Question 1

A premium on common stock:

Accepted Answer

A) Represents profit from issuing stock. 
B) Is prohibited in most states. 
C) Occurs when a corporation sells its stock for more than par or stated value. 
D) Represents capital gain on sale of stock. 
E) Is the difference between par value and issue price when the amount paid is below par. 
A) Represents profit from issuing stock. 
B) Is prohibited in most states. 
C) Occurs when a corporation sells its stock for more than par or stated value. 
D) Represents capital gain on sale of stock. 
E) Is the difference between par value and issue price when the amount paid is below par.

Question 2

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

Accepted Answer

A) A $1,800 credit to Common Stock. 
B) A $1,800 debit to Legal Expenses. 
C) A $1,800 credit to Cash. 
D) A $1,300 credit to Paid-in Capital in Excess of Par Value, Common Stock. 
E) A $300 debit to Organization Expenses. 
A) A $1,800 credit to Common Stock. 
B) A $1,800 debit to Legal Expenses. 
C) A $1,800 credit to Cash. 
D) A $1,300 credit to Paid-in Capital in Excess of Par Value, Common Stock. 
E) A $300 debit to Organization Expenses.

Question 3

Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:
 $\begin{array} { lll  }
 \text {feb }&1& \text { Issued 10,000 shares of common stock for $ \$ 30 $ cash per share.} \
&15& \text {Exchanged 2,000 shares of preferred stock for }\
&& \text {quipment and merchandise inventory with }\
&& \text {market values of $ \$ 80,000 $ and $ \$ 30,000 $,  }\
&& \text {respectively. }\
\end{array}$

Accepted Answer

The answer of Rhoads Corporation is authorized to issue 250,000...

Question 4

Retained earnings are part of the stockholders' claims on the company's net assets.

Accepted Answer

A) True 
 B)False

Question 5

Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

Accepted Answer

A) $2,000. 
B) $1,000. 
C) $0. 
D) $3,000. 
E) $4,000. 
A) $2,000. 
B) $1,000. 
C) $0. 
D) $3,000. 
E) $4,000.

Question 6

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

Accepted Answer

A) True 
 B)False

Question 7

Changes in accounting estimates are accounted for in current and future periods.

Accepted Answer

A) True 
 B)False

Question 8

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

Accepted Answer

A) Current yield. 
B) Earnings per share. 
C) Dividend yield. 
D) Dividend payout ratio. 
E) Price-earnings ratio. 
A) Current yield. 
B) Earnings per share. 
C) Dividend yield. 
D) Dividend payout ratio. 
E) Price-earnings ratio.

Question 9

The total number of shares outstanding is the authorized stock.

Accepted Answer

A) True 
 B)False

Question 10

Growth stocks generally pay large dividends on a regular basis.

Accepted Answer

A) True 
 B)False

Question 11

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Accepted Answer

A) True 
 B)False

Question 12

Companies report prior period adjustments, net of any income tax effects in the:

Accepted Answer

A) Statement of cash flows. 
B) No disclosure is required. 
C) Income statement. 
D) Balance sheet. 
E) Statement of retained earnings. 
A) Statement of cash flows. 
B) No disclosure is required. 
C) Income statement. 
D) Balance sheet. 
E) Statement of retained earnings.

Question 13

Shareholders in a corporation have the power to bind the corporation to contracts.

Accepted Answer

A) True 
 B)False

Question 14

What are the rights generally granted to common stockholders?

Accepted Answer

Common stockholders generally have the r

Question 15

A corporation with $10 par common stock issues a large stock dividend. The capitalization of retained earnings is equal to:

Accepted Answer

A) The par value of the shares to be distributed. 
B) There is no capitalization of retained earnings in the case of a large stock dividend. 
C) The market value of the shares outstanding. 
D) The market value of the shares to be distributed. 
E) The par value of the shares outstanding. 
A) The par value of the shares to be distributed. 
B) There is no capitalization of retained earnings in the case of a large stock dividend. 
C) The market value of the shares outstanding. 
D) The market value of the shares to be distributed. 
E) The par value of the shares outstanding.

Question 16

A stock dividend decreases the market price of the company's stock.

Accepted Answer

A) True 
 B)False

Question 17

All of the following statements regarding stock dividends are true except:

Accepted Answer

A) Stock dividends transfer a portion of equity from retained earnings to contributed capital. 
B) Directors can use stock dividends to keep the market price of the stock affordable. 
C) Stock dividends provide evidence of management's confidence that the company is doing well. 
D) Stock dividends do not reduce assets or equity. 
E) Stock dividends decrease the number of shares outstanding. 
A) Stock dividends transfer a portion of equity from retained earnings to contributed capital. 
B) Directors can use stock dividends to keep the market price of the stock affordable. 
C) Stock dividends provide evidence of management's confidence that the company is doing well. 
D) Stock dividends do not reduce assets or equity. 
E) Stock dividends decrease the number of shares outstanding.

Question 18

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

Accepted Answer

A) True 
 B)False

Question 19

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Accepted Answer

A) Callable preferred stock. 
B) Participating preferred stock. 
C) Cumulative preferred stock. 
D) Convertible preferred stock. 
E) Noncumulative preferred stock. 
A) Callable preferred stock. 
B) Participating preferred stock. 
C) Cumulative preferred stock. 
D) Convertible preferred stock. 
E) Noncumulative preferred stock.

Question 20

A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is:

Accepted Answer

A) Debit Cash $4,000; credit Preferred Stock $4,000. 
B) Debit Cash $2,100; credit Preferred Stock $2,100. 
C) Debit Preferred Stock $2,100, debit Investment in Preferred Stock $1,900; credit Cash $4,000. 
D) Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900, credit Preferred Stock $2,100. 
E) Debit Investment in Preferred Stock $2,100; credit Cash $2,100. 
A) Debit Cash $4,000; credit Preferred Stock $4,000. 
B) Debit Cash $2,100; credit Preferred Stock $2,100. 
C) Debit Preferred Stock $2,100, debit Investment in Preferred Stock $1,900; credit Cash $4,000. 
D) Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900, credit Preferred Stock $2,100. 
E) Debit Investment in Preferred Stock $2,100; credit Cash $2,100.

A premium on common stock:

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

Retained earnings are part of the stockholders' claims on the company's net assets.

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

Changes in accounting estimates are accounted for in current and future periods.

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

The total number of shares outstanding is the authorized stock.

Growth stocks generally pay large dividends on a regular basis.

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Companies report prior period adjustments, net of any income tax effects in the:

Shareholders in a corporation have the power to bind the corporation to contracts.

What are the rights generally granted to common stockholders?

A corporation with $10 par common stock issues a large stock dividend. The capitalization of retained earnings is equal to:

A stock dividend decreases the market price of the company's stock.

All of the following statements regarding stock dividends are true except:

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 13: Accounting for Corporations

A premium on common stock:

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

Retained earnings are part of the stockholders' claims on the company's net assets.

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

Changes in accounting estimates are accounted for in current and future periods.

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

The total number of shares outstanding is the authorized stock.

Growth stocks generally pay large dividends on a regular basis.

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Companies report prior period adjustments, net of any income tax effects in the:

Shareholders in a corporation have the power to bind the corporation to contracts.

What are the rights generally granted to common stockholders?

A corporation with $10 par common stock issues a large stock dividend. The capitalization of retained earnings is equal to:

A stock dividend decreases the market price of the company's stock.

All of the following statements regarding stock dividends are true except:

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters