Question 1

The Discount on Common Stock account reflects:

Accepted Answer

A) The difference between the par value of stock and its issue price when the issue price is below par value. 
B) One share's portion of the issued corporation's net assets recorded in its accounts 
C) The difference between the par value of the stock and the amount contributed by stockholders when the amount contributed is more than par value 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation 
E) The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock 
A) The difference between the par value of stock and its issue price when the issue price is below par value. 
B) One share's portion of the issued corporation's net assets recorded in its accounts 
C) The difference between the par value of the stock and the amount contributed by stockholders when the amount contributed is more than par value 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation 
E) The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock

Question 2

A corporation was formed on January 1.The corporate charter authorized 100,000 shares of $10 par value common stock.During the first month of operation,the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation.The entry to record this transaction would include:

Accepted Answer

A) A debit to Organization Expenses for $3,000 
B) A debit to Organization Expenses for $5,000 
C) A credit to Common Stock for $5,000 
D) A credit to Contributed Capital in Excess of Par Value,Common Stock for $5,000 
E) A debit to Contributed Capital in Excess of Par Value,Common Stock for $2,000 
A) A debit to Organization Expenses for $3,000 
B) A debit to Organization Expenses for $5,000 
C) A credit to Common Stock for $5,000 
D) A credit to Contributed Capital in Excess of Par Value,Common Stock for $5,000 
E) A debit to Contributed Capital in Excess of Par Value,Common Stock for $2,000

Question 3

A discount on stock occurs when a corporation sells its stock for a price greater than par value.

Accepted Answer

A) True 
 B)False

Question 4

The amount of income earned per share of a company's common stock is known as:

Accepted Answer

A) Restricted retained earnings per share 
B) Earnings per share 
C) Continuing operations per share 
D) Dividends per share 
E) Book value per share 
A) Restricted retained earnings per share 
B) Earnings per share 
C) Continuing operations per share 
D) Dividends per share 
E) Book value per share

Question 5

If a company discovers a mistake in 2010 that was made in 2009,the company records the adjustment in the year ________.

Accepted Answer

The answer of If a company discovers a mistake in...

Question 6

____________________ preferred stock gives holders the option to exchange their preferred shares for common shares at a specified rate.

Accepted Answer

The answer of ____________________ preferred stock gives holders the option...

Question 7

A company has 500 shares of $50 par value preferred stock outstanding and the call price of its preferred stock is $60 per share.It also has 20,000 shares of common stock outstanding and the total value of its stockholders' equity is $680,000.The company's book value per common share equals:

Accepted Answer

A) $31.71 
B) $32.50 
C) $32.75 
D) $33.17 
E) $60.00 
A) $31.71 
B) $32.50 
C) $32.75 
D) $33.17 
E) $60.00

Question 8

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends,the unpaid amount is called ____________________________.

Accepted Answer

The answer of When preferred stock is cumulative and the...

Question 9

A corporation declared and issued a 15% stock dividend on November 1.The following up-to-date information was available immediately prior to the dividend:
$\begin{array}{|l|r|}
\hline \text { Retained earnings } & \$ 750,000 \
\hline \text { Shares issued and outstanding } & 60,000 \
\hline \text { Market value per share } & \$ 15 \
\hline \text { Par value per share } & \$ 5 \
\hline
\end{array}$
The amount that total stockholders' equity will increase (decrease)as a result of recording this stock dividend is:

Accepted Answer

A) $45,000 
B) $135,000 
C) $(90,000) 
D) $(135,000) 
E) $0 
A) $45,000 
B) $135,000 
C) $(90,000) 
D) $(135,000) 
E) $0

Question 10

Duke Corporation reports the following components of stockholders' equity on December 31,2010.
$\begin{array}{lr}
 \text {Common stock- $ \$ 25 $ par value, 100,000 shares authorized, 45,000 shares issued}\
 \text { and outstandino}&\$1,125,000\
 \text { Paid-in capital in excess of par value, common stock } & 60,000 \
 \text { Retained earnings } & 460,000 \
 \text { Total stockholders' equity } & \$ 1,645,000 \
\end{array}$

In year 2011, the following transactions affected its stockholder's' equity accounts.
Jan. 1 Purchased 4,500 shares of its own stock at $ \$ 27 $ cash per share.
Jan. 5 Directors declared a $ \$ 3 $ per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.

Feb. 28 Paid the dividend declared on January 5.
Mar. 3 Sold 1,000 shares of treasury stock for $ \$ 28 $ per share
May 25 Sold 1,000 shares of treasury stock for $ \$ 16 $ per share
June 15 Directors declared a $ \$ 1.50 $ per share cash dividend payable on July 15 to the June 30 stockholders of record

July 15 Paid the dividend declared on June 15

What is the amount in the Retained Earnings account immediately after the dividend on July 15?

