Question 1

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

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

Question 2

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

Question 3

Dividends in arrears on cumulative preferred stock

Accepted Answer

A)  are considered to be a non-current liability. 
B)  are considered to be a current liability. 
C)  only occur when preferred dividends have been declared. 
D)  should be disclosed in the notes to the financial statements. 
A)  are considered to be a non-current liability. 
B)  are considered to be a current liability. 
C)  only occur when preferred dividends have been declared. 
D)  should be disclosed in the notes to the financial statements.

Question 4

On January 1, Swanson Corporation had 80,000 ordinary shares with a €10 par value outstanding. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was €13 on March 17. The shares were distributed on March 30. The entry to record the transaction of March 30 would include a

Accepted Answer

A)  credit to Cash for €120,000. 
B)  debit to Ordinary Share Dividends Distributable for €120,000. 
C)  credit to Share Premium-Ordinary for €36,000. 
D)  debit to Cash Dividends for €36,000. 
A)  credit to Cash for €120,000. 
B)  debit to Ordinary Share Dividends Distributable for €120,000. 
C)  credit to Share Premium-Ordinary for €36,000. 
D)  debit to Cash Dividends for €36,000.

Question 5

Ferman Corporation had net income of $160,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2014. Ferman Corporation's common stockholders' equity at the beginning and end of 2014 was $870,000 and $1,130,000, respectively. Ferman Corporation's return on common stockholders' equity was

Accepted Answer

A)  16%. 
B)  14%. 
C)  11%. 
D)  9%. 
A)  16%. 
B)  14%. 
C)  11%. 
D)  9%.

Question 6

A corporation has a separate __________________________ distinct from its owners.

Accepted Answer

The answer of A corporation has a separate __________________________ distinct...

Question 7

When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 8

Treasury stock is

Accepted Answer

A)  stock issued by the U.S. Treasury Department. 
B)  stock purchased by a corporation and held as an investment in its treasury. 
C)  corporate stock issued by the treasurer of a company. 
D)  a corporation's own stock, which has been reacquired and held for future use. 
A)  stock issued by the U.S. Treasury Department. 
B)  stock purchased by a corporation and held as an investment in its treasury. 
C)  corporate stock issued by the treasurer of a company. 
D)  a corporation's own stock, which has been reacquired and held for future use.

Question 9

Par value

Accepted Answer

A)  represents what a share of stock is worth. 
B)  represents the original selling price for a share of stock. 
C)  is established for a share of stock after it is issued. 
D)  is the value assigned per share in the corporate charter. 
A)  represents what a share of stock is worth. 
B)  represents the original selling price for a share of stock. 
C)  is established for a share of stock after it is issued. 
D)  is the value assigned per share in the corporate charter.

Question 10

Which of the following statements is not true about a 2-for-1 split?

Accepted Answer

A)  Par value per share is reduced to half of what it was before the split. 
B)  Total contributed capital increases. 
C)  The market price probably will decrease. 
D)  A stockholder with ten shares before the split owns twenty shares after the split. 
A)  Par value per share is reduced to half of what it was before the split. 
B)  Total contributed capital increases. 
C)  The market price probably will decrease. 
D)  A stockholder with ten shares before the split owns twenty shares after the split.

Question 11

Treasury stock is reported as an asset on the balance sheet because treasury stock may later be resold.

Accepted Answer

A) True 
 B)False

Question 12

A corporation records a dividend-related liability

Accepted Answer

A)  on the record date. 
B)  on the payment date. 
C)  when dividends are in arrears. 
D)  on the declaration date. 
A)  on the record date. 
B)  on the payment date. 
C)  when dividends are in arrears. 
D)  on the declaration date.

Question 13

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, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on July 31, 2014. The effects of the journal entry to record the payment of the dividend on August 15, 2014, 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.

Question 14

The number of common shares outstanding can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 15

The Common Stock Distributable account is classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

Accepted Answer

A)  Adequate cash. 
B)  Approval of stockholders. 
C)  Declared dividends. 
D)  Retained earnings. 
A)  Adequate cash. 
B)  Approval of stockholders. 
C)  Declared dividends. 
D)  Retained earnings.

Question 17

The two ways that a corporation can be classified by purpose are

Accepted Answer

A)  general and limited. 
B)  profit and not-for-profit. 
C)  state and federal. 
D)  publicly held and privately held. 
A)  general and limited. 
B)  profit and not-for-profit. 
C)  state and federal. 
D)  publicly held and privately held.

Question 18

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 19

A stockholder has the right to vote in the election of the board of directors.

Accepted Answer

A) True 
 B)False

Question 20

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show

Accepted Answer

A)  Common Stock of $1,000,000. 
B)  Common Stock of $4,800,000. 
C)  total paid-in capital of $4,760,000. 
D)  total paid-in capital of $3,800,000. 
A)  Common Stock of $1,000,000. 
B)  Common Stock of $4,800,000. 
C)  total paid-in capital of $4,760,000. 
D)  total paid-in capital of $3,800,000.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

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.

Dividends in arrears on cumulative preferred stock

A corporation has a separate __________________________ distinct from its owners.

When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Treasury stock is

Par value

Which of the following statements is not true about a 2-for-1 split?

Treasury stock is reported as an asset on the balance sheet because treasury stock may later be resold.

A corporation records a dividend-related liability

The number of common shares outstanding can never be greater than the number of shares issued.

The Common Stock Distributable account is classified as a current liability.

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

The two ways that a corporation can be classified by purpose are

Retained earnings represents the amount of cash available for dividends.

A stockholder has the right to vote in the election of the board of directors.

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show

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 and Acquisitions in Accounting

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

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.

Dividends in arrears on cumulative preferred stock

A corporation has a separate __________________________ distinct from its owners.

When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Treasury stock is

Par value

Which of the following statements is not true about a 2-for-1 split?

Treasury stock is reported as an asset on the balance sheet because treasury stock may later be resold.

A corporation records a dividend-related liability

The number of common shares outstanding can never be greater than the number of shares issued.

The Common Stock Distributable account is classified as a current liability.

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

The two ways that a corporation can be classified by purpose are

Retained earnings represents the amount of cash available for dividends.

A stockholder has the right to vote in the election of the board of directors.

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show

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 and Acquisitions in Accounting

Filters