Question 1

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 2

Which of the following is not a significant date with respect to dividends?

Accepted Answer

A)  The declaration date 
B)  The incorporation date 
C)  The record date 
D)  The payment date 
A)  The declaration date 
B)  The incorporation date 
C)  The record date 
D)  The payment date

Question 3

Mike Stephenson, the president and CEO of Earth Systems, Inc., a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his hospitalization, Earth Systems had experienced a sharp decline in its stock price, and trading activity became almost nonexistent. The primary reason for this was concern expressed in the media over a new untested waste management system implemented by the company. Mr. Stephenson had been unwilling to submit the procedure to testing before implementation, but he reluctantly agreed to limited tests after the system was operational. No problems have been identified by the tests to date.
The other members of management called a meeting to determine what they should do. Roger Carlson, the marketing manager, suggested that the company purchase a large number of shares of treasury stock. In that way, investors might notice that activity had picked up, and might decide to buy some more shares. This plan would use up most of the company's available cash, so that there will be no money available for a cash dividend. Earth Systems has paid cash dividends every quarter for over ten years.
Required:
1. Is Mr. Carlson's suggestion ethical? Explain.
2. Is it ethical to discontinue the cash dividend? Explain.

Accepted Answer

1. There is no definite answer as to whe

Question 4

The declaration of a stock dividend will

Accepted Answer

A)  increase paid-in capital. 
B)  change the total of stockholders' equity. 
C)  increase total liabilities. 
D)  increase total assets. 
A)  increase paid-in capital. 
B)  change the total of stockholders' equity. 
C)  increase total liabilities. 
D)  increase total assets.

Question 5

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

Accepted Answer

A)  credit to Stock Dividends for $18,000. 
B)  credit to Cash for $78,000. 
C)  credit to Common Stock Dividends Distributable for $60,000. 
D)  debit to Common Stock Dividends Distributable for $60,000. 
A)  credit to Stock Dividends for $18,000. 
B)  credit to Cash for $78,000. 
C)  credit to Common Stock Dividends Distributable for $60,000. 
D)  debit to Common Stock Dividends Distributable for $60,000.

Question 6

The Accumulated Other Comprehensive income account can have either a debit or credit balance.

Accepted Answer

A) True 
 B)False

Question 7

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.

Accepted Answer

capital st

Question 8

Outstanding stock of the Core Corporation included 20,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par noncumulative preferred stock. In 2017, Core declared and paid dividends of $4,000. In 2018, Core declared and paid dividends of $12,000. How much of the 2018 dividend was distributed to preferred shareholders?

Accepted Answer

A)  $8,000 
B)  $4,000 
C)  $6,000 
D)  None of these answers are correct 
A)  $8,000 
B)  $4,000 
C)  $6,000 
D)  None of these answers are correct

Question 9

Marion, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 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 $65,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

Accepted Answer

A)  $0 
B)  $25,000 
C)  $65,000 
D)  $40,000 
A)  $0 
B)  $25,000 
C)  $65,000 
D)  $40,000

Question 10

On November 1, 2018, Nate Corporation's stockholders' equity section is as follows:   
On November 1, Nate declares and distributes a 15% stock dividend when the market value of the stock is $14 per share.
Instructions
Indicate the balances in the stockholders' equity accounts after the stock dividend has been distributed.

Accepted Answer

@#IMG-DLM& *$600,000 + (60,000 × .15 × $

Question 11

Of the various dividends types, the two most common types in practice are

Accepted Answer

A)  cash and large stock. 
B)  cash and property. 
C)  cash and small stock. 
D)  property and small stock. 
A)  cash and large stock. 
B)  cash and property. 
C)  cash and small stock. 
D)  property and small stock.

Question 12

Which of the following is an incorrect statement about a corporation?

Accepted Answer

A)  A corporation is an entity separate and distinct from its owners. 
B)  Creditors ordinarily have recourse only to corporate assets in satisfaction of their claims. 
C)  A corporation may be formed in writing, orally, or implied. 
D)  A corporation is subject to numerous state and federal regulations. 
A)  A corporation is an entity separate and distinct from its owners. 
B)  Creditors ordinarily have recourse only to corporate assets in satisfaction of their claims. 
C)  A corporation may be formed in writing, orally, or implied. 
D)  A corporation is subject to numerous state and federal regulations.

Question 13

Corporations sometimes segregate retained earnings into two categories: (1)__________ retained earnings and (2)________________ retained earnings.

Accepted Answer

restricted

Question 14

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year-end. 
A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year-end.

Question 15

A typical organization chart showing delegation of authority would show

Accepted Answer

A)  stockholders delegating to the board of directors. 
B)  the board of directors delegating to stockholders. 
C)  the chief executive officer delegating to the board of directors. 
D)  the controller delegating to the chief executive officer. 
A)  stockholders delegating to the board of directors. 
B)  the board of directors delegating to stockholders. 
C)  the chief executive officer delegating to the board of directors. 
D)  the controller delegating to the chief executive officer.

Question 16

Return on common stockholders' equity is computed by dividing net income by ending stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 17

On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,

Accepted Answer

A)  Collins' Paid-in Capital in Excess of Par account increased $400,000. 
B)  Collins' total stockholders' equity was unaffected. 
C)  Collins' Stock Dividends account increased $1,200,000. 
D)  All of these answers are correct. 
A)  Collins' Paid-in Capital in Excess of Par account increased $400,000. 
B)  Collins' total stockholders' equity was unaffected. 
C)  Collins' Stock Dividends account increased $1,200,000. 
D)  All of these answers are correct.

Question 18

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

Accepted Answer

A)  $0. 
B)  $500. 
C)  $5,000. 
D)  $10,000. 
A)  $0. 
B)  $500. 
C)  $5,000. 
D)  $10,000.

Question 19

The return on common stockholders' equity is computed by dividing _____________ minus _______________ dividends by average common stockholders' equity.

Accepted Answer

net income

Question 20

A corporate board of directors does not generally

Accepted Answer

A)  select officers. 
B)  formulate operating policies. 
C)  declare dividends. 
D)  execute policy. 
A)  select officers. 
B)  formulate operating policies. 
C)  declare dividends. 
D)  execute policy.

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

If preferred stock is cumulative, the

Which of the following is not a significant date with respect to dividends?

The declaration of a stock dividend will

On January 1, Sway Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

The Accumulated Other Comprehensive income account can have either a debit or credit balance.

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.

Of the various dividends types, the two most common types in practice are

Which of the following is an incorrect statement about a corporation?

Corporations sometimes segregate retained earnings into two categories: (1)__________ retained earnings and (2)________________ retained earnings.

The date on which a cash dividend becomes a binding legal obligation is on the

A typical organization chart showing delegation of authority would show

Return on common stockholders' equity is computed by dividing net income by ending stockholders' equity.

On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 total

The return on common stockholders' equity is computed by dividing _____________ minus _______________ dividends by average common stockholders' equity.

A corporate board of directors does not generally

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

The paid-in capital section of the balance sheet consists of two classifications: and .

Corporations sometimes segregate retained earnings into two categories: (1) retained earnings and (2)______ retained earnings.

The return on common stockholders' equity is computed by dividing _ minus ___ dividends by average common stockholders' equity.