Question 1

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

Question 2

A company had the following stockholders' equity on January 1:   On January 10, the company declared a 40% stock dividend to stockholders of record on January 25, to be distributed January 31. The market value of the stock on January 10 prior to the dividend was $20 per share. What is the book value per common share on February 1?

Accepted Answer

Total stockholders' equity does not change; however, the number of shares outstanding is now 350,000 shares + (350,000 shares * .40) = 490,000 shares.
Book value per share = $1,414,000/490,000 shares = $2.89/common share

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Prior period adjustments are reported in the:

Accepted Answer

A) Multiple-step income statement. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Statement of cash flows. 
E) Single-step income statement. 
A) Multiple-step income statement. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Statement of cash flows. 
E) Single-step income statement.

Question 5

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Accepted Answer

A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

Question 6

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the reissuance of treasury stock on August 1 using the cost method?

Accepted Answer

A) Debit Common Stock $760; credit Cash $760. 
B) Debit Cash $760; debit Paid-in Capital, Treasury Stock $40; credit Treasury Stock $800. 
C) Debit Common Stock $800; credit Treasury Stock $760; credit Paid-In Capital, Treasury Stock $40. 
D) Debit Cash $760; debit Common Stock $40; credit Treasury Stock $800. 
E) Debit Cash $760; credit Treasury Stock $760. 
A) Debit Common Stock $760; credit Cash $760. 
B) Debit Cash $760; debit Paid-in Capital, Treasury Stock $40; credit Treasury Stock $800. 
C) Debit Common Stock $800; credit Treasury Stock $760; credit Paid-In Capital, Treasury Stock $40. 
D) Debit Cash $760; debit Common Stock $40; credit Treasury Stock $800. 
E) Debit Cash $760; credit Treasury Stock $760.

Question 7

Wiggins Company has 1,000 shares of $10 par preferred stock. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

Accepted Answer

A) $16.00. 
B) $19.60. 
C) $19.96. 
D) $20.00. 
E) $10.00. 
A) $16.00. 
B) $19.60. 
C) $19.96. 
D) $20.00. 
E) $10.00.

Question 8

A corporation reports the following year-end stockholders' equity:   Determine the following:
(1) Par value for the preferred stock.
(2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Accepted Answer

(1) Preferred stock

Question 9

Treasury stock is classified as:

Accepted Answer

A) An asset account. 
B) A contra asset account. 
C) A revenue account. 
D) A contra equity account. 
E) A liability account. 
A) An asset account. 
B) A contra asset account. 
C) A revenue account. 
D) A contra equity account. 
E) A liability account.

Question 10

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

Accepted Answer

Earnings per Share = Net Incom

Question 11

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

Accepted Answer

A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

Question 12

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

Accepted Answer

A) True 
 B)False

Question 13

Boron Company is authorized to issue 50,000 shares of $50 par value, 8%, cumulative, fully participating preferred stock, and 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Accepted Answer

The answer of Boron Company is authorized to issue 50,000...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A premium on common stock:

Accepted Answer

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

Question 16

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

Accepted Answer

A) Convertible stock. 
B) No-par stock. 
C) Callable stock. 
D) Noncumulative stock. 
E) Discounted stock. 
A) Convertible stock. 
B) No-par stock. 
C) Callable stock. 
D) Noncumulative stock. 
E) Discounted stock.

Question 17

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

Accepted Answer

A) Par value of preferred. 
B) Minimum legal capital. 
C) Premium capital. 
D) Stated value. 
E) Working capital. 
A) Par value of preferred. 
B) Minimum legal capital. 
C) Premium capital. 
D) Stated value. 
E) Working capital.

Question 18

A reverse stock split increases the market value per share and the par value per share of stock.

Accepted Answer

A) True 
 B)False

Question 19

The date of record is the date that directors vote to pay a cash dividend to shareholders.

Accepted Answer

A) True 
 B)False

Question 20

All of the following regarding accounting for Treasury Stock under U.S. GAAP and IRFS is true except:

Accepted Answer

A) U.S.GAAP applies the principle that companies do not record gains or losses on transactions involving their own stock. 
B) Only gains are recognized on retirements of treasury stock under IFRS. 
C) IFRS applies the principle that companies do not record gains or losses on transactions involving their own stock. 
D) Gains are not recognized on retirements of treasury stock under U.S.GAAP. 
E) A company's assets and equity are always reduced by the amount paid for the retiring stock. 
A) U.S.GAAP applies the principle that companies do not record gains or losses on transactions involving their own stock. 
B) Only gains are recognized on retirements of treasury stock under IFRS. 
C) IFRS applies the principle that companies do not record gains or losses on transactions involving their own stock. 
D) Gains are not recognized on retirements of treasury stock under U.S.GAAP. 
E) A company's assets and equity are always reduced by the amount paid for the retiring stock.

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:

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

Prior period adjustments are reported in the:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Wiggins Company has 1,000 shares of $10 par preferred stock. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

A corporation reports the following year-end stockholders' equity: Determine the following: (1) Par value for the preferred stock. (2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Treasury stock is classified as:

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

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

A premium on common stock:

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A reverse stock split increases the market value per share and the par value per share of stock.

The date of record is the date that directors vote to pay a cash dividend to shareholders.

All of the following regarding accounting for Treasury Stock under U.S. GAAP and IRFS is true except:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 11: Reporting and Analyzing Equity

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:

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

Prior period adjustments are reported in the:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Wiggins Company has 1,000 shares of $10 par preferred stock. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

A corporation reports the following year-end stockholders' equity: Determine the following: (1) Par value for the preferred stock. (2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Treasury stock is classified as:

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the declaration of the cash dividend is:

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

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

A premium on common stock:

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A reverse stock split increases the market value per share and the par value per share of stock.

The date of record is the date that directors vote to pay a cash dividend to shareholders.

All of the following regarding accounting for Treasury Stock under U.S. GAAP and IRFS is true except:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters