Question 1

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

Accepted Answer

A) Preemptive right. 
B) Proxy right. 
C) Right to call. 
D) Financial leverage. 
E) Voting right. 
A) Preemptive right. 
B) Proxy right. 
C) Right to call. 
D) Financial leverage. 
E) Voting right.

Question 2

A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend:   The amount that contributed capital will increase (decrease)as a result of recording this stock dividend is:

Accepted Answer

A) $45,000. 
B) $135,000. 
C) $(45,000). 
D) $(135,000). 
E) $0. 
A) $45,000. 
B) $135,000. 
C) $(45,000). 
D) $(135,000). 
E) $0.

Question 3

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 4

The declaration of cash dividends increases retained earnings.

Accepted Answer

A) True 
 B)False

Question 5

The costs of bringing a corporation into existence,including legal fees,promoter fees,and amounts paid to obtain a charter are called:

Accepted Answer

A) Minimum legal capital. 
B) Stock subscriptions. 
C) Organization expenses. 
D) Selling expenses. 
E) Prepaid fees. 
A) Minimum legal capital. 
B) Stock subscriptions. 
C) Organization expenses. 
D) Selling expenses. 
E) Prepaid fees.

Question 6

A company has earnings per share net income of $90,000;its weighted-average common shares outstanding are 18,000.Its dividend per share is $0.45,its market price per share is $88,and its book value per share is $76.Its price-earnings ratio equals:

Accepted Answer

A) 9.0. 
B) 17.6. 
C) 12.5. 
D) 15.2. 
E) 16.9. 
A) 9.0. 
B) 17.6. 
C) 12.5. 
D) 15.2. 
E) 16.9.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Book value per common share is computed by:

Accepted Answer

A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares. 
A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares.

Question 9

The board of directors of a corporation:

Accepted Answer

A) Are elected by the corporate registrar. 
B) Are responsible for day-to-day operations of the business. 
C) Do not have the power to bind the corporation to contracts,due to lack of mutual agency. 
D) May not also be executive officers of the corporation,due to the separate entity principle. 
E) Are responsible for and have final authority for managing corporate activities. 
A) Are elected by the corporate registrar. 
B) Are responsible for day-to-day operations of the business. 
C) Do not have the power to bind the corporation to contracts,due to lack of mutual agency. 
D) May not also be executive officers of the corporation,due to the separate entity principle. 
E) Are responsible for and have final authority for managing corporate activities.

Question 10

Cactus Joe Corporation reported stockholders' equity on January 1 of the current year as follows: Common Stock,$5 par value,1,000,000 shares authorized,600,000 shares issued;Paid-in Capital in Excess of Par Value,Common Stock,$1,025,000;Retained Earnings,$1,850,000.Prepare journal entries to record the following transactions:

Accepted Answer

The answer of Cactus Joe Corporation reported stockholders' equity on...

Question 11

The price-earnings ratio is calculated by dividing:

Accepted Answer

A) Market value per share by earnings per share. 
B) Earnings per share by market value per share. 
C) Dividends per share by earnings per share. 
D) Dividends per share by market value per share. 
E) Market value per share by dividends per share. 
A) Market value per share by earnings per share. 
B) Earnings per share by market value per share. 
C) Dividends per share by earnings per share. 
D) Dividends per share by market value per share. 
E) Market value per share by dividends per share.

Question 12

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.

Question 13

A debit balance in retained earnings is referred to as an accumulated deficit.

Accepted Answer

A) True 
 B)False

Question 14

The following selected transactions took place during the current year for a company:   (a)Prepare the journal entries for these transactions.
(b)If Retained Earnings had a $155,000 credit balance on January 1,calculate its year-end balance as of December 31.

Accepted Answer

The answer of The following selected transactions took place during...

Question 15

If the dividends account is not recorded as a reduction to Retained Earnings on the date of declaration,the dividends account is closed to Retained Earnings at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 16

Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

Accepted Answer

A) Debit Cash $312,000;credit Common Stock $26,000;credit Paid-in Capital in Excess of Par Value,Common Stock $286,000. 
B) Debit Cash for $312,000;credit Common Stock $312,000. 
C) Debit Common Stock $26,000;debit Paid-in Capital in Excess of Par Value,Common Stock $286,000;credit Cash $312,000. 
D) Debit Cash $312,000;credit Stock Liability $286,000;credit Common Stock $26,000. 
E) Debit Common Stock $26,000;credit Cash $26,000. 
A) Debit Cash $312,000;credit Common Stock $26,000;credit Paid-in Capital in Excess of Par Value,Common Stock $286,000. 
B) Debit Cash for $312,000;credit Common Stock $312,000. 
C) Debit Common Stock $26,000;debit Paid-in Capital in Excess of Par Value,Common Stock $286,000;credit Cash $312,000. 
D) Debit Cash $312,000;credit Stock Liability $286,000;credit Common Stock $26,000. 
E) Debit Common Stock $26,000;credit Cash $26,000.

Question 17

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Accepted Answer

A) True 
 B)False

Question 18

On June 30,a company declared a cash dividend of $0.35 per common share to the shareholders of record on July 15.The cash dividend will be paid on July 31.This company has 500,000 shares authorized and 100,000 shares outstanding.Prepare the journal entries required on June 30,July 15 and July 31.

Accepted Answer

The answer of On June 30,a company declared a cash...

Question 19

The Discount on Common Stock account reflects:

Accepted Answer

A) The difference between the par value of stock and its issue price when it is issued at a price below par value. 
B) One share's portion of the issued corporation's net assets recorded in its accounts. 
C) The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value. 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E) The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock. 
A) The difference between the par value of stock and its issue price when it is issued at a price below par value. 
B) One share's portion of the issued corporation's net assets recorded in its accounts. 
C) The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value. 
D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E) The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock.

Question 20

Common shareholders always share equally with all other shareholders in dividends.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Corporations

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease)as a result of recording this stock 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:

The declaration of cash dividends increases retained earnings.

The costs of bringing a corporation into existence,including legal fees,promoter fees,and amounts paid to obtain a charter are called:

A company has earnings per share net income of $90,000;its weighted-average common shares outstanding are 18,000.Its dividend per share is $0.45,its market price per share is $88,and its book value per share is $76.Its price-earnings ratio equals:

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

Book value per common share is computed by:

The board of directors of a corporation:

The price-earnings ratio is calculated by dividing:

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 debit balance in retained earnings is referred to as an accumulated deficit.

The following selected transactions took place during the current year for a company: (a)Prepare the journal entries for these transactions. (b)If Retained Earnings had a $155,000 credit balance on January 1,calculate its year-end balance as of December 31.

If the dividends account is not recorded as a reduction to Retained Earnings on the date of declaration,the dividends account is closed to Retained Earnings at the end of the accounting period.

Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

On June 30,a company declared a cash dividend of $0.35 per common share to the shareholders of record on July 15.The cash dividend will be paid on July 31.This company has 500,000 shares authorized and 100,000 shares outstanding.Prepare the journal entries required on June 30,July 15 and July 31.

The Discount on Common Stock account reflects:

Common shareholders always share equally with all other shareholders in dividends.

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

Filters