Question 1

Growth stocks generally pay large dividends on a regular basis.

Accepted Answer

A) True 
 B)False

Question 2

The journal entry to record the declaration of dividends on common stock includes a debit to either Dividends or Retained Earnings and a credit to Common Dividend Payable.

Accepted Answer

A) True 
 B)False

Question 3

A company made an error in calculating and reporting amortization expense in Year 1.The error was discovered in Year 2.The item should be reported as a prior period adjustment:

Accepted Answer

A) on the Year 1 statement of retained earnings. 
B) on the Year 1 income statement. 
C) on the Year 2 statement of retained earnings. 
D) on the Year 2 income statement. 
E) accounted for with a cumulative "catch-up" adjustment in Year 2.

Question 4

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On July 1,a corporation issued 15,000 shares...

Question 5

The stockholders' equity section of a company's year-end balance sheet follows:
  The preferred stock has a call price of $51.50 per share plus dividends in arrears.Only one year of dividends is in arrears.Calculate the book value per (1)preferred share,and (2)common share.

Accepted Answer

The answer of The stockholders' equity section of a company's...

Question 6

A corporation issued 5,000 shares of its $1 par value common stock in exchange for land (market value $30,000)and a building (market value of $100,000).The entry to record this transaction would be:

Accepted Answer

A) Debit Land and Building,$130,000; Credit Common Stock,$5,000; Credit Paid-in Capital in Excess of Par Value,Common Stock,$125,000. 
B) Debit Land,$30,000; Debit Building,$100,000; Credit Common Stock,$130,000. 
C) Debit Land and Building,$5,000; Credit Common Stock,$5,000. 
D) Debit Land,$30,000; Debit Building,$100,000; Credit Common Stock,$5,000; Credit Paid-in Capital in Excess of Par Value,Common Stock,$125,000. 
E) Debit Building,$130,000; Credit Common Stock,$130,000.

Question 7

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.

Question 8

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Accepted Answer

A) Stock dividend. 
B) Stock subscription. 
C) Premium on stock. 
D) Discount on stock. 
E) Treasury stock.

Question 9

If a company has no preferred stock,basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

Accepted Answer

A) True 
 B)False

Question 10

A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year:
  Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

Accepted Answer

The answer of A corporation had the following stock outstanding...

Question 11

The date the directors vote to declare and pay a dividend is called the:

Accepted Answer

A) Date of stockholders' meeting. 
B) Date of declaration. 
C) Date of record. 
D) Date of payment. 
E) Liquidating date.

Question 12

A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1)preferred share,and (2)common share.

Accepted Answer

The answer of A company has $2,400,000 in stockholders' equity...

Question 13

Common stock always carries a preference for receiving dividends over preferred stock.

Accepted Answer

A) True 
 B)False

Question 14

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.

Question 15

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 16

Ultimate Sportswear has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Ultimate Sportswear also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Accepted Answer

A) $8,000 preferred; $22,000 common. 
B) $16,000 preferred; $14,000 common. 
C) $7,500 preferred; $22,500 common. 
D) $15,000 preferred; $15,000 common. 
E) $0 preferred; $30,000 common.

Question 17

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Accepted Answer

A) True 
 B)False

Question 18

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Accepted Answer

A) True 
 B)False

Question 19

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 20

A stock split increases total stockholders' equity.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting and Analyzing Equity

Growth stocks generally pay large dividends on a regular basis.

The journal entry to record the declaration of dividends on common stock includes a debit to either Dividends or Retained Earnings and a credit to Common Dividend Payable.

A company made an error in calculating and reporting amortization expense in Year 1.The error was discovered in Year 2.The item should be reported as a prior period adjustment:

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

The stockholders' equity section of a company's year-end balance sheet follows: The preferred stock has a call price of $51.50 per share plus dividends in arrears.Only one year of dividends is in arrears.Calculate the book value per (1)preferred share,and (2)common share.

A corporation issued 5,000 shares of its $1 par value common stock in exchange for land (market value $30,000) and a building (market value of $100,000) .The entry to record this transaction would be:

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:

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

If a company has no preferred stock,basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

The date the directors vote to declare and pay a dividend is called the:

A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1)preferred share,and (2)common share.

Common stock always carries a preference for receiving dividends over preferred stock.

Prior period adjustments are reported in the:

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.

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

A stock split increases total stockholders' equity.