Question 1

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Accepted Answer

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

Question 2

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Accepted Answer

A) True 
 B)False

Question 3

Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

Accepted Answer

A) True 
 B)False

Question 4

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

Accepted Answer

The price-earnings ratio of a common sto

Question 5

Book value per common share is computed by:

Accepted Answer

A) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding times the market price per common share. 
E) Multiplying the number of common shares outstanding by par value per share. 
A) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding times the market price per common share. 
E) Multiplying the number of common shares outstanding by par value per share.

Question 6

Prior period adjustments to financial statements can result from:

Accepted Answer

A) Unacceptable accounting practices. 
B) Changes in accounting estimates. 
C) Discontinued operations. 
D) Extraordinary items. 
E) Changes in tax law. 
A) Unacceptable accounting practices. 
B) Changes in accounting estimates. 
C) Discontinued operations. 
D) Extraordinary items. 
E) Changes in tax law.

Question 7

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

Accepted Answer

A) 19.2. 
B) 10.0. 
C) 1.15. 
D) 11.46. 
E) 0.87. 
A) 19.2. 
B) 10.0. 
C) 1.15. 
D) 11.46. 
E) 0.87.

Question 8

The Paid-in Capital, Treasury Stock account can never have a debit balance.

Accepted Answer

A) True 
 B)False

Question 9

A company has earnings per share of $6.50. Its dividend per share is $0.50, and its market price per share is $80. Its price-earnings ratio equals 13.

Accepted Answer

A) True 
 B)False

Question 10

Common Stock Dividend Distributable is an equity account.

Accepted Answer

A) True 
 B)False

Question 11

Stocks with a price-earnings ratio less than 20 to 25 are likely to be overpriced.

Accepted Answer

A) True 
 B)False

Question 12

The date the directors vote to declare and pay a dividend is called the:

Accepted Answer

A) Date of declaration. 
B) Date of payment. 
C) Date of stockholders' meeting. 
D) Date of record. 
E) Liquidating date. 
A) Date of declaration. 
B) Date of payment. 
C) Date of stockholders' meeting. 
D) Date of record. 
E) Liquidating date.

Question 13

On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

Accepted Answer

A) Debit Retained Earnings $250,000; credit Common Stock $250,000. 
B) No entry is made for this transaction. 
C) Debit Retained Earnings $750,000; credit Common Stock $750,000. 
D) Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. 
E) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. 
A) Debit Retained Earnings $250,000; credit Common Stock $250,000. 
B) No entry is made for this transaction. 
C) Debit Retained Earnings $750,000; credit Common Stock $750,000. 
D) Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. 
E) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.

Question 14

A proxy is:

Accepted Answer

A) A contractual commitment by an investor to purchase unissued shares of stock. 
B) An arbitrary amount assigned to no-par stock by the corporation's board of directors. 
C) A document that delegates a stockholder's voting rights to an agent. 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E) The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation. 
A) A contractual commitment by an investor to purchase unissued shares of stock. 
B) An arbitrary amount assigned to no-par stock by the corporation's board of directors. 
C) A document that delegates a stockholder's voting rights to an agent. 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E) The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.

Question 15

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Accepted Answer

A) 12.5. 
B) 17.6. 
C) 15.2. 
D) 9.0. 
E) 16.9. 
A) 12.5. 
B) 17.6. 
C) 15.2. 
D) 9.0. 
E) 16.9.

Question 16

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

Accepted Answer

A) No entry is made until the stock is issued. 
B) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. 
C) Debit Retained Earnings $135,000; credit Cash $135,000. 
D) Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. 
E) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000. 
A) No entry is made until the stock is issued. 
B) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. 
C) Debit Retained Earnings $135,000; credit Cash $135,000. 
D) Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. 
E) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.

Question 17

The price at which a share of stock is bought or sold is known as par value.

Accepted Answer

A) True 
 B)False

Question 18

Stockholders' equity consists of paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 19

If a company has noncumulative preferred stock, basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.

Accepted Answer

A) True 
 B)False

Question 20

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:

Accepted Answer

A) Debit Land $50,000; credit Common Stock $50,000. 
B) Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value, Common Stock $20,000; credit Land $70,000. 
C) Debit Common Stock $70,000; credit Land $70,000. 
D) Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $20,000. 
E) Debit Land $70,000; credit Common Stock $70,000. 
A) Debit Land $50,000; credit Common Stock $50,000. 
B) Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value, Common Stock $20,000; credit Land $70,000. 
C) Debit Common Stock $70,000; credit Land $70,000. 
D) Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $20,000. 
E) Debit Land $70,000; credit Common Stock $70,000.

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

Book value per common share is computed by:

Prior period adjustments to financial statements can result from:

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

The Paid-in Capital, Treasury Stock account can never have a debit balance.

A company has earnings per share of $6.50. Its dividend per share is $0.50, and its market price per share is $80. Its price-earnings ratio equals 13.

Common Stock Dividend Distributable is an equity account.

Stocks with a price-earnings ratio less than 20 to 25 are likely to be overpriced.

The date the directors vote to declare and pay a dividend is called the:

On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

A proxy is:

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

The price at which a share of stock is bought or sold is known as par value.

Stockholders' equity consists of paid-in capital and retained earnings.

If a company has noncumulative preferred stock, basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange 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

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

Book value per common share is computed by:

Prior period adjustments to financial statements can result from:

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

The Paid-in Capital, Treasury Stock account can never have a debit balance.

A company has earnings per share of $6.50. Its dividend per share is $0.50, and its market price per share is $80. Its price-earnings ratio equals 13.

Common Stock Dividend Distributable is an equity account.

Stocks with a price-earnings ratio less than 20 to 25 are likely to be overpriced.

The date the directors vote to declare and pay a dividend is called the:

On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

A proxy is:

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

The price at which a share of stock is bought or sold is known as par value.

Stockholders' equity consists of paid-in capital and retained earnings.

If a company has noncumulative preferred stock, basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange 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