Question 1

Discuss a few common reasons for increases in the market price of a corporation's common stock.

Accepted Answer

Stock prices for the market as a whole tend to increase when the economy is good and when interest rates are low and/or falling. Future economic expectations also play a role in changes in market prices. The expectations of future success of a company play a major role in the behavior of stock prices. To a lesser degree, financial statement information sometimes has an effect on stock prices.

Question 2

Where is treasury stock reported on a corporation's balance sheet?

Accepted Answer

A)  As an addition to total paid-in capital 
B)  As a deduction from total stockholders' equity, following retained earnings 
C)  As a deduction from total paid-in capital 
D)  As a deduction from retained earnings 
A)  As an addition to total paid-in capital 
B)  As a deduction from total stockholders' equity, following retained earnings 
C)  As a deduction from total paid-in capital 
D)  As a deduction from retained earnings B

Question 3

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Use only one letter for each element. You do not need to enter amounts.
Increase = IDecrease = D No Affected = NA The stock of Atlantic Oil Company was trading at $14 per share on March 27 when the company announced that it had recently discovered a large oil reserve. The stock price immediately went up to $28 per share. The company had 10,000,000 shares outstanding. Indicate the effects of this discovery on Atlantic's financial statements.

Accepted Answer

A change in the market price of common stock that has been issued has no impact on a company's financial statements.

Question 4

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

Accepted Answer

A)  increase by $640,000. 
B)  be unaffected. 
C)  increase by $240,000. 
D)  increase by $400,000. 
A)  increase by $640,000. 
B)  be unaffected. 
C)  increase by $240,000. 
D)  increase by $400,000.

Question 5

Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will the entry to record this transaction affect the company's equity accounts?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 6

Show the effect of a stock dividend on the accounting equation (by using "+" or "−" in the elements affected).

Accepted Answer

@#IMG-DLM& A stock dividend has no overa

Question 7

The issuance of a stock dividend will:

Accepted Answer

A)  decrease total assets. 
B)  increase retained earnings. 
C)  decrease paid-in capital. 
D)  not affect total equity. 
A)  decrease total assets. 
B)  increase retained earnings. 
C)  decrease paid-in capital. 
D)  not affect total equity.

Question 8

A corporation might buy some of its own stock to help keep the market price from falling.

Accepted Answer

A) True 
 B)False

Question 9

Ix Company issued 32,000 shares of $10 par value common stock at a market price of $29. As a result of this accounting event, the amount of stockholders' equity would:

Accepted Answer

A)  increase by $928,000. 
B)  be unaffected. 
C)  increase by $320,000. 
D)  increase by $608,000. 
A)  increase by $928,000. 
B)  be unaffected. 
C)  increase by $320,000. 
D)  increase by $608,000.

Question 10

The term "double taxation" refers to which of the following?

Accepted Answer

A)  Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on the dividends they receive from the corporation. 
B)  In a partnership, both partners are required to claim their share of net income on their tax returns. 
C)  A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals. 
D)  A sole proprietorship must pay income taxes to both the state government and the federal government. 
A)  Corporations must pay income taxes on their net income, and their stockholders must pay income taxes on the dividends they receive from the corporation. 
B)  In a partnership, both partners are required to claim their share of net income on their tax returns. 
C)  A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals. 
D)  A sole proprietorship must pay income taxes to both the state government and the federal government.

Question 11

Discuss some of the information items normally included in a corporation's articles of incorporation.

Accepted Answer

The name of the corporation and the prop

Question 12

Gilligan Corporation was established on February 15, Year 1. Gilligan is authorized to issue 500,000 shares of $6.00 par value common stock. As of December 30, Year 1, Gilligan's stockholders' equity accounts report the following balances:   On December 31, Year 1, Gilligan decides to issue a 5% stock dividend. At the time of issue, the market price of the stock was $22 per share.What is the dollar value of the stock dividend issued by Gilligan Corporation?

Accepted Answer

A)  $60,500 
B)  $16,500 
C)  $44,000 
D)  $108,500 
A)  $60,500 
B)  $16,500 
C)  $44,000 
D)  $108,500

Question 13

A partner is responsible for his/her own actions, but not for actions taken by another partner on behalf of the partnership.

Accepted Answer

A) True 
 B)False

Question 14

An appropriation of retained earnings places a limit on the amount of dividends a corporation can declare.

Accepted Answer

A) True 
 B)False

Question 15

The Rubble-Flintstone Company was started on January 1, Year 1 as a partnership. The initial investments from the two partners were $50,000 from Rubble and $30,000 from Flintstone. During Year 1, Rubble-Flintstone Company earned $70,000 in cash revenue, paid $42,000 in cash expenses and the partners withdrew $5,000 each for their personal use. The partnership agreement calls for equal sharing of net income or loss.Required:
Using only the above information, prepare an income statement, a capital statement, and a balance sheet for the Rubble-Flintstone Company.

