Question 1

Each of the following is correct regarding treasury stock except that it has been

Accepted Answer

A)  issued. 
B)  fully paid for. 
C)  reacquired. 
D)  retired. 
A)  issued. 
B)  fully paid for. 
C)  reacquired. 
D)  retired.

Question 2

The person responsible for maintaining the company's cash position is the

Accepted Answer

A)  controller. 
B)  treasurer. 
C)  vice-president. 
D)  president. 
A)  controller. 
B)  treasurer. 
C)  vice-president. 
D)  president.

Question 3

A statement of comprehensive income is presented in

Accepted Answer

A)  a single-statement format only. 
B)  a two-statement format only. 
C)  an operating format. 
D)  either a one- or two-statement format. 
A)  a single-statement format only. 
B)  a two-statement format only. 
C)  an operating format. 
D)  either a one- or two-statement format.

Question 4

Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2017. The board of directors declares and pays a $250,000 dividend in 2018. What is the amount of dividends received by the common stockholders in 2018?

Accepted Answer

A)  $0 
B)  $150,000 
C)  $250,000 
D)  $100,000 
A)  $0 
B)  $150,000 
C)  $250,000 
D)  $100,000

Question 5

Which one of the following is a privately held corporation?

Accepted Answer

A)  Intel 
B)  General Electric 
C)  Caterpillar Inc. 
D)  Cargill Inc. 
A)  Intel 
B)  General Electric 
C)  Caterpillar Inc. 
D)  Cargill Inc.

Question 6

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.

Question 7

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Accepted Answer

A) True 
 B)False

Question 8

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Accepted Answer

A) True 
 B)False

Question 9

A stockholders' equity statement shows

Accepted Answer

A)  the names of each stockholder. 
B)  how profits are distributed to the various classes of stockholders. 
C)  the number of shares owned by each of the stockholders. 
D)  the changes in each stockholders' equity account and in total stockholders' equity during the period. 
A)  the names of each stockholder. 
B)  how profits are distributed to the various classes of stockholders. 
C)  the number of shares owned by each of the stockholders. 
D)  the changes in each stockholders' equity account and in total stockholders' equity during the period.

Question 10

Darling Corporation issued 200,000 shares of $20 par value, 5% preferred stock on January 1, 2016, for $4,500,000. In December 2018, Darling declared its first dividend of $800,000.
Instructions
(a) Prepare Darling's journal entry to record the issuance of the preferred stock.
(b) If the preferred stock is not cumulative, how much of the $800,000 would be paid to common stockholders?
(c) If the preferred stock is cumulative, how much of the $800,000 would be paid to common stockholders?

Accepted Answer

The answer of Darling Corporation issued 200,000 shares of $20...

Question 11

Evergreen Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $115,000. As a result of this event,

Accepted Answer

A)  Evergreen's Common Stock account decreased $50,000. 
B)  Evergreen's total stockholders' equity decreased $115,000. 
C)  Evergreen's Paid-in Capital in Excess of Par account decreased $65,000. 
D)  All of these answers are correct. 
A)  Evergreen's Common Stock account decreased $50,000. 
B)  Evergreen's total stockholders' equity decreased $115,000. 
C)  Evergreen's Paid-in Capital in Excess of Par account decreased $65,000. 
D)  All of these answers are correct.

Question 12

The acquisition of treasury stock by a corporation

Accepted Answer

A)  increases its total assets and total stockholders' equity. 
B)  decreases its total assets and total stockholders' equity. 
C)  has no effect on total assets and total stockholders' equity. 
D)  requires that a gain or loss be recognized on the income statement. 
A)  increases its total assets and total stockholders' equity. 
B)  decreases its total assets and total stockholders' equity. 
C)  has no effect on total assets and total stockholders' equity. 
D)  requires that a gain or loss be recognized on the income statement.

Question 13

The sale of common stock below par

Accepted Answer

A)  is a common occurrence in most states. 
B)  is not permitted in most states. 
C)  is a practice that most stockholders encourage. 
D)  requires that a liability be recorded for the difference between the sales price and the par value of the shares. 
A)  is a common occurrence in most states. 
B)  is not permitted in most states. 
C)  is a practice that most stockholders encourage. 
D)  requires that a liability be recorded for the difference between the sales price and the par value of the shares.

Question 14

The officer who is generally responsible for maintaining the cash position of the corporation is the

Accepted Answer

A)  controller. 
B)  treasurer. 
C)  cashier. 
D)  internal auditor. 
A)  controller. 
B)  treasurer. 
C)  cashier. 
D)  internal auditor.

Question 15

Jarrett Company issued 900 shares of no-par common stock for $13,200. Which of the following journal entries would be made if the stock has no stated value?

Accepted Answer

The answer of Jarrett Company issued 900 shares of no-par...

Question 16

A successful corporation can have a continuous and perpetual life.

Accepted Answer

A) True 
 B)False

Question 17

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

Accepted Answer

A)  ending total stockholders' equity. 
B)  ending common stockholders' equity. 
C)  average total stockholders' equity. 
D)  average common stockholders' equity. 
A)  ending total stockholders' equity. 
B)  ending common stockholders' equity. 
C)  average total stockholders' equity. 
D)  average common stockholders' equity.

Question 18

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock becomes legal capital.

Accepted Answer

A) True 
 B)False

Question 19

A debit balance in the Retained Earnings account is identified as a deficit.

Accepted Answer

A) True 
 B)False

Question 20

Karl Corporation was organized on January 2, 2018. During 2018, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2018?

Accepted Answer

A)  $1,280,000 
B)  $1,404,000 
C)  $1,416,000 
D)  $1,440,000 
A)  $1,280,000 
B)  $1,404,000 
C)  $1,416,000 
D)  $1,440,000

Exam 11: Corporations: Organization, Stock Transactions, and Stockholders Equity

Each of the following is correct regarding treasury stock except that it has been

The person responsible for maintaining the company's cash position is the

A statement of comprehensive income is presented in

Which one of the following is a privately held corporation?

Dividends in arrears on cumulative preferred stock

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

A stockholders' equity statement shows

Evergreen Manufacturing Corporation purchased 5,000 shares of its own previously issued $10 par common stock for $115,000. As a result of this event,

The acquisition of treasury stock by a corporation

The sale of common stock below par

The officer who is generally responsible for maintaining the cash position of the corporation is the

Jarrett Company issued 900 shares of no-par common stock for $13,200. Which of the following journal entries would be made if the stock has no stated value?

A successful corporation can have a continuous and perpetual life.

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock becomes legal capital.

A debit balance in the Retained Earnings account is identified as a deficit.

Karl Corporation was organized on January 2, 2018. During 2018, Karl issued 40,000 shares at $24 per share, purchased 6,000 shares of treasury stock at $26 per share, and had net income of $600,000. What is the total amount of stockholders' equity at December 31, 2018?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters