Question 1

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Accepted Answer

A) True 
 B)False

Question 2

If a corporation receives assets other than cash in exchange for stock,it records the assets received at their market value as of the date of the transaction.

Accepted Answer

A) True 
 B)False

Question 3

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

Accepted Answer

A) Convertible stock. 
B) No-par stock. 
C) Callable stock. 
D) Noncumulative stock. 
E) Discounted stock. 
A) Convertible stock. 
B) No-par stock. 
C) Callable stock. 
D) Noncumulative stock. 
E) Discounted stock.

Question 4

The statement of changes in stockholders' equity:

Accepted Answer

A) Is part of the statement of retained earnings. 
B) Shows only the ending balances in stockholders' equity. 
C) Describes changes in paid-in capital and retained earnings subcategories. 
D) Does not include changes in treasury stock. 
E) Is reported by very few companies. 
A) Is part of the statement of retained earnings. 
B) Shows only the ending balances in stockholders' equity. 
C) Describes changes in paid-in capital and retained earnings subcategories. 
D) Does not include changes in treasury stock. 
E) Is reported by very few companies.

Question 5

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Accepted Answer

A) True 
 B)False

Question 6

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Accepted Answer

A) True 
 B)False

Question 7

Minimum legal capital requirements are intended to protect creditors.

Accepted Answer

A) True 
 B)False

Question 8

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Accepted Answer

A) True 
 B)False

Question 9

The stockholders' equity section of a corporation's balance sheet follows:   (1)Assuming that the preferred stock is not callable and no dividends are in arrears,compute the book values per preferred share and per common share.
(2)Assuming that the preferred stock has a call price of $30 per share and one year of cumulative preferred dividends is in arrears,compute the book values per preferred share and per common share.

Accepted Answer

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

Question 10

Stated value of no-par stock is:

Accepted Answer

A) Another name for redemption value. 
B) An amount assigned to par value stock by the state of incorporation. 
C) The market value of the stock on the date of issuance. 
D) The difference between the par value of stock and the amount below or above par value paid-in by the stockholder. 
E) An amount assigned to no-par stock by the corporation's board of directors. 
A) Another name for redemption value. 
B) An amount assigned to par value stock by the state of incorporation. 
C) The market value of the stock on the date of issuance. 
D) The difference between the par value of stock and the amount below or above par value paid-in by the stockholder. 
E) An amount assigned to no-par stock by the corporation's board of directors.

Question 11

Treasury stock is classified as:

Accepted Answer

A) An asset account. 
B) A contra asset account. 
C) A revenue account. 
D) A contra equity account. 
E) A liability account. 
A) An asset account. 
B) A contra asset account. 
C) A revenue account. 
D) A contra equity account. 
E) A liability account.

Question 12

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Accepted Answer

A) Debit Retained Earnings $90,000;credit Common Dividends Payable $90,000. 
B) Debit Common Dividends Payable $95,000;credit Cash $95,000. 
C) Debit Retained Earnings $5,000;credit Common Dividends Payable $5,000. 
D) Debit Common Dividends Payable $90,000;credit Cash $90,000. 
E) Debit Retained Earnings $95,000;credit Common Dividends Payable $95,000. 
A) Debit Retained Earnings $90,000;credit Common Dividends Payable $90,000. 
B) Debit Common Dividends Payable $95,000;credit Cash $95,000. 
C) Debit Retained Earnings $5,000;credit Common Dividends Payable $5,000. 
D) Debit Common Dividends Payable $90,000;credit Cash $90,000. 
E) Debit Retained Earnings $95,000;credit Common Dividends Payable $95,000.

Question 13

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

Question 14

A company is authorized to issue 750,000 shares of $2 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Accepted Answer

The answer of A company is authorized to issue 750,000...

Question 15

Retained earnings are part of the stockholders' claims on the company's net assets.

Accepted Answer

A) True 
 B)False

Question 16

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Accepted Answer

A) Always equal to its par value. 
B) Always equal to its stated value. 
C) Referred to as paid-in capital. 
D) Referred to as retained earnings. 
E) Always below its stated value. 
A) Always equal to its par value. 
B) Always equal to its stated value. 
C) Referred to as paid-in capital. 
D) Referred to as retained earnings. 
E) Always below its stated value.

Question 17

Which of the following is true of a stock dividend?

Accepted Answer

A) It is a liability on the balance sheet. 
B) The decision to declare a stock dividend resides with the shareholders. 
C) Transfers a portion of equity from retained earnings to a cash reserve account. 
D) Does not affect total equity,but transfer amounts between the components of equity. 
E) Reduces a corporation's assets and stockholders' equity. 
A) It is a liability on the balance sheet. 
B) The decision to declare a stock dividend resides with the shareholders. 
C) Transfers a portion of equity from retained earnings to a cash reserve account. 
D) Does not affect total equity,but transfer amounts between the components of equity. 
E) Reduces a corporation's assets and stockholders' equity.

Question 18

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000.The entry to record this transaction would include:

Accepted Answer

A) A debit to Common Stock for $12,000. 
B) A debit to Land for $12,000. 
C) A credit to Land for $12,000. 
D) A credit to Paid-in Capital in Excess of Par Value,Common Stock for $72,000. 
E) A credit to Common Stock for $84,000. 
A) A debit to Common Stock for $12,000. 
B) A debit to Land for $12,000. 
C) A credit to Land for $12,000. 
D) A credit to Paid-in Capital in Excess of Par Value,Common Stock for $72,000. 
E) A credit to Common Stock for $84,000.

Question 19

Stock that has been issued and is held by stockholders is ___________________ stock.

Accepted Answer

The answer of Stock that has been issued and is...

Question 20

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.   The amount of dividends paid to preferred and common shareholders in 2016 is:

Accepted Answer

A) $3,500 preferred;$2,500 common. 
B) $3,000 preferred;$3,000 common. 
C) $0 preferred;$6,000 common. 
D) $4,200 preferred;$1,800 common. 
E) $6,000 preferred;$0 common. 
A) $3,500 preferred;$2,500 common. 
B) $3,000 preferred;$3,000 common. 
C) $0 preferred;$6,000 common. 
D) $4,200 preferred;$1,800 common. 
E) $6,000 preferred;$0 common.

Exam 13: Accounting for Corporations

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

If a corporation receives assets other than cash in exchange for stock,it records the assets received at their market value as of the date of the transaction.

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

The statement of changes in stockholders' equity:

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Minimum legal capital requirements are intended to protect creditors.

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Stated value of no-par stock is:

Treasury stock is classified as:

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

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

A company is authorized to issue 750,000 shares of $2 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Retained earnings are part of the stockholders' claims on the company's net assets.

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Which of the following is true of a stock dividend?

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000.The entry to record this transaction would include:

Stock that has been issued and is held by stockholders is ___________________ stock.

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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