Question 1

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Accepted Answer

A)  debit to M. Lest, Capital. 
B)  debit to M. Lest, Drawings. 
C)  debit to M. Lest, Retained Earnings. 
D)  credit to M. Lest, Capital. 
A)  debit to M. Lest, Capital. 
B)  debit to M. Lest, Drawings. 
C)  debit to M. Lest, Retained Earnings. 
D)  credit to M. Lest, Capital.

Question 2

Which of the following below correctly states the sequence of dates related to dividends on common stock?

Accepted Answer

A)  Board of directors date, Date of declaration, Date of payment 
B)  Declaration date, Date of record, Date of payment 
C)  Date of record -Declaration date, Date of payment 
D)  Declaration date, Date of Payment, Date of distribution 
A)  Board of directors date, Date of declaration, Date of payment 
B)  Declaration date, Date of record, Date of payment 
C)  Date of record -Declaration date, Date of payment 
D)  Declaration date, Date of Payment, Date of distribution

Question 3

Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

Accepted Answer

A)  Treasury Stock will equal $4,000. 
B)  Treasury Stock will equal $2,000. 
C)  Additional Paid-in Capital will be increased by $12,000. 
D)  Cash will be decreased by $10,000. 
A)  Treasury Stock will equal $4,000. 
B)  Treasury Stock will equal $2,000. 
C)  Additional Paid-in Capital will be increased by $12,000. 
D)  Cash will be decreased by $10,000.

Question 4

Company Z has 8 million shares of common stock authorized with a par value of $1 and a market price of $72.There are 4 million outstanding shares and 1 million shares held in treasury stock.
Required:
Part a.Prepare the journal entry if the company declares and distributes a 10% stock dividend.
Part b.Show the effect of the 10% stock dividend on assets,liabilities,and stockholders' equity.
Part c.Prepare the journal entry if the company declares and distributes a 100% stock dividend.
Part d.Show the effect of the 100% stock dividend on assets,liabilities,and stockholders' equity.

Accepted Answer

Part a
Declaration and distrib

Question 5

The laws governing corporations:

Accepted Answer

A)  require that a company be incorporated in the state in which it does most of its business. 
B)  require that all companies in Delaware be incorporated. 
C)  allow a company to be incorporated in a different state from the one in which it operates. 
D)  require that all companies be incorporated in Delaware. 
A)  require that a company be incorporated in the state in which it does most of its business. 
B)  require that all companies in Delaware be incorporated. 
C)  allow a company to be incorporated in a different state from the one in which it operates. 
D)  require that all companies be incorporated in Delaware.

Question 6

Which of the following statements about dividends in arrears is correct?

Accepted Answer

A)  Dividends in arrears do not appear on the balance sheet or require a journal entry. 
B)  Dividends in arrears are not disclosed to stockholders. 
C)  Dividends in arrears applies to common stock. 
D)  Dividends in arrears are legal liabilities. 
A)  Dividends in arrears do not appear on the balance sheet or require a journal entry. 
B)  Dividends in arrears are not disclosed to stockholders. 
C)  Dividends in arrears applies to common stock. 
D)  Dividends in arrears are legal liabilities.

Question 7

The Enterprise Co.has the following information available from its accounting records:
 
The company has no preferred stock.What is the return on equity?

Accepted Answer

A)  40% 
B)  44% 
C)  49% 
D)  467% 
A)  40% 
B)  44% 
C)  49% 
D)  467%

Question 8

Holders of common stock receive certain benefits,such as a residual claim,which is the:

Accepted Answer

A)  right of stockholders to be paid back for their investment before anyone else if the company ceases operation. 
B)  right to oversee management of the company. 
C)  right to share in any remaining assets after creditors have been paid off, should the company cease operations. 
D)  continuing right to receive a share of the company's profits in the form of dividends. 
A)  right of stockholders to be paid back for their investment before anyone else if the company ceases operation. 
B)  right to oversee management of the company. 
C)  right to share in any remaining assets after creditors have been paid off, should the company cease operations. 
D)  continuing right to receive a share of the company's profits in the form of dividends.

Question 9

The market price of a share of common stock at the time of issuance was $19.50,while the market price of a preferred share of stock at the time of issuance was $32.The company paid $12.50 per share for its treasury stock.
Required:
Determine the missing amount in the stockholders' equity section of the balance sheet set forth below.
   
(a)________
(b)________
(c)________
(d)________
(e)________
(f)________
(g)________

Accepted Answer

@#IMG-DLM& 
Supporting calculations:
(a)$2.00 Par

Question 10

The stockholders' equity section of the balance sheet includes all of the following except:

Accepted Answer

A)  Retained Earnings. 
B)  Contributed Capital. 
C)  Treasury Stock. 
D)  Dividends. 
A)  Retained Earnings. 
B)  Contributed Capital. 
C)  Treasury Stock. 
D)  Dividends.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Lenders will sometimes impose dividend restrictions to:

Accepted Answer

A)  prevent the corporation from paying out too much to stockholders. 
B)  try to limit available dividends. 
C)  prevent the corporation from paying out too much to other creditors. 
D)  ensure the lenders will receive more dividends than the stockholders. 
A)  prevent the corporation from paying out too much to stockholders. 
B)  try to limit available dividends. 
C)  prevent the corporation from paying out too much to other creditors. 
D)  ensure the lenders will receive more dividends than the stockholders.

Question 13

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Accepted Answer

A)  increase total liabilities and decrease stockholders' equity. 
B)  increase total expenses and decrease assets. 
C)  increase total assets and increase stockholders' equity. 
D)  decrease total assets and decrease stockholders' equity. 
A)  increase total liabilities and decrease stockholders' equity. 
B)  increase total expenses and decrease assets. 
C)  increase total assets and increase stockholders' equity. 
D)  decrease total assets and decrease stockholders' equity.

Question 14

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

Accepted Answer

A)  Dividends Payable should be reported on the December 31, 2015 balance sheet. 
B)  Dividends Payable should be reported on the December 31, 2016 balance sheet. 
C)  Dividends in arrears should be disclosed in the notes to the 2015 and 2016 financial statements. 
D)  Dividends expense should be reported on the income statement for the year ended December 31, 2015. 
A)  Dividends Payable should be reported on the December 31, 2015 balance sheet. 
B)  Dividends Payable should be reported on the December 31, 2016 balance sheet. 
C)  Dividends in arrears should be disclosed in the notes to the 2015 and 2016 financial statements. 
D)  Dividends expense should be reported on the income statement for the year ended December 31, 2015.

Question 15

How do stock splits and stock dividends impact Retained Earnings?

Accepted Answer

A)  Stock splits increase Retained Earnings and stock dividends have no effect on Retained Earnings. 
B)  Stock splits have no effect on Retained Earnings and stock dividends decrease Retained Earnings. 
C)  Stock splits and stock dividends both decrease Retained Earnings. 
D)  Stock splits and stock dividends have no effect on Retained Earnings. 
A)  Stock splits increase Retained Earnings and stock dividends have no effect on Retained Earnings. 
B)  Stock splits have no effect on Retained Earnings and stock dividends decrease Retained Earnings. 
C)  Stock splits and stock dividends both decrease Retained Earnings. 
D)  Stock splits and stock dividends have no effect on Retained Earnings.

Question 16

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Accepted Answer

A)  Debit Treasury Stock for $8,000, debit Additional Paid-in Capital for $24,000, and credit Cash for $32,000 
B)  Debit Treasury Stock and credit Cash for $32,000 
C)  Debit Treasury Stock for $8,000, debit Common Stock for $24,000, and credit Cash for $32,000 
D)  Debit Common Stock and credit Cash for $32,000 
A)  Debit Treasury Stock for $8,000, debit Additional Paid-in Capital for $24,000, and credit Cash for $32,000 
B)  Debit Treasury Stock and credit Cash for $32,000 
C)  Debit Treasury Stock for $8,000, debit Common Stock for $24,000, and credit Cash for $32,000 
D)  Debit Common Stock and credit Cash for $32,000

Question 17

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term:
1._____ Treasury Stock
2._____ Cash Dividend
3._____ IPO
4._____ Preferred Stock
5._____ Outstanding Shares
6._____ EPS
7._____ Stock Dividend
8._____ Residual Claim
9._____ ROE
Definition:
A.When a company first starts selling stock to the public.
B.The additional shares of stock a company can issue beyond what are already issued.
C.Earnings per share that reflects treasury and preferred stock.
D.This payment raises stockholders' equity.
E.(Net income less preferred dividends)divided by average stockholders' equity.
F.The shares of stock held by stockholders.
G.Stock shares that pay a fixed dividend rate but have no voting rights.
H.(Net income less preferred dividends)divided by the average number of outstanding common shares.
I.Stock that allows owners to be listed among creditors.
J.This dividend does not reduce stockholders' equity.
K.The shares of stock held by the issuing company.
L.Stockholders' entitlement to remaining assets after creditors are repaid.
M.This payment decreases stockholders' equity.

Accepted Answer

1.K
2.M
3.

Question 18

Which of the following is correct about reissuing treasury stock?

Accepted Answer

A)  If treasury stock is sold at a higher price than the stock's cost when the company reacquired it, a gain will be recognized. 
B)  If treasury stock is sold at a higher price than the stock's par value, a gain will be recognized. 
C)  If the treasury stock is sold at a lower price than the amount of the original issuance, a loss will be recognized. 
D)  A gain or loss on the reissuance of treasury stock is never recognized. 
A)  If treasury stock is sold at a higher price than the stock's cost when the company reacquired it, a gain will be recognized. 
B)  If treasury stock is sold at a higher price than the stock's par value, a gain will be recognized. 
C)  If the treasury stock is sold at a lower price than the amount of the original issuance, a loss will be recognized. 
D)  A gain or loss on the reissuance of treasury stock is never recognized.

Question 19

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

Accepted Answer

A)  $5,000 each year. 
B)  $15,000 each year. 
C)  5% of net income each year. 
D)  $3 per share. 
A)  $5,000 each year. 
B)  $15,000 each year. 
C)  5% of net income each year. 
D)  $3 per share.

Question 20

A liability for dividends is recorded on the date of record.

Accepted Answer

A) True 
 B)False

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Which of the following below correctly states the sequence of dates related to dividends on common stock?

Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

The laws governing corporations:

Which of the following statements about dividends in arrears is correct?

The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the return on equity?

Holders of common stock receive certain benefits,such as a residual claim,which is the:

The stockholders' equity section of the balance sheet includes all of the following except:

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

Lenders will sometimes impose dividend restrictions to:

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

How do stock splits and stock dividends impact Retained Earnings?

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Which of the following is correct about reissuing treasury stock?

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

A liability for dividends is recorded on the date of record.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 11: Reporting and Interpreting Stockholders Equity

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Which of the following below correctly states the sequence of dates related to dividends on common stock?

Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

The laws governing corporations:

Which of the following statements about dividends in arrears is correct?

The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the return on equity?

Holders of common stock receive certain benefits,such as a residual claim,which is the:

The stockholders' equity section of the balance sheet includes all of the following except:

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

Lenders will sometimes impose dividend restrictions to:

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

How do stock splits and stock dividends impact Retained Earnings?

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Which of the following is correct about reissuing treasury stock?

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

A liability for dividends is recorded on the date of record.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters