Question 1

Which of the following statements is correct?

Accepted Answer

A)  Stock splits and stock dividends both reduce the market price of a share, but only stock splits reduce the par value of a share. 
B)  Stock splits and stock dividends both reduce the market price of a share and the par value of a share. 
C)  Stock splits and stock dividends both reduce the market price of a share, but only stock dividends reduce the par value of a share. 
D)  Stock splits and stock dividends both reduce the market price of a share and reduce Retained Earnings. 
A)  Stock splits and stock dividends both reduce the market price of a share, but only stock splits reduce the par value of a share. 
B)  Stock splits and stock dividends both reduce the market price of a share and the par value of a share. 
C)  Stock splits and stock dividends both reduce the market price of a share, but only stock dividends reduce the par value of a share. 
D)  Stock splits and stock dividends both reduce the market price of a share and reduce Retained Earnings.

Question 2

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following statements about earnings per share (EPS)is correct?

Accepted Answer

A)  The EPS ratio is important because it signals the ability of the company to pay future dividends, which investors factor into the stock price. 
B)  Earnings per share (EPS) is generally reported in the balance sheet under stockholders' equity. 
C)  Earnings per share (EPS) is the best way to compare the performance of different companies. 
D)  EPS, in its basic form, is calculated by dividing net income by the average number of common shares issued. 
A)  The EPS ratio is important because it signals the ability of the company to pay future dividends, which investors factor into the stock price. 
B)  Earnings per share (EPS) is generally reported in the balance sheet under stockholders' equity. 
C)  Earnings per share (EPS) is the best way to compare the performance of different companies. 
D)  EPS, in its basic form, is calculated by dividing net income by the average number of common shares issued.

Question 4

Stock dividends and stock splits are similar in all of the following ways except:

Accepted Answer

A)  they both involve a pro rata distribution of shares to existing stockholders. 
B)  they both reduce the stock price. 
C)  they both decrease Retained Earnings. 
D)  have no effect on cash. 
A)  they both involve a pro rata distribution of shares to existing stockholders. 
B)  they both reduce the stock price. 
C)  they both decrease Retained Earnings. 
D)  have no effect on cash.

Question 5

What does the par value of a stock represent?

Accepted Answer

A)  The average market value of a stock for the year to date 
B)  It is a legal concept not related to the market value of a stock 
C)  The amount that would be paid if a stock was purchased by the issuing company 
D)  The current market value of a stock 
A)  The average market value of a stock for the year to date 
B)  It is a legal concept not related to the market value of a stock 
C)  The amount that would be paid if a stock was purchased by the issuing company 
D)  The current market value of a stock

Question 6

A stock split increases total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 7

A company has 110,000 shares authorized,50,000 shares issued,and 5,000 shares of treasury stock.How many shares are outstanding?

Accepted Answer

A)  45,000 
B)  155,000 
C)  55,000 
D)  145,000 
A)  45,000 
B)  155,000 
C)  55,000 
D)  145,000

Question 8

One of the advantages of a partnership is:

Accepted Answer

A)  limited liability. 
B)  the salaries of the partners can be written off as an expense. 
C)  ease of formation. 
D)  income tax is paid by the business. 
A)  limited liability. 
B)  the salaries of the partners can be written off as an expense. 
C)  ease of formation. 
D)  income tax is paid by the business.

Question 9

A cumulative dividend preference means that:

Accepted Answer

A)  preferred stockholders are paid dividends before common stockholders are paid dividends for the current year only. 
B)  unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends. 
C)  preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation. 
D)  unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period. 
A)  preferred stockholders are paid dividends before common stockholders are paid dividends for the current year only. 
B)  unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends. 
C)  preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation. 
D)  unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period.

Question 10

At the end of the prior year,Atoka Industries reported the following account balances:
 
The treasury stock arose from a purchase of 10,000 shares of common stock for $78 per share.If the 10,000 treasury shares are issued for $50 per share in in the current year,what journal entry must be prepared to record the transaction?

