Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of preferred stock for land with an asking price of $625,000 and a market value of $550,000, which of the following would be the best journal entry for Retro to record?

Accepted Answer

The answer of Retro Company is authorized to issue 10,000...

Question 4

An inexperienced accountant for Teahan Corporation made the following entries.   Instructions
On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.)

Accepted Answer

The answer of An inexperienced accountant for Teahan Corporation made...

Question 5

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

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

As part of a Careers in Accounting program sponsored by accounting organizations and supported by your company, you will be taking a group of high-school students through the accounting department in your company. You will also provide them with various materials to explain the work of an accountant. One of the materials you will provide is the Stockholders' Equity section of a recent balance sheet.
Required:
Prepare a short response explaining each major section: Common Stock, Additional Paid-in Capital, and Retained Earnings. You should try to be brief but clear.

Accepted Answer

Common Stock: When investors invest in o

Question 8

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Accepted Answer

A) True 
 B)False

Question 9

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

Accepted Answer

A) True 
 B)False

Question 10

The authorized stock of a corporation

Accepted Answer

A)  only reflects the initial capital needs of the company. 
B)  is indicated in its by-laws. 
C)  is indicated in its charter. 
D)  must be recorded in a formal accounting entry. 
A)  only reflects the initial capital needs of the company. 
B)  is indicated in its by-laws. 
C)  is indicated in its charter. 
D)  must be recorded in a formal accounting entry.

Question 11

Brewer Inc. has 5,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $15,000 dividend in 2013. In 2014, $60,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?

Accepted Answer

A)  $35,000. 
B)  $30,000. 
C)  $25,000. 
D)  $20,000. 
A)  $35,000. 
B)  $30,000. 
C)  $25,000. 
D)  $20,000.

Question 12

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Accepted Answer

The answer of The _______________ feature of preferred stock gives...

Question 13

Common Stock Dividends Distributable is classified as a(n)

Accepted Answer

A)  asset account. 
B)  stockholders' equity account. 
C)  expense account. 
D)  liability account. 
A)  asset account. 
B)  stockholders' equity account. 
C)  expense account. 
D)  liability account.

Question 14

Nance Corporation's December 31, 2014 balance sheet showed the following:   Nance's total stockholders' equity was

Accepted Answer

A)  $55,140,000. 
B)  $46,860,000. 
C)  $54,510,000. 
D)  $53,880,000. 
A)  $55,140,000. 
B)  $46,860,000. 
C)  $54,510,000. 
D)  $53,880,000.

Question 15

The officer that 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 16

Which of the following statements is true regarding corporate performance ratios?

Accepted Answer

A)  A high payout ratio may indicate that a company is retaining earnings for future growth investments. 
B)  As a company grows larger, it is easy to sustain a high return on common stockholder's equity. 
C)  Return on common stockholder's equity is often higher under bond financing rather than common stock financing. 
D)  Companies low growth rates are characterized by low payout ratios. 
A)  A high payout ratio may indicate that a company is retaining earnings for future growth investments. 
B)  As a company grows larger, it is easy to sustain a high return on common stockholder's equity. 
C)  Return on common stockholder's equity is often higher under bond financing rather than common stock financing. 
D)  Companies low growth rates are characterized by low payout ratios.

Question 17

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Accepted Answer

A) True 
 B)False

Question 18

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Accepted Answer

A)  entirely within the capital stock section. 
B)  entirely within the additional paid-in capital section. 
C)  under both the capital stock and additional paid-in capital sections. 
D)  entirely under the retained earnings section. 
A)  entirely within the capital stock section. 
B)  entirely within the additional paid-in capital section. 
C)  under both the capital stock and additional paid-in capital sections. 
D)  entirely under the retained earnings section.

Question 19

Racer Corporation's December 31, 2014 balance sheet showed the following:   Racer's total stockholders' equity was

Accepted Answer

A)  $73,520,000. 
B)  $62,480,000. 
C)  $72,680,000. 
D)  $71,840,000. 
A)  $73,520,000. 
B)  $62,480,000. 
C)  $72,680,000. 
D)  $71,840,000.

Question 20

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

Accepted Answer

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

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

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

An inexperienced accountant for Teahan Corporation made the following entries. Instructions On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.)

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

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

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

The authorized stock of a corporation

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Common Stock Dividends Distributable is classified as a(n)

Nance Corporation's December 31, 2014 balance sheet showed the following: Nance's total stockholders' equity was

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

Which of the following statements is true regarding corporate performance ratios?

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Racer Corporation's December 31, 2014 balance sheet showed the following: Racer's total stockholders' equity was

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 and Acquisitions in Accounting

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

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

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

An inexperienced accountant for Teahan Corporation made the following entries. Instructions On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.)

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

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

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

The authorized stock of a corporation

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Common Stock Dividends Distributable is classified as a(n)

Nance Corporation's December 31, 2014 balance sheet showed the following: Nance's total stockholders' equity was

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

Which of the following statements is true regarding corporate performance ratios?

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Racer Corporation's December 31, 2014 balance sheet showed the following: Racer's total stockholders' equity was

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 and Acquisitions in Accounting

Filters