Accepted Answer

A) $264,750 
B) $392,500 
C) $460,000 
D) $338,500 
E) $470,000 
A) $264,750 
B) $392,500 
C) $460,000 
D) $338,500 
E) $470,000

Question 11

The following data were reported by a corporation:
$$\begin{array} { | l | r | } 
\hline \text { Authorized shares } & 20,000 \
\hline \text { Issued shares } & 15,000 \
\hline \text { Treasury shares } & 3,000 \
\hline
\end{array}$$
The number of outstanding shares is:

Accepted Answer

A) 12,000 
B) 15,000 
C) 17,000 
D) 20,000 
E) 23,000 
A) 12,000 
B) 15,000 
C) 17,000 
D) 20,000 
E) 23,000

Question 12

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Accepted Answer

A) Preemptive right 
B) Proxy right 
C) Right to call 
D) Financial leverage 
E) Voting right 
A) Preemptive right 
B) Proxy right 
C) Right to call 
D) Financial leverage 
E) Voting right

Question 13

Stocks that pay relatively large cash dividends on a regular basis are referred to as:

Accepted Answer

A) Small capital stocks 
B) Mid capital stocks 
C) Growth stocks 
D) Large capital stocks 
E) Income stocks 
A) Small capital stocks 
B) Mid capital stocks 
C) Growth stocks 
D) Large capital stocks 
E) Income stocks

Question 14

A document that gives a designated agent the right to vote a stockholder's stock is called a _______________.

Accepted Answer

The answer of A document that gives a designated agent...

Question 15

Polly's outstanding stock consists of (a)67,000 shares of cumulative 5% preferred stock with a $20 par value and (b)95,000 shares of common stock with a $1 par value.During its first four years of operation,the corporation declared and paid the following total cash dividends.
 $$\begin{array} { c c } 
2010 & \$ 0 \
2011 & 50,000 \
2012 & 180,000 \
2013 & 205,000
\end{array}$$ 
What is the amount of dividends that the Common Stockholders receive for all years presented?

Accepted Answer

The answer of Polly's outstanding stock consists of (a)67,000 shares...

Question 16

On May 1,a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21.The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share.Prepare the journal entries required on May 1,May 21 and June 1.

Accepted Answer

None

Question 17

Book value per common share is computed by:

Accepted Answer

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

Question 18

What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.

Accepted Answer

Preferred shareholders usually have the

Question 19

Match between columns
                        Premises:  The right to purchase common stock at a fixed price over a specified period
 A corporation's own stock that was reacquired and is still held by the corporation
 The date a corporation's directors vote to issue a dividend
 A correction of an error in a prior year that is reported in the statement of retained earnings or changes in stockholders' equity net of any income tax effects
 A financial statement that lists the beginning and ending balances of each equity account and describes the changes in these accounts during the period
 Income earned by each share of a company's outstanding common stock
 A distribution of cash to the owners of a corporation
 A part of operations that serves a particular line of business or class of customers and that has assets, activities and operating results distinguished from other parts
 A stock dividend that is more than 25% of the previously outstanding shares
 A abnormal debit balance in retained earnings

Accepted Answer

The Answer of Earnings per share and Stock option and is...

Question 20

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

Accepted Answer

A) A debit to Contributed Capital in Excess of Par Value,Common Stock for $42,000 
B) A debit to Cash for $140,000 
C) A credit to Common Stock for $182,000 
D) A credit to Common Stock for $140,000 
E) A credit to Contributed Capital in Excess of Par Value,Common Stock for $182,000 
A) A debit to Contributed Capital in Excess of Par Value,Common Stock for $42,000 
B) A debit to Cash for $140,000 
C) A credit to Common Stock for $182,000 
D) A credit to Common Stock for $140,000 
E) A credit to Contributed Capital in Excess of Par Value,Common Stock for $182,000

The Discount on Common Stock account reflects:

A discount on stock occurs when a corporation sells its stock for a price greater than par value.

The amount of income earned per share of a company's common stock is known as:

If a company discovers a mistake in 2010 that was made in 2009,the company records the adjustment in the year ________.

____________________ preferred stock gives holders the option to exchange their preferred shares for common shares at a specified rate.

A company has 500 shares of $50 par value preferred stock outstanding and the call price of its preferred stock is $60 per share.It also has 20,000 shares of common stock outstanding and the total value of its stockholders' equity is $680,000.The company's book value per common share equals:

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends,the unpaid amount is called ____________________________.

The following data were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of outstanding shares is:

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Stocks that pay relatively large cash dividends on a regular basis are referred to as:

A document that gives a designated agent the right to vote a stockholder's stock is called a _______________.

Book value per common share is computed by:

What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 11: Reporting and Analyzing Equity

The Discount on Common Stock account reflects:

A discount on stock occurs when a corporation sells its stock for a price greater than par value.

The amount of income earned per share of a company's common stock is known as:

If a company discovers a mistake in 2010 that was made in 2009,the company records the adjustment in the year ________.

____________________ preferred stock gives holders the option to exchange their preferred shares for common shares at a specified rate.

A company has 500 shares of $50 par value preferred stock outstanding and the call price of its preferred stock is $60 per share.It also has 20,000 shares of common stock outstanding and the total value of its stockholders' equity is $680,000.The company's book value per common share equals:

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends,the unpaid amount is called ____________________________.

The following data were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of outstanding shares is:

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Stocks that pay relatively large cash dividends on a regular basis are referred to as:

A document that gives a designated agent the right to vote a stockholder's stock is called a _______________.

Book value per common share is computed by:

What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters