Question 1

A sole proprietorship is a separate entity for legal purposes.

Accepted Answer

A) True 
 B)False  False

Question 2

Stockholders prefer to invest in preferred stock because

Accepted Answer

A)  preferred stock confers preferred voting rights. 
B)  preferred stock can always be converted to common stock if they desire. 
C)  the dividends are generally increased each year. 
D)  the dividends are paid on preferred stock before they are paid on common stock. 
A)  preferred stock confers preferred voting rights. 
B)  preferred stock can always be converted to common stock if they desire. 
C)  the dividends are generally increased each year. 
D)  the dividends are paid on preferred stock before they are paid on common stock. D

Question 3

Basic Solutions Company reported net earnings of $60,000, declared and paid cash dividends on its common stock in the amount of $40,000 during the year, and sold 3,000 shares of $2 par value common stock for $15 per share during the year. What effects would these transactions have on the stockholders' equity accounts shown below?

Accepted Answer

A

Question 4

Park Avenue Toys reported the following information at December 31, 2015:
   Answer the following questions for Park Avenue Toys.
1. Would the book value per share increase, decrease, or remain the same, if the company declared a 3-for-1 stock split on December 31, 2015? Explain.
2. If cash dividends were declared on January 10, 2016, at $1 per share, by how much would retained earnings decrease as a result? Assume that the 3-for-1 stock split occurred.

Accepted Answer

1. The book value would be cut

Question 5

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once.
-Which item decreases Retained Earnings and also credits a payable liability?

Accepted Answer

A) Preferred stock issued by Carlton 
B) Amount received by Carlton in excess of par value when preferred stock was issued 
C) Dividends in arrears on Carlton preferred stock 
D) Cash dividend declared but unpaid on Carlton stock 
E) Stock dividend declared but unissued by Carlton
F)Treasury stock
G)Amount received in excess of cost when treasury stock is reissued by MJ
H)Retained earnings 
A) Preferred stock issued by Carlton 
B) Amount received by Carlton in excess of par value when preferred stock was issued 
C) Dividends in arrears on Carlton preferred stock 
D) Cash dividend declared but unpaid on Carlton stock 
E) Stock dividend declared but unissued by Carlton
F)Treasury stock
G)Amount received in excess of cost when treasury stock is reissued by MJ
H)Retained earnings

Question 6

Explain what amount is recorded in the Additional Paid-in Capital account when stock is issued.

Accepted Answer

The amount recorded in the Add

Question 7

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Accepted Answer

A)  treated as a gain on the sale. 
B)  treated as a loss on the sale. 
C)  an increase in stockholders' equity. 
D)  a decrease in stockholders' equity. 
A)  treated as a gain on the sale. 
B)  treated as a loss on the sale. 
C)  an increase in stockholders' equity. 
D)  a decrease in stockholders' equity.

Question 8

Which of the following is reported as a financing activity?

Accepted Answer

A)  Payment of cash dividends 
B)  Declaration of cash dividends 
C)  Stock dividend 
D)  Stock split 
A)  Payment of cash dividends 
B)  Declaration of cash dividends 
C)  Stock dividend 
D)  Stock split

Question 9

Refer to the information about Anole Company. The amount of Anole's total contributed capital 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

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 11

Abilene Western Shop began business on January 1, 2015. The corporate charter authorized issuance of 10,000 shares of $2 par value common stock and 4,000 shares of $8 par value, 6% cumulative preferred stock. Abilene issued 2,400 shares of common stock for cash at $20 per share on January 2, 2015. What effect does the entry to record the issuance of stock have on total stockholders' equity?

Accepted Answer

A)  Increase of $4,800 
B)  Decrease of $4,800 
C)  Increase of $48,000 
D)  Decrease of $48,000 
A)  Increase of $4,800 
B)  Decrease of $4,800 
C)  Increase of $48,000 
D)  Decrease of $48,000

Question 12

Use the comparative financial statements of Penny Company for the year ended December 31, 2015 to answer the following questions.
Penny Company
Statement of Stockholder's Equity
for the Year Ended December 31, 2015
   .
REQUIRED:
1 What is the primary cause of the change in Penny's stockholders' equity from January 1, 2015 to December 31,
2015?
2 Did Penny declare dividends during 2015? How do you know? Which items would be included as part of comprehensive income, if any?