Accepted Answer

A)  Debit Cash for $500,000, debit Other Losses for $280,000, and credit Treasury Stock for 780,000 
B)  Debit Cash for $500,000, credit Common Stock for $100, and credit Additional Paid-in Capital for $499,900 
C)  Debit Cash for $500,000, debit Additional Paid-in Capital for $280,000, and credit Treasury Stock for $780,000 
D)  Debit Cash and credit Treasury Stock for $500,000 
A)  Debit Cash for $500,000, debit Other Losses for $280,000, and credit Treasury Stock for 780,000 
B)  Debit Cash for $500,000, credit Common Stock for $100, and credit Additional Paid-in Capital for $499,900 
C)  Debit Cash for $500,000, debit Additional Paid-in Capital for $280,000, and credit Treasury Stock for $780,000 
D)  Debit Cash and credit Treasury Stock for $500,000

Question 11

If a company does not have any accumulated other comprehensive income (loss),stockholders' equity is the:

Accepted Answer

A)  amount the company received in exchange for all stock issued plus the amount of Retained Earnings minus the cost of treasury stock. 
B)  amount the company received for all stock authorized plus the amount of Retained Earnings and treasury stock. 
C)  par value the company received for all stock issued plus the amount of Retained Earnings minus treasury stock. 
D)  amount the company received for all stock when issued minus the amount of Retained Earnings and treasury stock. 
A)  amount the company received in exchange for all stock issued plus the amount of Retained Earnings minus the cost of treasury stock. 
B)  amount the company received for all stock authorized plus the amount of Retained Earnings and treasury stock. 
C)  par value the company received for all stock issued plus the amount of Retained Earnings minus treasury stock. 
D)  amount the company received for all stock when issued minus the amount of Retained Earnings and treasury stock.

Question 12

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

Accepted Answer

A)  declare a cash dividend because it has enough Retained Earnings and cash. 
B)  declare a cash dividend because it has enough Retained Earnings. 
C)  not declare a cash dividend because it does not have enough Retained Earnings. 
D)  not declare a cash dividend because it does not have enough cash. 
A)  declare a cash dividend because it has enough Retained Earnings and cash. 
B)  declare a cash dividend because it has enough Retained Earnings. 
C)  not declare a cash dividend because it does not have enough Retained Earnings. 
D)  not declare a cash dividend because it does not have enough cash.

Question 13

A dividend date of record is the date on which the corporation:

Accepted Answer

A)  makes no entry. 
B)  records an increase in Dividends Payable. 
C)  records a decrease in Dividends Payable. 
D)  records an increase in Dividends. 
A)  makes no entry. 
B)  records an increase in Dividends Payable. 
C)  records a decrease in Dividends Payable. 
D)  records an increase in Dividends.

Question 14

Preferred stock has some distinctly different characteristics from common stock.Which of the characteristics below is not related to preferred stock?

Accepted Answer

A)  Its dividends may be paid at a fixed rate. 
B)  It has a higher priority for the distribution of assets than common stock. 
C)  It has a higher priority for the payment of dividends than common stock. 
D)  It generally has voting rights. 
A)  Its dividends may be paid at a fixed rate. 
B)  It has a higher priority for the distribution of assets than common stock. 
C)  It has a higher priority for the payment of dividends than common stock. 
D)  It generally has voting rights.

Question 15

A stock dividend transfers:

Accepted Answer

A)  contributed capital to Retained Earnings. 
B)  Retained Earnings to assets. 
C)  contributed capital to assets. 
D)  Retained Earnings to contributed capital. 
A)  contributed capital to Retained Earnings. 
B)  Retained Earnings to assets. 
C)  contributed capital to assets. 
D)  Retained Earnings to contributed capital.

Question 16

Use the information above to answer the following question.What journal entry will record the reissuance on July 3?

Accepted Answer

A)  Debit Cash and credit Treasury Stock for $20,000 
B)  Debit Cash for $20,000, credit Treasury Stock for $16,000, and credit Additional Paid-in Capital for $4,000 
C)  Debit Cash for $20,000, credit Common Stock for $6,000, and credit Additional Paid-in Capital for $14,000 
D)  Debit Cash for $20,000, credit Common Stock for $16,000, and credit Gain on Reissuance of Stock for $4,000 
A)  Debit Cash and credit Treasury Stock for $20,000 
B)  Debit Cash for $20,000, credit Treasury Stock for $16,000, and credit Additional Paid-in Capital for $4,000 
C)  Debit Cash for $20,000, credit Common Stock for $6,000, and credit Additional Paid-in Capital for $14,000 
D)  Debit Cash for $20,000, credit Common Stock for $16,000, and credit Gain on Reissuance of Stock for $4,000

Question 17

A debit balance in Retained Earnings is:

Accepted Answer

A)  an indication of a contra-equity account. 
B)  called an Accumulated Deficit. 
C)  called a net loss. 
D)  impossible. 
A)  an indication of a contra-equity account. 
B)  called an Accumulated Deficit. 
C)  called a net loss. 
D)  impossible.

