Question 1

If Llama Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

Accepted Answer

A) a debit balance in the Retained Earnings account. 
B) a credit balance in the Retained Earnings account. 
C) a debit balance in the Common Stock account. 
D) a credit balance in the Common Stock account. 
A) a debit balance in the Retained Earnings account. 
B) a credit balance in the Retained Earnings account. 
C) a debit balance in the Common Stock account. 
D) a credit balance in the Common Stock account.

Question 2

Ari's Cafe began operations on March 1, 2015.The corporate charter authorized the issuance of 3,000 shares of $2 par value common stock and 1,000 shares of $3 par value, 8% cumulative preferred stock.The company's fiscal year ends on February 28.Ari's sold 500 shares of common stock at $6 per share on April 1.What impact does the entry to record the April 1 transaction have on total stockholders' equity?

Accepted Answer

A) No effect 
B) Increase by $1,000 
C) Increase by $3,000 
D) Increase by $6,000 
A) No effect 
B) Increase by $1,000 
C) Increase by $3,000 
D) Increase by $6,000

Question 3

The Treasury Stock account should be considered an asset account.

Accepted Answer

A) True 
 B)False

Question 4

When stock is issued for cash, only the par value of the stock should be reported in the stock account.

Accepted Answer

A) True 
 B)False

Question 5

The Stockholders' Equity section of the balance sheet of Sea Turtle Company reveals the following information:   There have been two issues of stock since the corporation began business.The average issue price per share of stock was

Accepted Answer

A) $ 3.00. 
B) $17.00. 
C) $20.00. 
D) Not enough information to determine. 
A) $ 3.00. 
B) $17.00. 
C) $20.00. 
D) Not enough information to determine.

Question 6

Stock dividends affect the par value per share of the stock.

Accepted Answer

A) True 
 B)False

Question 7

Portland Sound Cafe began business on January 1, 2015.The corporate charter authorized issuance of 1,000 shares of no-par value common stock, of which 200 shares were issued, and 4,000 shares of $8 par value, 6% cumulative preferred stock, of which none were issued.Portland Sound sold 400 shares of common stock at $8 per share on May 1.The entry to record the issuance of the shares on May 1 will:

Accepted Answer

A) Increase Cash, $1,000; Increase Additional Paid­in Capital-Common, $320; Increase Common Stock, $680 
B) Increase Cash, $3,200; Increase Additional Paid­in Capital-Common, $2,800; Increase Common Stock, $400 
C) Increase Cash, $4,800; Increase Common Stock, $4,800 
D) Increase Cash, $3,200; Increase Common Stock, $3,200 
A) Increase Cash, $1,000; Increase Additional Paid­in Capital-Common, $320; Increase Common Stock, $680 
B) Increase Cash, $3,200; Increase Additional Paid­in Capital-Common, $2,800; Increase Common Stock, $400 
C) Increase Cash, $4,800; Increase Common Stock, $4,800 
D) Increase Cash, $3,200; Increase Common Stock, $3,200

Question 8

A drawing account is sometimes referred to as a ______________________.

Accepted Answer

withdrawal

Question 9

Anole Company
Anole Company was incorporated as a new business on January 1, 2015.The company is authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%, $10 par value, cumulative, participating preferred stock.On January 1, 2015, the company issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock for $30 per share.Net income for the year ended December 31, 2015, was $375,000.
-Refer to the information about Anole Company.
Anole's total stockholders' equity reported on the balance sheet at December 31, 2015, is

Accepted Answer

A) $ 60,000. 
B) $120,000. 
C) $180,000. 
D) $555,000. 
A) $ 60,000. 
B) $120,000. 
C) $180,000. 
D) $555,000.

Question 10

All of the following statements are true about a 3-for-1 split, except:

Accepted Answer

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

Question 11

When a company purchases treasury stock, which of the following statements is true?

Accepted Answer

A) Treasury stock is considered to be an asset because cash is paid for the stock. 
B) The cost of the treasury stock reduces stockholders' equity. 
C) Dividends continue to be paid on the treasury stock because it is still issued. 
D) Since treasury stock is held by the original issuer, it is no longer considered to be issued. 
A) Treasury stock is considered to be an asset because cash is paid for the stock. 
B) The cost of the treasury stock reduces stockholders' equity. 
C) Dividends continue to be paid on the treasury stock because it is still issued. 
D) Since treasury stock is held by the original issuer, it is no longer considered to be issued.

Question 12

Dividends in Arrears

Accepted Answer

A) is a liability account. 
B) is a contra stockholders' equity account. 
C) is a stockholders' equity account. 
D) appear in the notes to the financial statements. 
A) is a liability account. 
B) is a contra stockholders' equity account. 
C) is a stockholders' equity account. 
D) appear in the notes to the financial statements.

Question 13

Valor Company issued 5,000 shares of $1 par common stock for $30 per share, providing the company with $150,000 in cash.What effect, in addition to the increase in cash, does this transaction have on the accounting equation for Valor?

Accepted Answer

A) Common Stock increases $150,000. 
B) Common Stock increases $5,000; Additional Paid­in Capital-Common increases $145,000. 
C) Common Stock increases $5,000; Retained Earnings increases $145,000. 
D) Common Stock increases $5,000; Gain on Sale of Common Stock increases $145,000. 
A) Common Stock increases $150,000. 
B) Common Stock increases $5,000; Additional Paid­in Capital-Common increases $145,000. 
C) Common Stock increases $5,000; Retained Earnings increases $145,000. 
D) Common Stock increases $5,000; Gain on Sale of Common Stock increases $145,000.

Question 14

The Stockholders' Equity section of Stallion Tack Shack balance sheet on January 1, 2015, appeared as follows:   
On March 1, 2015, Stallion reacquired 3,000 shares of common stock at $8 per share.Answer the following questions:
A) What amount would be reported on the March 31, 2015, balance sheet for treasury stock?
B) What is the number of outstanding shares at March 31, 2015?
C) How much is total stockholders' equity to be reported on the March 31, 2015 balance sheet?

Accepted Answer

A) 3,000 shares × $8 = $24,000

Question 15

[APPENDIX] Gordon Vending, a sole proprietorship, had the following balances and transactions during 2015: beginning capital, $40,000; contribution of cash to the business by the owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by the owner, $5,000.What is the amount of the ending capital balance?

Accepted Answer

A) $40,000 
B) $60,000 
C) $75,000 
D) $85,000 
A) $40,000 
B) $60,000 
C) $75,000 
D) $85,000

Question 16

The stockholders' equity section of the balance sheet for Scuba Gear Corporation appeared as follows before its recent stock dividend:   Scuba Gear declared a 10% stock dividend when the market price per share was $8.After the stock dividend was distributed, the components of the stockholders' equity section were:

Accepted Answer

The answer of The stockholders' equity section of the balance...

Question 17

[APPENDIX] A partnership can be owned by one or more entities or individuals.

Accepted Answer

A) True 
 B)False

Question 18

A liability for dividends is created

Accepted Answer

A) at the end of each fiscal year. 
B) at the date of payment. 
C) at the date of record. 
D) at the date of declaration. 
A) at the end of each fiscal year. 
B) at the date of payment. 
C) at the date of record. 
D) at the date of declaration.

Question 19

Authorized stock represents the

Accepted Answer

A) maximum number of shares that can be issued. 
B) number of shares that have been sold. 
C) number of shares that are currently held by stockholders. 
D) number of shares that have been repurchased by the corporation. 
A) maximum number of shares that can be issued. 
B) number of shares that have been sold. 
C) number of shares that are currently held by stockholders. 
D) number of shares that have been repurchased by the corporation.

Question 20

CarWorks Company has 100,000 authorized shares of $4 par common stock.The company issued 40,000 shares at $8.Subsequently, CarWorks declared a 2% stock dividend on a date when the market price was $11 a share.What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Accepted Answer

A) $8,800 
B) $4,800 
C) $3,200 
D) $6,400 
A) $8,800 
B) $4,800 
C) $3,200 
D) $6,400

If Llama Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

The Treasury Stock account should be considered an asset account.

When stock is issued for cash, only the par value of the stock should be reported in the stock account.

The Stockholders' Equity section of the balance sheet of Sea Turtle Company reveals the following information: There have been two issues of stock since the corporation began business.The average issue price per share of stock was

Stock dividends affect the par value per share of the stock.

A drawing account is sometimes referred to as a ______________________.

All of the following statements are true about a 3-for-1 split, except:

When a company purchases treasury stock, which of the following statements is true?

Dividends in Arrears

Valor Company issued 5,000 shares of $1 par common stock for $30 per share, providing the company with $150,000 in cash.What effect, in addition to the increase in cash, does this transaction have on the accounting equation for Valor?

[APPENDIX] A partnership can be owned by one or more entities or individuals.

A liability for dividends is created

Authorized stock represents the

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 11: Stockholders Equity

If Llama Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

The Treasury Stock account should be considered an asset account.

When stock is issued for cash, only the par value of the stock should be reported in the stock account.

The Stockholders' Equity section of the balance sheet of Sea Turtle Company reveals the following information: There have been two issues of stock since the corporation began business.The average issue price per share of stock was

Stock dividends affect the par value per share of the stock.

A drawing account is sometimes referred to as a ______________________.

All of the following statements are true about a 3-for-1 split, except:

When a company purchases treasury stock, which of the following statements is true?

Dividends in Arrears

Valor Company issued 5,000 shares of $1 par common stock for $30 per share, providing the company with $150,000 in cash.What effect, in addition to the increase in cash, does this transaction have on the accounting equation for Valor?

[APPENDIX] A partnership can be owned by one or more entities or individuals.

A liability for dividends is created

Authorized stock represents the

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters