Question 1

Income statements for corporations are the same as the statements for proprietorships except for the reporting of

Accepted Answer

A)  gross profit. 
B)  income from operations. 
C)  income tax expense. 
D)  other revenues and gains. 
A)  gross profit. 
B)  income from operations. 
C)  income tax expense. 
D)  other revenues and gains.

Question 2

Derek Corporation was organized on January 1, 2009. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:   
Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2011 using the assumption of part (b).

Accepted Answer

The answer of Derek Corporation was organized on January 1,...

Question 3

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

Accepted Answer

A)  decrease current liabilities and stockholders' equity. 
B)  increase total assets and stockholders' equity. 
C)  increase current liabilities and stockholders' equity. 
D)  decrease stockholders' equity and total assets. 
A)  decrease current liabilities and stockholders' equity. 
B)  increase total assets and stockholders' equity. 
C)  increase current liabilities and stockholders' equity. 
D)  decrease stockholders' equity and total assets.

Question 4

Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders.

Accepted Answer

A) True 
 B)False

Question 5

The return on ________________ shows how many dollars of net income were earned for each dollar invested by owners.

Accepted Answer

common sto

Question 6

The following information is available for Vincent Corporation:   
Instructions
Compute the earnings per share of common stock.

Accepted Answer

Earnings per share =

Question 7

Earnings per share is calculated by dividing _______________ available for common stockholders by the ________________ number of common shares outstanding.

Accepted Answer

net income

Question 8

A major difference among corporations, proprietorships, and partnerships is that a corporation's income statement reports income tax expense.

Accepted Answer

A) True 
 B)False

Question 9

The return on common stockholders' equity is computed by dividing _____________ minus _______________ dividends by average common stockholders' equity.

Accepted Answer

net income

Question 10

A prior period adjustment for understatement of net income will

Accepted Answer

A)  be credited to the Retained Earnings account. 
B)  be debited to the Retained Earnings account. 
C)  show as a gain on the current year's Income Statement. 
D)  show as an asset on the current year's Balance Sheet. 
A)  be credited to the Retained Earnings account. 
B)  be debited to the Retained Earnings account. 
C)  show as a gain on the current year's Income Statement. 
D)  show as an asset on the current year's Balance Sheet.

Question 11

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 12

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 less preferred dividends by ending common stockholders' equity. 
D)  net income less 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 less preferred dividends by ending common stockholders' equity. 
D)  net income less preferred dividends by average common stockholders' equity.

Question 13

Outstanding stock of the Abel Corporation included 20,000 shares of $5 par common stock and 10,000 shares of 5%, $10 par noncumulative preferred stock. In 2009, Abel declared and paid dividends of $4,000. In 2010, Abel declared and paid dividends of $12,000. How much of the 2010 dividend was distributed to preferred shareholders?

Accepted Answer

A)  $7,000 
B)  $4,000 
C)  $5,000 
D)  None of the above 
A)  $7,000 
B)  $4,000 
C)  $5,000 
D)  None of the above

Question 14

ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2010. What is the annual dividend on the preferred stock?

Accepted Answer

A)  $50 per share 
B)  $5,000 in total 
C)  $500 in total 
D)  $.50 per share 
A)  $50 per share 
B)  $5,000 in total 
C)  $500 in total 
D)  $.50 per share

Question 15

A prior period adjustment that corrects income of a prior period requires that an entry be made to

Accepted Answer

A)  an income statement account. 
B)  a current year revenue or expense account. 
C)  the retained earnings account. 
D)  an asset account. 
A)  an income statement account. 
B)  a current year revenue or expense account. 
C)  the retained earnings account. 
D)  an asset account.

Question 16

On November 1, 2010, Neely Corporation's stockholders' equity section is as follows:   
On November 1, Neely declares and distributes a 15% stock dividend when the market value of the stock is $14 per share.
Instructions
Indicate the balances in the stockholders' equity accounts after the stock dividend has been distributed.

Accepted Answer

@#IMG-DLM& *$600,000 + (60,000 × .15 × $

Question 17

Dividends are predominantly paid in

Accepted Answer

A)  earnings. 
B)  property. 
C)  cash. 
D)  stock. 
A)  earnings. 
B)  property. 
C)  cash. 
D)  stock.

Question 18

Retained earnings are occasionally restricted

Accepted Answer

A)  to set aside cash for dividends. 
B)  to keep the legal capital associated with paid-in capital intact. 
C)  due to contractual loan restrictions. 
D)  if preferred dividends are in arrears. 
A)  to set aside cash for dividends. 
B)  to keep the legal capital associated with paid-in capital intact. 
C)  due to contractual loan restrictions. 
D)  if preferred dividends are in arrears.

Question 19

Which of the following show the proper effect of a stock split and a stock dividend?

Accepted Answer

The answer of Which of the following show the proper...

Question 20

The formula for computing earnings per share is net income

Accepted Answer

A)  divided by the ending common shares outstanding. 
B)  divided by the weighted-average number of common shares outstanding. 
C)  less preferred dividends divided by the ending common shares outstanding. 
D)  less preferred dividends divided by the weighted-average number of common shares outstanding. 
A)  divided by the ending common shares outstanding. 
B)  divided by the weighted-average number of common shares outstanding. 
C)  less preferred dividends divided by the ending common shares outstanding. 
D)  less preferred dividends divided by the weighted-average number of common shares outstanding.

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

Income statements for corporations are the same as the statements for proprietorships except for the reporting of

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders.

The return on ________________ shows how many dollars of net income were earned for each dollar invested by owners.

The following information is available for Vincent Corporation: Instructions Compute the earnings per share of common stock.

Earnings per share is calculated by dividing _______________ available for common stockholders by the ________________ number of common shares outstanding.

A major difference among corporations, proprietorships, and partnerships is that a corporation's income statement reports income tax expense.

The return on common stockholders' equity is computed by dividing _____________ minus _______________ dividends by average common stockholders' equity.

A prior period adjustment for understatement of net income will

On the dividend record date,

The return on common stockholders' equity is computed by dividing

ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2010. What is the annual dividend on the preferred stock?

A prior period adjustment that corrects income of a prior period requires that an entry be made to

Dividends are predominantly paid in

Retained earnings are occasionally restricted

Which of the following show the proper effect of a stock split and a stock dividend?

The formula for computing earnings per share is 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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Earnings per share is calculated by dividing _ available for common stockholders by the __ number of common shares outstanding.

The return on common stockholders' equity is computed by dividing _ minus ___ dividends by average common stockholders' equity.