Question 1

The return on common stockholders' equity is computed by dividing

Accepted Answer

A)  net income by ending common stockholders' equity. 
B)  net income by average common stockholders' equity. 
C)  net income minus preferred dividends by ending common stockholders' equity. 
D)  net income minus preferred dividends by average common stockholders' equity. 
A)  net income by ending common stockholders' equity. 
B)  net income by average common stockholders' equity. 
C)  net income minus preferred dividends by ending common stockholders' equity. 
D)  net income minus preferred dividends by average common stockholders' equity.

Question 2

A debit balance in the Retained Earnings account is identified as a deficit.

Accepted Answer

A) True 
 B)False

Question 3

A net loss

Accepted Answer

A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the paid-in capital account of the stockholders' equity section of the balance sheet. 
A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the paid-in capital account of the stockholders' equity section of the balance sheet.

Question 4

Earnings per share is reported only for ________________.

Accepted Answer

The answer of Earnings per share is reported only for...

Question 5

A 10% stock dividend will increase the number of shares outstanding but the par value per share will stay the same.

Accepted Answer

A) True 
 B)False

Question 6

The following information is available for Rubio Corporation for the year ended December 31 2017: Sales revenue $900000; Other revenues and gains $72000; Operating expenses $110000; Cost of goods sold $520000; Other expenses and losses $32000; Preferred stock dividends $30000. The company's tax rate was 20% and it had 40000 shares outstanding during the entire year.
Instructions

Calculate earnings per share.

Accepted Answer

The answer of The following information is available for Rubio...

Question 7

The balance in retained earnings on January 1 2017 for Hotel Plaza Inc. was $575000. During the year the corporation paid cash dividends of $70000 and distributed a stock dividend of $15000. In addition the company determined that it had overstated its depreciation expense in prior years by $50000. Net income for 2017 was $120000.
Instructions
Prepare the retained earnings statement for 2017.

Accepted Answer

None

Question 8

The per share amount normally assigned by the board of directors to a small stock dividend is

Accepted Answer

A)  the market value of the stock on the date of declaration. 
B)  the average price paid by stockholders on outstanding shares. 
C)  the par or stated value of the stock. 
D)  zero. 
A)  the market value of the stock on the date of declaration. 
B)  the average price paid by stockholders on outstanding shares. 
C)  the par or stated value of the stock. 
D)  zero.

Question 9

The correction of an error in previously issued financial statements is known as a _________________.

Accepted Answer

prior peri

Question 10

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

Accepted Answer

A)  ending total stockholders' equity. 
B)  ending common stockholders' equity. 
C)  average total stockholders' equity. 
D)  average common stockholders' equity. 
A)  ending total stockholders' equity. 
B)  ending common stockholders' equity. 
C)  average total stockholders' equity. 
D)  average common stockholders' equity.

Question 11

When stock dividends are distributed

Accepted Answer

A)  Common Stock Dividends Distributable is decreased. 
B)  Retained Earnings is decreased. 
C)  Paid-in Capital in Excess of Par is debited if it is a small stock dividend. 
D)  no entry is necessary if it is a large stock dividend. 
A)  Common Stock Dividends Distributable is decreased. 
B)  Retained Earnings is decreased. 
C)  Paid-in Capital in Excess of Par is debited if it is a small stock dividend. 
D)  no entry is necessary if it is a large stock dividend.

Question 12

As part of a Careers in Accounting program sponsored by accounting organizations and supported by your company you will be taking a group of high-school students through the accounting department in your company. You will also provide them with various materials to explain the work of an accountant. One of the materials you will provide is the Stockholders' Equity section of a recent balance sheet.
Required:
Prepare a sentence or two explaining each major section: Common Stock Additional Paid-in Capital and Retained Earnings. You should try to be brief but clear.

Accepted Answer

Common Stock: When investors invest in o

Question 13

On the dividend record date

Accepted Answer

A)  a dividend becomes a current obligation. 
B)  no entry is required. 
C)  an entry may be required if it is a stock dividend. 
D)  Dividends Payable is debited. 
A)  a dividend becomes a current obligation. 
B)  no entry is required. 
C)  an entry may be required if it is a stock dividend. 
D)  Dividends Payable is debited.

