a given period of time. 
D) common dividends that have been declared but have not yet been paid. 
A) cumulative preferred stock that have been declared but have not been paid. 
B) non-cumulative preferred stock that have not been declared for a given period of time. 
C) cumulative preferred stock that have not been declared for a given period of time. 
D) common dividends that have been declared but have not yet been paid.

Question 5

A liability arises when the board of directors declares a stock dividend.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following phrases is not descriptive of the corporate form of business?

Accepted Answer

A) Professional management. 
B) Double taxation on distributed earnings. 
C) Unlimited liability. 
D) Continuous existence. 
A) Professional management. 
B) Double taxation on distributed earnings. 
C) Unlimited liability. 
D) Continuous existence.

Question 7

Treasury stock is a contra stockholders' equity account.

Accepted Answer

A) True 
 B)False

Question 8

Regular dividends are declared out of

Accepted Answer

A) paid-in capital in excess of par value. 
B) treasury stock. 
C) common stock. 
D) retained earnings. 
A) paid-in capital in excess of par value. 
B) treasury stock. 
C) common stock. 
D) retained earnings.

Question 9

Ace Inc.has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020.What is the annual dividend on the preferred stock?

Accepted Answer

A) $40 per share 
B) $40,000 in total 
C) $4,000 in total 
D) $0.40 per share 
A) $40 per share 
B) $40,000 in total 
C) $4,000 in total 
D) $0.40 per share

Question 10

Dividends in arrears on cumulative preferred stock

Accepted Answer

A) never have to be paid, even if common dividends are paid. 
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) never have to be paid, even if common dividends are paid. 
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.

Question 11

The declaration and distribution of a stock dividend will

Accepted Answer

A) increase total stockholders' equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets. 
A) increase total stockholders' equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets.

Question 12

If a stockholder cannot attend a stockholders' meeting, he may delegate his voting rights by means of a(n)

Accepted Answer

A) absentee ballot. 
B) proxy. 
C) certified letter. 
D) telegram. 
A) absentee ballot. 
B) proxy. 
C) certified letter. 
D) telegram.

Question 13

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 14

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $125,000.As a result of this event,

Accepted Answer

A) Leary's Common Stock account decreased $50,000. 
B) Leary's total stockholders' equity decreased $125,000. 
C) Leary's Paid-in Capital in Excess of Par Value account decreased $75,000. 
D) All of these answer choices are correct. 
A) Leary's Common Stock account decreased $50,000. 
B) Leary's total stockholders' equity decreased $125,000. 
C) Leary's Paid-in Capital in Excess of Par Value account decreased $75,000. 
D) All of these answer choices are correct.

Question 15

Preferred stockholders generally do not have the right to vote for the board of directors.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about treasury stock is true?

Accepted Answer

A) Few corporations have treasury stock. 
B) Purchasing treasury stock is done to eliminate hostile shareholder buyouts. 
C) Companies acquire treasury stock to increase the number of shares outstanding. 
D) Companies acquire treasury stock to decrease earnings per share. 
A) Few corporations have treasury stock. 
B) Purchasing treasury stock is done to eliminate hostile shareholder buyouts. 
C) Companies acquire treasury stock to increase the number of shares outstanding. 
D) Companies acquire treasury stock to decrease earnings per share.

Question 17

The Paid-in Capital in Excess of Par Value is increased in the accounting records when

Accepted Answer

A) the number of shares issued exceeds par value. 
B) the stated value of capital stock is greater than the par value. 
C) the market value of the stock rises above par value. 
D) capital stock is issued at an amount greater than par value. 
A) the number of shares issued exceeds par value. 
B) the stated value of capital stock is greater than the par value. 
C) the market value of the stock rises above par value. 
D) capital stock is issued at an amount greater than par value.

Question 18

Watson, Inc.has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2020.There were no dividends declared in 2018.The board of directors declares and pays a $90,000 dividend in 2019 and in 2020.What is the amount of dividends received by the common stockholders in 2020?

Accepted Answer

A) $30,000. 
B) $40,000. 
C) $50,000. 
D) $0. 
A) $30,000. 
B) $40,000. 
C) $50,000. 
D) $0.

Question 19

Stockholders of a corporation directly elect

Accepted Answer

A) the president of the corporation. 
B) the board of directors. 
C) the treasurer of the corporation. 
D) all of the employees of the corporation. 
A) the president of the corporation. 
B) the board of directors. 
C) the treasurer of the corporation. 
D) all of the employees of the corporation.

Question 20

The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2020.The dividend is to be paid on August 15, 2020, to stockholders of record on July 31, 2020.The effects of the journal entry to record the payment of the dividend on August 15, 2020, are to

Accepted Answer

A) decrease stockholders' equity and decrease liabilities. 
B) decrease liabilities and decrease assets. 
C) increase stockholders' equity and increase liabilities. 
D) increase stockholders' equity and decrease assets. 
A) decrease stockholders' equity and decrease liabilities. 
B) decrease liabilities and decrease assets. 
C) increase stockholders' equity and increase liabilities. 
D) increase stockholders' equity and decrease assets.

When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.

A corporation acts under its own name rather than in the name of its stockholders.

The per share amount normally assigned by the board of directors to a small stock dividend is

Dividends in arrears are dividends on

A liability arises when the board of directors declares a stock dividend.

Which of the following phrases is not descriptive of the corporate form of business?

Treasury stock is a contra stockholders' equity account.

Regular dividends are declared out of

Ace Inc.has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020.What is the annual dividend on the preferred stock?

Dividends in arrears on cumulative preferred stock

The declaration and distribution of a stock dividend will

If a stockholder cannot attend a stockholders' meeting, he may delegate his voting rights by means of a(n)

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

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $125,000.As a result of this event,

Preferred stockholders generally do not have the right to vote for the board of directors.

Which of the following statements about treasury stock is true?

The Paid-in Capital in Excess of Par Value is increased in the accounting records when

Stockholders of a corporation directly elect

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 11: Reporting and Analyzing Stockholders Equity

When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.

A corporation acts under its own name rather than in the name of its stockholders.

The per share amount normally assigned by the board of directors to a small stock dividend is

Dividends in arrears are dividends on

A liability arises when the board of directors declares a stock dividend.

Which of the following phrases is not descriptive of the corporate form of business?

Treasury stock is a contra stockholders' equity account.

Regular dividends are declared out of

Ace Inc.has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020.What is the annual dividend on the preferred stock?

Dividends in arrears on cumulative preferred stock

The declaration and distribution of a stock dividend will

If a stockholder cannot attend a stockholders' meeting, he may delegate his voting rights by means of a(n)

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

Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $125,000.As a result of this event,

Preferred stockholders generally do not have the right to vote for the board of directors.

Which of the following statements about treasury stock is true?

The Paid-in Capital in Excess of Par Value is increased in the accounting records when

Stockholders of a corporation directly elect

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters