Question 1

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

Accepted Answer

A)  Common Stock will be credited for $140,000. 
B)  Paid-in Capital in Excess of Par Value will be credited for $20,000. 
C)  Paid-in Capital in Excess of Par Value will be credited for $120,000. 
D)  Cash will be debited for $120,000. 
A)  Common Stock will be credited for $140,000. 
B)  Paid-in Capital in Excess of Par Value will be credited for $20,000. 
C)  Paid-in Capital in Excess of Par Value will be credited for $120,000. 
D)  Cash will be debited for $120,000.

Question 2

A net loss

Accepted Answer

A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the Paid-in Capital account of the stockholders' equity section of the balance sheet. 
A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the Paid-in Capital account of the stockholders' equity section of the balance sheet.

Question 3

Regular dividends are declared out of

Accepted Answer

A)  paid-in capital in excess of par value. 
B)  treasury stock. 
C)  common stock. 
D)  retained earnings. 
A)  paid-in capital in excess of par value. 
B)  treasury stock. 
C)  common stock. 
D)  retained earnings.

Question 4

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

Accepted Answer

A)  Kaplan's Common Stock account decreased $25,000. 
B)  Kaplan's total stockholders' equity decreased $57,500. 
C)  Kaplan's Paid-in Capital in Excess of Par Value account decreased $32,500. 
D)  All of these answer choices are correct. 
A)  Kaplan's Common Stock account decreased $25,000. 
B)  Kaplan's total stockholders' equity decreased $57,500. 
C)  Kaplan's Paid-in Capital in Excess of Par Value account decreased $32,500. 
D)  All of these answer choices are correct.

Question 5

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 6

Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.

Accepted Answer

A) True 
 B)False

Question 7

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

Accepted Answer

A)  Common Stock will be credited for $25,000. 
B)  Paid-in Capital in Excess of Par Value will be credited for $25,000. 
C)  Paid-in Capital in Excess of Par Value will be credited for $210,000. 
D)  Cash will be debited for $185,000. 
A)  Common Stock will be credited for $25,000. 
B)  Paid-in Capital in Excess of Par Value will be credited for $25,000. 
C)  Paid-in Capital in Excess of Par Value will be credited for $210,000. 
D)  Cash will be debited for $185,000.

Question 8

A corporation must be incorporated in each state in which it does business.

Accepted Answer

A) True 
 B)False

Question 9

Dividends in arrears on cumulative preferred stock

Accepted Answer

A)  never have to be paid, even if common dividends are paid. 
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)  never have to be paid, even if common dividends are paid. 
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 10

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Accepted Answer

A corporation may acquire treasury stock

Question 11

Corporations generally issue stock dividends in order to

Accepted Answer

A)  increase the market price per share. 
B)  exceed stockholders' dividend expectations. 
C)  increase the marketability of the stock. 
D)  decrease the amount of capital in the corporation. 
A)  increase the market price per share. 
B)  exceed stockholders' dividend expectations. 
C)  increase the marketability of the stock. 
D)  decrease the amount of capital in the corporation.

Question 12

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

Accepted Answer

A) True 
 B)False

Question 13

Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation's common stockholders' equity at the beginning and end of 2014s was $450,000 and $550,000, respectively. Herman Corporation's return on common stockholders' equity is

Accepted Answer

A)  24.0%. 
B)  20.0%. 
C)  19.2%. 
D)  15.2%. 
A)  24.0%. 
B)  20.0%. 
C)  19.2%. 
D)  15.2%.

Question 14

On the dividend record date

Accepted Answer

A)  a dividend becomes a current obligation. 
B)  no entry is required. 
C)  an entry may be required if it is a stock dividend. 
D)  Dividends Payable is debited. 
A)  a dividend becomes a current obligation. 
B)  no entry is required. 
C)  an entry may be required if it is a stock dividend. 
D)  Dividends Payable is debited.

Question 15

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

Accepted Answer

A) True 
 B)False

Question 16

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Accepted Answer

A) True 
 B)False

Question 17

Paid-in Capital in Excess of Par Value

Accepted Answer

A)  is credited when no-par stock does not have a stated value. 
B)  is reported as part of paid-in capital on the balance sheet. 
C)  represents the amount of legal capital. 
D)  normally has a debit balance. 
A)  is credited when no-par stock does not have a stated value. 
B)  is reported as part of paid-in capital on the balance sheet. 
C)  represents the amount of legal capital. 
D)  normally has a debit balance.

Question 18

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following would not be considered an advantage of the corporate form of organization?

Accepted Answer

A)  Limited liability of stockholders. 
B)  Separate legal existence. 
C)  Continuous life. 
D)  Government regulation. 
A)  Limited liability of stockholders. 
B)  Separate legal existence. 
C)  Continuous life. 
D)  Government regulation.

Question 20

Which of the following statements reflects the transferability of ownership rights in a corporation?

Accepted Answer

A)  If a stockholder decides to transfer ownership, he must transfer all of his shares. 
B)  A stockholder may dispose of part or all of his shares. 
C)  A stockholder must obtain permission of the board of directors before selling shares. 
D)  A stockholder must obtain permission from at least three other stockholders before selling shares. 
A)  If a stockholder decides to transfer ownership, he must transfer all of his shares. 
B)  A stockholder may dispose of part or all of his shares. 
C)  A stockholder must obtain permission of the board of directors before selling shares. 
D)  A stockholder must obtain permission from at least three other stockholders before selling shares.

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

A net loss

Regular dividends are declared out of

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

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.

Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

A corporation must be incorporated in each state in which it does business.

Dividends in arrears on cumulative preferred stock

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Corporations generally issue stock dividends in order to

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

On the dividend record date

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Paid-in Capital in Excess of Par Value

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Which one of the following would not be considered an advantage of the corporate form of organization?

Which of the following statements reflects the transferability of ownership rights in a corporation?

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

Time Value of Money

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

A net loss

Regular dividends are declared out of

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

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.

Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

A corporation must be incorporated in each state in which it does business.

Dividends in arrears on cumulative preferred stock

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Corporations generally issue stock dividends in order to

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

On the dividend record date

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Paid-in Capital in Excess of Par Value

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Which one of the following would not be considered an advantage of the corporate form of organization?

Which of the following statements reflects the transferability of ownership rights in a corporation?

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

Time Value of Money

Filters