Question 1

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Accepted Answer

A) True 
 B)False

Question 2

Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

Accepted Answer

A) True 
 B)False

Question 3

What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS)?

Accepted Answer

A) Common shares. 
B) Premium shares. 
C) Share capital. 
D) Capital premium. 
A) Common shares. 
B) Premium shares. 
C) Share capital. 
D) Capital premium.

Question 4

Tractor Corporation was just formed. The following accounts with code letters are given below.
Required:
Indicate the appropriate journal entry for each transaction by entering the code letters and the correct amounts (do not use dollar signs). The transactions, including the example, are not interrelated unless otherwise stated.

Accepted Answer

The answer of Tractor Corporation was just formed. The following...

Question 5

Which of the following statements is true about partnership accounting?

Accepted Answer

A) A particular partner's capital account is debited when a withdrawal takes place by that partner. 
B) Through the closing entry process for a partnership, a positive net income results in an increase in overall partner capital. 
C) The total of the drawing account balances are subtracted to arrive at the net income to allocate to the partners. 
D) The partner's drawing account is closed to retained earnings at the end of the perioD.The capital account in a partnership keeps track of each partner's capital balance and is affected by partner investments and withdrawals as well as net income. 
A) A particular partner's capital account is debited when a withdrawal takes place by that partner. 
B) Through the closing entry process for a partnership, a positive net income results in an increase in overall partner capital. 
C) The total of the drawing account balances are subtracted to arrive at the net income to allocate to the partners. 
D) The partner's drawing account is closed to retained earnings at the end of the perioD.The capital account in a partnership keeps track of each partner's capital balance and is affected by partner investments and withdrawals as well as net income.

Question 6

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 7

A large stock dividend:

Accepted Answer

A) Results in a transfer of retained earnings to common stock and additional paid-in capital. 
B) Reduces the par value per share by the percentage of the additional shares issued. 
C) Is accounted for in exactly the same manner as a stock split. 
D) Results in a transfer of retained earnings to the common stock account. 
A) Results in a transfer of retained earnings to common stock and additional paid-in capital. 
B) Reduces the par value per share by the percentage of the additional shares issued. 
C) Is accounted for in exactly the same manner as a stock split. 
D) Results in a transfer of retained earnings to the common stock account.

Question 8

Total assets remain the same when a company uses cash to purchase treasury stock.

Accepted Answer

A) True 
 B)False

Question 9

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

Accepted Answer

A) True 
 B)False

Question 10

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is not correct?

Accepted Answer

A) Issuance of common stock creates a financing activities cash inflow. 
B) Payment of a common stock cash dividend creates an operating activities cash outflow. 
C) Purchase of treasury stock creates a financing activities cash outflow. 
D) Issuance of preferred stock creates a financing activities cash inflow. 
A) Issuance of common stock creates a financing activities cash inflow. 
B) Payment of a common stock cash dividend creates an operating activities cash outflow. 
C) Purchase of treasury stock creates a financing activities cash outflow. 
D) Issuance of preferred stock creates a financing activities cash inflow.

Question 12

Survivor Company was formed on January 1, 2016 by selling and issuing 20,000 shares of common stock at $15 per share. On December 1, 2016, the company declared a cash dividend of $10,000, which will be paid in cash on January 15, 2017.
Required:
A.Prepare the journal entry to record the sale and issuance of the common stock on January 1, 2016 under each of the following independent assumptions:
1.The common stock has a par value of $10 per share.2.The common stock was no-par with a stated value of $5 per share.3.The common stock was no-par and had no stated value.
B.Prepare the journal entry to record the dividend declaration on December 1, 2016.
C.Prepare the journal entry to record payment of the dividend on January 15, 2017.

Accepted Answer

The answer of Survivor Company was formed on January 1,...

Question 13

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is false?

Accepted Answer

A) The declaration of a cash dividend creates a liability as of the date of record. 
B) The date of record is irrelevant with respect to recording a liability for a cash dividend. 
C) The dividend payment date is when the dividend liability is reduced. 
D) The dividend liability for a cash dividend is created on the declaration date. 
A) The declaration of a cash dividend creates a liability as of the date of record. 
B) The date of record is irrelevant with respect to recording a liability for a cash dividend. 
C) The dividend payment date is when the dividend liability is reduced. 
D) The dividend liability for a cash dividend is created on the declaration date.

Question 15

HighRise Company reported the following amounts of contributed capital in the stockholders' equity accounts as of January 1, 2016:

Accepted Answer

The answer of HighRise Company reported the following amounts of...

Question 16

The following information is provided for Slickers, Inc. for year 2016: • Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for 2014 and 2015
• Total dividends declared and paid during 2016 totaled $25,000
How much of the dividend is paid to the common stockholders during 2016 assuming the preferred stock is cumulative?

Accepted Answer

A) $3,500. 
B) $7,000. 
C) $22,500. 
D) $14,500. 
A) $3,500. 
B) $7,000. 
C) $22,500. 
D) $14,500.

Question 17

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding.
Required:
Calculate the par value per share of the company's common stock.

Accepted Answer

Total issued shares = 750,000

Question 18

The following information is provided for Bold Company for the year 2017: • Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
• Common stock, $100 par value, 2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2014­­-2016)
• Total dividends declared and paid in 2017 were $50,000.
How much of the 2017 dividend payment was paid to the common stockholders assuming the preferred stock is noncumulative?

Accepted Answer

A) $12,000. 
B) $3,000. 
C) $47,000. 
D) $38,000. 
A) $12,000. 
B) $3,000. 
C) $47,000. 
D) $38,000.

Question 19

Which of the following statements is correct?

Accepted Answer

A) The dividend yield and earnings per share both have the same denominator. 
B) The dividend yield and earnings per share both have the same numerator. 
C) Dividends per share are used in calculating both the earnings per share and the dividend yield. 
D) Net income is used in calculating the earnings per share but not in calculating the dividend yielD.Earnings per share equals net income divided by the weighted average number of common shares outstanding.Dividend yield equals dividends per share divided by market price per share. 
A) The dividend yield and earnings per share both have the same denominator. 
B) The dividend yield and earnings per share both have the same numerator. 
C) Dividends per share are used in calculating both the earnings per share and the dividend yield. 
D) Net income is used in calculating the earnings per share but not in calculating the dividend yielD.Earnings per share equals net income divided by the weighted average number of common shares outstanding.Dividend yield equals dividends per share divided by market price per share.

Question 20

Which of the following statements is false?

Accepted Answer

A) Common stockholders have a residual claim on assets in the event of liquidation. 
B) Shares of stock held in the treasury are subtracted from the number of issued shares in the determination of the number of outstanding shares. 
C) Common stockholders have voting rights at annual stockholder meetings. 
D) Corporations are governed by their stockholders. 
A) Common stockholders have a residual claim on assets in the event of liquidation. 
B) Shares of stock held in the treasury are subtracted from the number of issued shares in the determination of the number of outstanding shares. 
C) Common stockholders have voting rights at annual stockholder meetings. 
D) Corporations are governed by their stockholders.

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS)?

Which of the following statements is true about partnership accounting?

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

A large stock dividend:

Total assets remain the same when a company uses cash to purchase treasury stock.

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

Which of the following statements is not correct?

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Which of the following statements is false?

HighRise Company reported the following amounts of contributed capital in the stockholders' equity accounts as of January 1, 2016:

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding. Required: Calculate the par value per share of the company's common stock.

Which of the following statements is correct?

Which of the following statements is false?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

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Exam 11: Reporting and Interpreting Stockholders Equity

The declaration of a stock dividend by a corporation's board of directors creates a liability on the declaration date.

Net income decreases when treasury stock is sold for an amount less than the original cost when the shares of stock were repurchased.

What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS)?

Which of the following statements is true about partnership accounting?

What is the correct entry for the sale of 1,000 shares of $10 par value preferred stock for $50,000 cash?

A large stock dividend:

Total assets remain the same when a company uses cash to purchase treasury stock.

Treasury stock is a corporation's own stock that was issued and then repurchased, and is still held by the corporation.

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

Which of the following statements is not correct?

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Which of the following statements is false?

HighRise Company reported the following amounts of contributed capital in the stockholders' equity accounts as of January 1, 2016:

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding. Required: Calculate the par value per share of the company's common stock.

Which of the following statements is correct?

Which of the following statements is false?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

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