Accepted Answer

1 Stockholders' equity increased from $1

Question 13

Debbie and Alex formed a new partnership. The partnership agreement specified that income should be allocated in a 2-to-1 ratio, with Debbie receiving the larger portion. If revenue for the first year was $90,000 and expenses were $60,000, how much would be allocated to each partner?

Accepted Answer

A)  Debbie - $45,000; Alex - $45,000 
B)  Debbie - $20,000; Alex - $10,000 
C)  Debbie - $60,000; Alex - $30,000 
D)  Debbie - $40,000; Alex - $20,000 
A)  Debbie - $45,000; Alex - $45,000 
B)  Debbie - $20,000; Alex - $10,000 
C)  Debbie - $60,000; Alex - $30,000 
D)  Debbie - $40,000; Alex - $20,000

Question 14

Which of the following combinations appropriately reflects the type of accounts represented by the Treasury Stock account and Additional Paid-in Capital --Treasury Stock account?

Accepted Answer

The answer of Which of the following combinations appropriately reflects...

Question 15

When a company declares a 3-for-1 stock split, the number of outstanding shares

Accepted Answer

A)  is tripled compared to the number of shares that were outstanding prior to the split. 
B)  stays the same, but, the number of issued shares triples. 
C)  is tripled, while the number of issued shares is reduced to one-third of the original issued shares. 
D)  is reduced, and the number of issued shares is tripled. 
A)  is tripled compared to the number of shares that were outstanding prior to the split. 
B)  stays the same, but, the number of issued shares triples. 
C)  is tripled, while the number of issued shares is reduced to one-third of the original issued shares. 
D)  is reduced, and the number of issued shares is tripled.

Question 16

Assume that Milo Company's Stockholders' Equity category of the balance sheet appears as follows as of January
1, 2015:
   Assume that Milo's common stock is selling at $35 per share on that date.
REQUIRED:
What is the effect on the Stockholders' Equity section of Milo's balance sheet if the company issues a 3­for­1
stock split on January 2, 2015?

Accepted Answer

Par value is reduced to $5 per

Question 17

What are the advantages of organizing a company as a corporation instead of a partnership or sole proprietorship?

Accepted Answer

Sole proprietorships and partnerships ar

Question 18

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

Question 19

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

Accepted Answer

A) True 
 B)False

Question 20

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000.

Accepted Answer

A) True 
 B)False

A sole proprietorship is a separate entity for legal purposes.

Stockholders prefer to invest in preferred stock because

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once. -Which item decreases Retained Earnings and also credits a payable liability?

Explain what amount is recorded in the Additional Paid-in Capital account when stock is issued.

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Which of the following is reported as a financing activity?

Refer to the information about Anole Company. The amount of Anole's total contributed capital at December 31, 2015, is

Authorized stock represents the

Debbie and Alex formed a new partnership. The partnership agreement specified that income should be allocated in a 2-to-1 ratio, with Debbie receiving the larger portion. If revenue for the first year was $90,000 and expenses were $60,000, how much would be allocated to each partner?

Which of the following combinations appropriately reflects the type of accounts represented by the Treasury Stock account and Additional Paid-in Capital --Treasury Stock account?

When a company declares a 3-for-1 stock split, the number of outstanding shares

What are the advantages of organizing a company as a corporation instead of a partnership or sole proprietorship?

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000.

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

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Exam 11: Stockholders Equity

A sole proprietorship is a separate entity for legal purposes.

Stockholders prefer to invest in preferred stock because

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once. -Which item decreases Retained Earnings and also credits a payable liability?

Explain what amount is recorded in the Additional Paid-in Capital account when stock is issued.

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Which of the following is reported as a financing activity?

Refer to the information about Anole Company. The amount of Anole's total contributed capital at December 31, 2015, is

Authorized stock represents the

Debbie and Alex formed a new partnership. The partnership agreement specified that income should be allocated in a 2-to-1 ratio, with Debbie receiving the larger portion. If revenue for the first year was $90,000 and expenses were $60,000, how much would be allocated to each partner?

Which of the following combinations appropriately reflects the type of accounts represented by the Treasury Stock account and Additional Paid-in Capital --Treasury Stock account?

When a company declares a 3-for-1 stock split, the number of outstanding shares

What are the advantages of organizing a company as a corporation instead of a partnership or sole proprietorship?

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000.

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