Question 1

The par value of common stock must always be equal to its market value on the date the stock is issued.

Accepted Answer

A) True 
 B)False

Question 2

A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

Accepted Answer

A) True 
 B)False

Question 3

A company would not acquire treasury stock

Accepted Answer

A) in order to reissue shares to officers. 
B) as an asset investment. 
C) in order to increase trading of the company's stock. 
D) to have additional shares available to use in acquisitions of other companies. 
A) in order to reissue shares to officers. 
B) as an asset investment. 
C) in order to increase trading of the company's stock. 
D) to have additional shares available to use in acquisitions of other companies.

Question 4

Which of the following represents the largest number of common shares?

Accepted Answer

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

Question 5

Placing a restriction on retained earnings will

Accepted Answer

A) assure that a company has sufficient cash for a specific purpose. 
B) increase total stockholders' equity. 
C) communicate to readers a portion of retained earnings is unavailable for dividends. 
D) decrease total stockholders' equity. 
A) assure that a company has sufficient cash for a specific purpose. 
B) increase total stockholders' equity. 
C) communicate to readers a portion of retained earnings is unavailable for dividends. 
D) decrease total stockholders' equity.

Question 6

Racer Corporation's December 31, 2020 balance sheet showed the following: 6% preferred stock, $20 par value, cumulative,   Racer declared and paid a $100,000 cash dividend on December 15, 2020.If the company's dividends in arrears prior to that date were $30,000, Racer's common stockholders received

Accepted Answer

A) $70,000. 
B) $60,000. 
C) $40,000. 
D) no dividend. 
A) $70,000. 
B) $60,000. 
C) $40,000. 
D) no dividend.

Question 7

If an investment firm underwrites a stock issue, the

Accepted Answer

A) risk of being unable to sell the shares stays with the issuing corporation. 
B) corporation obtains cash immediately from the investment firm. 
C) investment firm has guaranteed profits on the sale of the stock. 
D) issuance of stock is likely to be directly to creditors. 
A) risk of being unable to sell the shares stays with the issuing corporation. 
B) corporation obtains cash immediately from the investment firm. 
C) investment firm has guaranteed profits on the sale of the stock. 
D) issuance of stock is likely to be directly to creditors.

Question 8

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Accepted Answer

The answer of Indicate the respective effects of the declaration...

Question 9

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000.Based on this information, the

Accepted Answer

A) legal capital is $2,780,000. 
B) number of shares issued is 80,000. 
C) number of shares outstanding is 2,780,000. 
D) average price per share issued is $3.48. 
A) legal capital is $2,780,000. 
B) number of shares issued is 80,000. 
C) number of shares outstanding is 2,780,000. 
D) average price per share issued is $3.48.

Question 10

Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

Accepted Answer

A) Preferred Stock for $4,400,000. 
B) Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $400,000. 
C) Preferred Stock for $4,000,000 and Retained Earnings for $300,000. 
D) Paid-in Capital from Preferred Stock for $4,400,000. 
A) Preferred Stock for $4,400,000. 
B) Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $400,000. 
C) Preferred Stock for $4,000,000 and Retained Earnings for $300,000. 
D) Paid-in Capital from Preferred Stock for $4,400,000.

Question 11

John Jones Company has 20,000 shares of $100 par value common stock.Assuming that the proper journal entry was made to record a 5% common stock dividend on the declaration date when the market value of the stock was $135, which of the following accounts would be debited when the stock dividend is distributed?

Accepted Answer

A) Retained Earnings. 
B) Dividends Payable. 
C) Common Stock Dividends Distributable. 
D) Paid-in Capital in Excess of Par Value. 
A) Retained Earnings. 
B) Dividends Payable. 
C) Common Stock Dividends Distributable. 
D) Paid-in Capital in Excess of Par Value.

Question 12

A small stock dividend is defined as

Accepted Answer

A) less than 30% but greater than 25% of the corporation's issued stock. 
B) between 50% and 100% of the corporation's issued stock. 
C) more than 30% of the corporation's issued stock. 
D) less than 20-25% of the corporation's issued stock. 
A) less than 30% but greater than 25% of the corporation's issued stock. 
B) between 50% and 100% of the corporation's issued stock. 
C) more than 30% of the corporation's issued stock. 
D) less than 20-25% of the corporation's issued stock.

Question 13

Hutchinson Company had retained earnings of $18,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments.Cash of $2,000 had been set aside for the plant expansion.How much of retained earnings is available for dividends?

Accepted Answer

A) $15,000. 
B) $16,000. 
C) $18,000. 
D) $13,000. 
A) $15,000. 
B) $16,000. 
C) $18,000. 
D) $13,000.

Question 14

Tomlinson Packaging Corporation began business in 2020 by issuing 50,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par.At year-end, the common stock had a market value of $10.On its December 31, 2020 balance sheet, Tomlinson Packaging would report

Accepted Answer

A) Common Stock of $500,000. 
B) Common Stock of $250,000. 
C) Common Stock of $400,000. 
D) Paid-in Capital of $330,000. 
A) Common Stock of $500,000. 
B) Common Stock of $250,000. 
C) Common Stock of $400,000. 
D) Paid-in Capital of $330,000.

Question 15

Dividends may be declared and paid in cash or stock.

Accepted Answer

A) True 
 B)False

Question 16

Paid-in capital in excess of stated value would appear on a balance sheet under the category

Accepted Answer

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

Question 17

Nance Corporation's December 31, 2020 balance sheet showed the following:   Nance's total stockholders' equity was

Accepted Answer

A) $58,240,000. 
B) $47,330,000. 
C) $57,610. 
D) $56,980,000. 
A) $58,240,000. 
B) $47,330,000. 
C) $57,610. 
D) $56,980,000.

Question 18

Dawson Company issued 800 shares of no-par common stock for $7,200.Which of the following journal entries would be made if the stock has stated value of $2 per share?

Accepted Answer

The answer of Dawson Company issued 800 shares of no-par...

Question 19

Alt Corp.issues 5,000 shares of $10 par value common stock at $14 per share.When the transaction is recorded, credits are made to:

Accepted Answer

A) Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000. 
B) Common Stock $70,000. 
C) Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000. 
D) Common Stock $50,000 and Retained Earnings $20,000. 
A) Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000. 
B) Common Stock $70,000. 
C) Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000. 
D) Common Stock $50,000 and Retained Earnings $20,000.

Question 20

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

Accepted Answer

A) Cash Dividends 
&ensp;&ensp;&ensp;Cash 
B) Dividends Payable 
&ensp;&ensp;&ensp;Cash 
C) Paid-in Capital 
&ensp;&ensp;&ensp;Dividends Payable 
D) Cash Dividends 
&ensp;&ensp;&ensp;Dividends Payable 
A) Cash Dividends 
&ensp;&ensp;&ensp;Cash 
B) Dividends Payable 
&ensp;&ensp;&ensp;Cash 
C) Paid-in Capital 
&ensp;&ensp;&ensp;Dividends Payable 
D) Cash Dividends 
&ensp;&ensp;&ensp;Dividends Payable

The par value of common stock must always be equal to its market value on the date the stock is issued.

A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

A company would not acquire treasury stock

Which of the following represents the largest number of common shares?

Placing a restriction on retained earnings will

Racer Corporation's December 31, 2020 balance sheet showed the following: 6% preferred stock, $20 par value, cumulative, Racer declared and paid a $100,000 cash dividend on December 15, 2020.If the company's dividends in arrears prior to that date were $30,000, Racer's common stockholders received

If an investment firm underwrites a stock issue, the

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000.Based on this information, the

Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

A small stock dividend is defined as

Dividends may be declared and paid in cash or stock.

Paid-in capital in excess of stated value would appear on a balance sheet under the category

Nance Corporation's December 31, 2020 balance sheet showed the following: Nance's total stockholders' equity was

Dawson Company issued 800 shares of no-par common stock for $7,200.Which of the following journal entries would be made if the stock has stated value of $2 per share?

Alt Corp.issues 5,000 shares of $10 par value common stock at $14 per share.When the transaction is recorded, credits are made to:

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

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

The par value of common stock must always be equal to its market value on the date the stock is issued.

A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

A company would not acquire treasury stock

Which of the following represents the largest number of common shares?

Placing a restriction on retained earnings will

Racer Corporation's December 31, 2020 balance sheet showed the following: 6% preferred stock, $20 par value, cumulative, Racer declared and paid a $100,000 cash dividend on December 15, 2020.If the company's dividends in arrears prior to that date were $30,000, Racer's common stockholders received

If an investment firm underwrites a stock issue, the

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000.Based on this information, the

Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share.The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to

A small stock dividend is defined as

Dividends may be declared and paid in cash or stock.

Paid-in capital in excess of stated value would appear on a balance sheet under the category

Nance Corporation's December 31, 2020 balance sheet showed the following: Nance's total stockholders' equity was

Dawson Company issued 800 shares of no-par common stock for $7,200.Which of the following journal entries would be made if the stock has stated value of $2 per share?

Alt Corp.issues 5,000 shares of $10 par value common stock at $14 per share.When the transaction is recorded, credits are made to:

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

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