Question 14

On January 1 Key Corporation had 2000000 shares of $10 par value common stock outstanding. On March 31 the company declared a 20% stock dividend. Market value of the stock was $15/share. As a result of this event

Accepted Answer

A)  Key's Paid-in Capital in Excess of Par account increased $2000000. 
B)  Key's total stockholders' equity was unaffected. 
C)  Key's Stock Dividends account increased $6000000. 
D)  All of these answer choices are correct. 
A)  Key's Paid-in Capital in Excess of Par account increased $2000000. 
B)  Key's total stockholders' equity was unaffected. 
C)  Key's Stock Dividends account increased $6000000. 
D)  All of these answer choices are correct.

Question 15

Paiva Corporation splits its common stock 2 for 1 when the market value is $80 per share. Prior to the split Paiva had 100000 shares of $10 par value common stock issued and outstanding. After the split the par value of the stock

Accepted Answer

A)  remains the same. 
B)  is reduced to $2 per share. 
C)  is reduced to $5 per share. 
D)  is reduced to $20 per share. 
A)  remains the same. 
B)  is reduced to $2 per share. 
C)  is reduced to $5 per share. 
D)  is reduced to $20 per share.

Question 16

Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

Accepted Answer

restricted

Question 17

Return on common stockholders' equity is computed by dividing net income by ending stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 18

Income statements for corporations report _______________ in a separate section before net income.

Accepted Answer

The answer of Income statements for corporations report _______________ in...

Question 19

Assume that all balance sheet amounts for Carolina Company represent average balance figures. $$\begin{array} { l r } 
\text { Stockholders' equity-common } & \$ 360,000 \
\text { Total stockholders' equity } & 800,000 \
\text { Sales revenue } & 400,000 \
\text { Net income } & 76,000 \
\text { Number of shares of common stock } & 40,000 \
\text { Common stock dividends } & 24,000 \
\text { Preferred stock dividends } & 4,000
\end{array}$$ What is the earnings per share for Carolina?

Accepted Answer

A)  $1.90 
B)  $1.80 
C)  $1.20 
D)  $2.00 
A)  $1.90 
B)  $1.80 
C)  $1.20 
D)  $2.00

Question 20

At December 31 2017 Florrict Company has $500000 of $100 par value 6% cumulative preferred stock outstanding and $2000000 of $10 par value common stock issued. Florrict's net income for the year is $410000.
Instructions
Compute earnings per share of common stock for 2017 under the following independent situations. (Round to two decimals.)
(a) The dividend to preferred stockholders was declared and there has been no change in the number of shares of common stock outstanding during the year.
(b) The dividend to preferred stockholders was not declared and 10000 shares of common treasury stock were held throughout the year. The preferred stock is cumulative.

Accepted Answer

(a) ($410000 - $30000) ÷ 200000 = $1.90

Exam 14: Corporations: Dividends, Retained Earnings, and Income Reporting

The return on common stockholders' equity is computed by dividing

A debit balance in the Retained Earnings account is identified as a deficit.

A net loss

Earnings per share is reported only for ________________.

A 10% stock dividend will increase the number of shares outstanding but the par value per share will stay the same.

The per share amount normally assigned by the board of directors to a small stock dividend is

The correction of an error in previously issued financial statements is known as a _________________.

The return on common stockholders' equity is computed by dividing net income available to common stockholders by

When stock dividends are distributed

On the dividend record date

On January 1 Key Corporation had 2000000 shares of $10 par value common stock outstanding. On March 31 the company declared a 20% stock dividend. Market value of the stock was $15/share. As a result of this event

Paiva Corporation splits its common stock 2 for 1 when the market value is $80 per share. Prior to the split Paiva had 100000 shares of $10 par value common stock issued and outstanding. After the split the par value of the stock

Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

Return on common stockholders' equity is computed by dividing net income by ending stockholders' equity.

Income statements for corporations report _______________ in a separate section before net income.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

Corporations sometimes segregate retained earnings into two categories: (1) retained earnings and (2) retained earnings.