Accepted Answer

None

Question 16

For Year 1, the Sacramento Corporation had beginning and ending Retained Earnings balances of $151,900 and $201,400 respectively. Also during Year 1, the corporation declared and paid cash dividends of $20,600 and issued stock dividends valued at $16,000. Total expenses were $37,416. Based on this information, what was the amount of total revenue for Year 1?

Accepted Answer

A)  $143,384 
B)  $107,516 
C)  $123,516 
D)  $131,300 
A)  $143,384 
B)  $107,516 
C)  $123,516 
D)  $131,300

Question 17

Which of the following is a negative or contra equity account?

Accepted Answer

A)  Retained earnings 
B)  Paid-in capital in excess of par value 
C)  Treasury stock 
D)  Appropriated retained earnings 
A)  Retained earnings 
B)  Paid-in capital in excess of par value 
C)  Treasury stock 
D)  Appropriated retained earnings

Question 18

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. Use only one letter for each element. You do not need to enter amounts.
Increase = IDecrease = D No Affected = NAJack Grimes, who had held 12% of Preston Company's outstanding common stock, agreed to purchase another 8% of Preston Company's outstanding common stock from Todd Barbour, another major stockholder of Preston's. Indicate the effect of this event on Preston's financial statements.

Accepted Answer

@#IMG-DLM&
This event has no impact

Question 19

Loudoun Corporation's balance sheet reflected the following information.
 $\begin{array}{llr}
  \text {Common stock, \$2 par  } &\$140,000\
 \text { Paid-in capital in excess of par - Common } &210,000\
\end{array}$
 Required:
Assuming all the stock was issued in a single transaction, what was the issue price per share of the stock?

Accepted Answer

Number of shares = $140,000 ÷

Question 20

On September 1, Year 1, Orville Corporation has unrestricted Retained Earnings of $600,000, Appropriated Retained Earnings of $400,000, Cash of $850,000, and Accounts Payable of $50,000. What is the maximum amount that can be used for cash dividends?

Accepted Answer

A)  $850,000 
B)  $600,000 
C)  $800,000 
D)  $450,000 
A)  $850,000 
B)  $600,000 
C)  $800,000 
D)  $450,000

Discuss a few common reasons for increases in the market price of a corporation's common stock.

Where is treasury stock reported on a corporation's balance sheet?

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will the entry to record this transaction affect the company's equity accounts?

Show the effect of a stock dividend on the accounting equation (by using "+" or "−" in the elements affected).

The issuance of a stock dividend will:

A corporation might buy some of its own stock to help keep the market price from falling.

Ix Company issued 32,000 shares of $10 par value common stock at a market price of $29. As a result of this accounting event, the amount of stockholders' equity would:

The term "double taxation" refers to which of the following?

Discuss some of the information items normally included in a corporation's articles of incorporation.

A partner is responsible for his/her own actions, but not for actions taken by another partner on behalf of the partnership.

An appropriation of retained earnings places a limit on the amount of dividends a corporation can declare.

Which of the following is a negative or contra equity account?

Loudoun Corporation's balance sheet reflected the following information. Common stock, \2 par \1 40,000 Paid-in capital in excess of par - Common 210,000 Required: Assuming all the stock was issued in a single transaction, what was the issue price per share of the stock?

On September 1, Year 1, Orville Corporation has unrestricted Retained Earnings of $600,000, Appropriated Retained Earnings of $400,000, Cash of $850,000, and Accounts Payable of $50,000. What is the maximum amount that can be used for cash dividends?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

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Exam 8: Proprietorships, Partnerships, and Corporations

Discuss a few common reasons for increases in the market price of a corporation's common stock.

Where is treasury stock reported on a corporation's balance sheet?

Ix Company issued 20,000 shares of $20 par value common stock at a market price of $32. As a result of this accounting event, the amount of stockholders' equity would:

Rocco Corporation decides to issue a 7.5% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution is made at the time the market value of the stock is $50 a share. How will the entry to record this transaction affect the company's equity accounts?

Show the effect of a stock dividend on the accounting equation (by using "+" or "−" in the elements affected).

The issuance of a stock dividend will:

A corporation might buy some of its own stock to help keep the market price from falling.

Ix Company issued 32,000 shares of $10 par value common stock at a market price of $29. As a result of this accounting event, the amount of stockholders' equity would:

The term "double taxation" refers to which of the following?

Discuss some of the information items normally included in a corporation's articles of incorporation.

A partner is responsible for his/her own actions, but not for actions taken by another partner on behalf of the partnership.

An appropriation of retained earnings places a limit on the amount of dividends a corporation can declare.

Which of the following is a negative or contra equity account?

Loudoun Corporation's balance sheet reflected the following information. Common stock, \2 par \1 40,000 Paid-in capital in excess of par - Common 210,000 Required: Assuming all the stock was issued in a single transaction, what was the issue price per share of the stock?

On September 1, Year 1, Orville Corporation has unrestricted Retained Earnings of $600,000, Appropriated Retained Earnings of $400,000, Cash of $850,000, and Accounts Payable of $50,000. What is the maximum amount that can be used for cash dividends?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters