Question 1

Growth stocks generally pay large dividends on a regular basis.

Accepted Answer

A) True 
 B)False

Question 2

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Accepted Answer

A) $15,000 preferred;$15,000 common. 
B) $6,000 preferred;$24,000 common. 
C) $30,000 preferred;$0 common. 
D) $12,000 preferred;$18,000 common. 
E) $0 preferred;$30,000 common. 
A) $15,000 preferred;$15,000 common. 
B) $6,000 preferred;$24,000 common. 
C) $30,000 preferred;$0 common. 
D) $12,000 preferred;$18,000 common. 
E) $0 preferred;$30,000 common.

Question 3

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 4

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

Accepted Answer

A) Debit Retained Earnings $36,000;credit Common Stock Dividend Distributable $36,000. 
B) Debit Retained Earnings $36,000;credit Common Stock Dividend Distributable $30,000;credit Paid-In Capital in Excess of Par Value,Common Stock $6,000. 
C) Debit Common Stock Dividend Distributable $36,000;credit Retained Earnings $36,000. 
D) Debit Retained Earnings $30,000;credit Common Stock Dividend Distributable $30,000. 
E) No entry is needeD.3,000/10,000 shares = large stock dividend of 30% 
A) Debit Retained Earnings $36,000;credit Common Stock Dividend Distributable $36,000. 
B) Debit Retained Earnings $36,000;credit Common Stock Dividend Distributable $30,000;credit Paid-In Capital in Excess of Par Value,Common Stock $6,000. 
C) Debit Common Stock Dividend Distributable $36,000;credit Retained Earnings $36,000. 
D) Debit Retained Earnings $30,000;credit Common Stock Dividend Distributable $30,000. 
E) No entry is needeD.3,000/10,000 shares = large stock dividend of 30%

Question 5

A corporation had the following stock outstanding when the company's board of directors declared a $55,000 cash dividend during the current year:   Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

Accepted Answer

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

Question 6

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

Accepted Answer

A) Issued. 
B) Authorized. 
C) Subscribed. 
D) Outstanding. 
E) In treasury. 
A) Issued. 
B) Authorized. 
C) Subscribed. 
D) Outstanding. 
E) In treasury.

Question 7

Percy 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 400 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 $4,000. 
B) A debit to Organization Expenses for $5,000. 
C) A credit to Common Stock for $5,000. 
D) A credit to Paid-in Capital in Excess of Par Value,Common Stock for $5,000. 
E) A debit to Paid-in Capital in Excess of Par Value,Common Stock for $2,000. 
A) A debit to Organization Expenses for $4,000. 
B) A debit to Organization Expenses for $5,000. 
C) A credit to Common Stock for $5,000. 
D) A credit to Paid-in Capital in Excess of Par Value,Common Stock for $5,000. 
E) A debit to Paid-in Capital in Excess of Par Value,Common Stock for $2,000.

Question 8

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On September 20,Fletcher Corporation issued 25,000 shares...

Question 9

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Accepted Answer

A) Participating preferred stock. 
B) Callable preferred stock. 
C) Cumulative preferred stock. 
D) Convertible preferred stock. 
E) Noncumulative preferred stock. 
A) Participating preferred stock. 
B) Callable preferred stock. 
C) Cumulative preferred stock. 
D) Convertible preferred stock. 
E) Noncumulative preferred stock.

Question 10

Rights to purchase common stock at a fixed price over a specified period are:

Accepted Answer

A) Preferred stocks. 
B) Class B stocks. 
C) Stock options. 
D) Stock restrictions. 
E) Preemptive rights. 
A) Preferred stocks. 
B) Class B stocks. 
C) Stock options. 
D) Stock restrictions. 
E) Preemptive rights.

Question 11

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

Accepted Answer

A) Common stock's market value. 
B) Earnings per share. 
C) Investors' purchase price of the stock. 
D) Amount of retained earnings. 
E) Amount of cash. 
A) Common stock's market value. 
B) Earnings per share. 
C) Investors' purchase price of the stock. 
D) Amount of retained earnings. 
E) Amount of cash.

Question 12

On August 1,a company's board of directors declared a 10% stock dividend to be distributed on September 1 to the stockholders of record on August 20.The company had 1,000,000 shares of $2.50 par value common stock outstanding with a market value of $23 per share.Prepare the journal entries required on August 1,August 20,and September 1.

Accepted Answer

The answer of On August 1,a company's board of directors...

Question 13

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 repurchase of stock on June 30?

Accepted Answer

A) Debit Common Stock $4,000;credit Cash $4,000. 
B) Debit Common Stock $100;debit Treasury Stock $3,900;credit Cash $4,000. 
C) Debit Treasury Stock $3,900;debit Paid-in Capital,Treasury Stock $100;credit Cash $4,000. 
D) Debit Treasury Stock,Common $4,000;credit Cash $4,000. 
E) Debit Cash $4,000;credit Treasury Stock $4,000. 
A) Debit Common Stock $4,000;credit Cash $4,000. 
B) Debit Common Stock $100;debit Treasury Stock $3,900;credit Cash $4,000. 
C) Debit Treasury Stock $3,900;debit Paid-in Capital,Treasury Stock $100;credit Cash $4,000. 
D) Debit Treasury Stock,Common $4,000;credit Cash $4,000. 
E) Debit Cash $4,000;credit Treasury Stock $4,000.

Question 14

Underwood Company's only treasury stock transactions for the current year follow: (1)2,000 shares of its common stock were purchased on June 1 for $80,000; (2)On July 1 it reissued 500 of these shares at $45 per share; (3)On August 1 it reissued an additional 500 treasury shares at $38 per share.
1)Prepare the journal entries required to record these transactions.
2)Calculate the balance in Paid-in Capital,Treasury Stock,on September 1 assuming its beginning-year balance is zero.

Accepted Answer

@#IMG-DLM& 2)There is a credit

Question 15

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.

Accepted Answer

minimum le

Question 16

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 17

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Accepted Answer

A) True 
 B)False

Question 18

The term restricted retained earnings refers to statutory but not contractual restrictions.

Accepted Answer

A) True 
 B)False

Question 19

The following data were reported by a corporation:   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 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.

Exam 13: Accounting for Corporations

Growth stocks generally pay large dividends on a regular basis.

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

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

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Rights to purchase common stock at a fixed price over a specified period are:

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.

Prior period adjustments are reported in the:

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

The term restricted retained earnings refers to statutory but not contractual restrictions.

The following data were reported by a corporation: The number of outstanding shares is:

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

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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