Question 1

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Accepted Answer

B

Question 2

Corporations generally issue stock dividends in order to

Accepted Answer

A)  increase the market price per share.
B)  exceed stockholders' dividend expectations.
C)  increase the marketability of the stock.
D)  decrease the amount of capital in the corporation. C

Question 3

Which of the following statements is not true about a 2-for-1 split?

Accepted Answer

A)  Par value per share is reduced to half of what it was before the split.
B)  Total contributed capital increases.
C)  The market price probably will decrease.
D)  A stockholder with ten shares before the split owns twenty shares after the split. B

Question 4

Berman Inc. has 6,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2016, and December 31, 2017. The board of directors declared and paid an $12,000 dividend in 2016. In 2017, $72,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2017?

Accepted Answer

A)  $48,000.
B)  $42,000.
C)  $54,000.
D)  $18,000.

Question 5

The two ways that a corporation can be classified by purpose are

Accepted Answer

A)  general and limited.
B)  profit and not-for-profit.
C)  state and federal.
D)  publicly held and privately held.

Question 6

The chief accounting officer in a company is known as the

Accepted Answer

A)  controller.
B)  treasurer.
C)  vice-president.
D)  president.

Question 7

What is the total stockholders' equity based on the following account balances? $$\begin{array} { l r } 
\text { Common Stock } & \$ 1,800,000 \
\text { Paid-In Capital in Excess of Par } & 100,000 \
\text { Retained Earnings } & 360,000 \
\text { Treasury Stock } & 60,000
\end{array}$$

Accepted Answer

A)  $1,900,000.
B)  $2,320,000.
C)  $2,260,000.
D)  $2,200,000.

Question 8

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.

Accepted Answer

A) True 
 B)False

Question 9

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

Accepted Answer

A)  decrease total assets and total stockholders' equity.
B)  increase stockholders' equity and to decrease total liabilities.
C)  decrease total retained earnings and increase total liabilities.
D)  reduce the amount of retained earnings available for dividend declarations.

Question 10

A stockholder has the right to vote in the election of the board of directors.

Accepted Answer

A) True 
 B)False

Question 11

Ace Inc. has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017. What is the annual dividend on the preferred stock?

Accepted Answer

A)  $40 per share
B)  $40,000 in total
C)  $4,000 in total
D)  $0.40 per share

Question 12

Which one of the following is not an ownership right of a stockholder in a corporation?

Accepted Answer

A)  To vote in the election of directors.
B)  To declare dividends on the common stock.
C)  To share in assets upon liquidation.
D)  To share in corporate earnings.

Question 13

The effect of the declaration of a cash dividend by the board of directors is to

Accepted Answer

The answer of The effect of the declaration of a...

Question 14

The number of common shares outstanding can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 15

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

Accepted Answer

A) True 
 B)False

Question 16

Treasury Stock is a(n)

Accepted Answer

A)  contra asset account.
B)  retained earnings account.
C)  asset account.
D)  contra stockholders' equity account.

Question 17

A stockholder who receives a stock dividend would

Accepted Answer

A)  expect the market price per share to increase.
B)  own more shares of stock.
C)  expect retained earnings to increase.
D)  expect the par value of the stock to change.

Question 18

The term residual claim refers to a stockholders' right to

Accepted Answer

A)  receive dividends.
B)  share in assets upon liquidation.
C)  acquire additional shares when offered.
D)  exercise a proxy vote.

Question 19

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 7,000 shares of preferred stock for land with an asking price of $875,000 and a market value of $770,000, which of the following would be the best journal entry for Retro to record?

Accepted Answer

The answer of Retro Company is authorized to issue 10,000...

Question 20

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the

Accepted Answer

A)  legal capital is $2,780,000.
B)  number of shares issued is 80,000.
C)  number of shares outstanding is 2,780,000.
D)  average price per share issued is $3.48.

Exam 10: Reporting and Analyzing Stockholders Equity

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Corporations generally issue stock dividends in order to

Which of the following statements is not true about a 2-for-1 split?

The two ways that a corporation can be classified by purpose are

The chief accounting officer in a company is known as the

What is the total stockholders' equity based on the following account balances? $\begin{array} { l r } \text { Common Stock } & \$ 1,800,000 \\\text { Paid-In Capital in Excess of Par } & 100,000 \\\text { Retained Earnings } & 360,000 \\\text { Treasury Stock } & 60,000\end{array}$

When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

A stockholder has the right to vote in the election of the board of directors.

Ace Inc. has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017. What is the annual dividend on the preferred stock?

Which one of the following is not an ownership right of a stockholder in a corporation?

The effect of the declaration of a cash dividend by the board of directors is to

The number of common shares outstanding can never be greater than the number of shares issued.

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

Treasury Stock is a(n)

A stockholder who receives a stock dividend would

The term residual claim refers to a stockholders' right to

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the