Question 18

The information below was extracted from the most recent financial statements of Milton Technologies (in millions, except for stock price):
  
-Use the information above to answer the following question.What is the company's return on equity (ROE)for the current year?

Accepted Answer

A)  39.3% 
B)  21.7% 
C)  37.1% 
D)  36.3% 
A)  39.3% 
B)  21.7% 
C)  37.1% 
D)  36.3%

Question 19

A company reported net income of $5.6 million.At the beginning of the year,3.4 million shares of common stock were outstanding and at the end of the year,3.6 million shares were outstanding.No dividends were declared.The EPS is approximately:

Accepted Answer

A)  $1.60. 
B)  $1.56. 
C)  $1.65. 
D)  $1.40. 
A)  $1.60. 
B)  $1.56. 
C)  $1.65. 
D)  $1.40.

Question 20

An LLC is different from a corporation in that an LLC has:

Accepted Answer

A)  a "distribution of net income" section in its financial statements. 
B)  Retained Earnings in its financial statements. 
C)  Income Tax Expense in its financial statements. 
D)  Dividends in its financial statements. 
A)  a "distribution of net income" section in its financial statements. 
B)  Retained Earnings in its financial statements. 
C)  Income Tax Expense in its financial statements. 
D)  Dividends in its financial statements.

Which of the following statements is correct?

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Which one of the following statements about earnings per share (EPS)is correct?

Stock dividends and stock splits are similar in all of the following ways except:

What does the par value of a stock represent?

A stock split increases total stockholders' equity.

A company has 110,000 shares authorized,50,000 shares issued,and 5,000 shares of treasury stock.How many shares are outstanding?

One of the advantages of a partnership is:

A cumulative dividend preference means that:

If a company does not have any accumulated other comprehensive income (loss),stockholders' equity is the:

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

A dividend date of record is the date on which the corporation:

Preferred stock has some distinctly different characteristics from common stock.Which of the characteristics below is not related to preferred stock?

A stock dividend transfers:

Use the information above to answer the following question.What journal entry will record the reissuance on July 3?

A debit balance in Retained Earnings is:

The information below was extracted from the most recent financial statements of Milton Technologies (in millions, except for stock price): -Use the information above to answer the following question.What is the company's return on equity (ROE)for the current year?

A company reported net income of $5.6 million.At the beginning of the year,3.4 million shares of common stock were outstanding and at the end of the year,3.6 million shares were outstanding.No dividends were declared.The EPS is approximately:

An LLC is different from a corporation in that an LLC has:

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

Exam 11: Reporting and Interpreting Stockholders Equity

Which of the following statements is correct?

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Which one of the following statements about earnings per share (EPS)is correct?

Stock dividends and stock splits are similar in all of the following ways except:

What does the par value of a stock represent?

A stock split increases total stockholders' equity.

A company has 110,000 shares authorized,50,000 shares issued,and 5,000 shares of treasury stock.How many shares are outstanding?

One of the advantages of a partnership is:

A cumulative dividend preference means that:

If a company does not have any accumulated other comprehensive income (loss),stockholders' equity is the:

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

A dividend date of record is the date on which the corporation:

Preferred stock has some distinctly different characteristics from common stock.Which of the characteristics below is not related to preferred stock?

A stock dividend transfers:

Use the information above to answer the following question.What journal entry will record the reissuance on July 3?

A debit balance in Retained Earnings is:

The information below was extracted from the most recent financial statements of Milton Technologies (in millions, except for stock price): -Use the information above to answer the following question.What is the company's return on equity (ROE)for the current year?

A company reported net income of $5.6 million.At the beginning of the year,3.4 million shares of common stock were outstanding and at the end of the year,3.6 million shares were outstanding.No dividends were declared.The EPS is approximately:

An LLC is different from a corporation in that an LLC has:

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