Question 1

Select the best answer from the list below to complete statements 1-11 that follow.
  
-A drawing account is sometimes referred to as a ______________________.

Accepted Answer

withdrawal

Question 2

Below are two transactions for Navaho Co.
1. On June 1, Navaho Co. issued 2,000 shares of $5 par common stock for $16 per share.
2. On June 15, Navaho Co. issued 1,200 shares of $5 par preferred stock to acquire a building. The stock is not widely traded, and the current market value of the stock is not evident. The building has recently been appraised by an independent firm as having a market value of $15,000.
REQUIRED: For each of these transactions, identify the accounting equation effects on Navaho Company's books.

Accepted Answer

@#IMG-DLM& June 1 To record the issuance

Question 3

FASB's concept of comprehensive income

Accepted Answer

A)  excludes transactions that involve the payment of dividends. 
B)  requires that all transactions must be shown on the income statement. 
C)  has a primary drawback because it allows management to manipulate the income figure to a certain extent. 
D)  allows items that are not necessarily under management's control, such as natural disasters, to be shown as an adjustment of retained earnings. 
A)  excludes transactions that involve the payment of dividends. 
B)  requires that all transactions must be shown on the income statement. 
C)  has a primary drawback because it allows management to manipulate the income figure to a certain extent. 
D)  allows items that are not necessarily under management's control, such as natural disasters, to be shown as an adjustment of retained earnings.

Question 4

Information taken from the accounting records of Airways, Inc., for the year ended December 31, 2015, appears in the table below. In the space provided, indicate in which section of the statement of cash flows investing or financing each item would be reported, and whether the item is a cash inflow or outflow. If an item is neither an investing activity or financing activity, place an X in the box.

Accepted Answer

The answer of Information taken from the accounting records of...

Question 5

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Accepted Answer

A) True 
 B)False

Question 6

Match the terms to the definitions by selecting the letter of the term. Each term may be used more than once or not at all.
-Shares of stock that are repurchased and then discontinued by removing them from the accounting records.

Accepted Answer

A) cumulative feature 
B) stock dividend 
C) retired stock 
D) retained earnings 
E) callable feature
F)convertible feature
G)outstanding shares
H)treasury stock
I)participating feature
J)additional paid-in capital 
A) cumulative feature 
B) stock dividend 
C) retired stock 
D) retained earnings 
E) callable feature
F)convertible feature
G)outstanding shares
H)treasury stock
I)participating feature
J)additional paid-in capital

Question 7

Manson World reported the following: Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding
What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

Accepted Answer

A)  Retained earnings in the amount of $400,000 is transferred to the contributed capital accounts. 
B)  Cash decreases $400,000. 
C)  Additional Paid-in Capital increases $400,000. 
D)  A stock split has no effect on total stockholders' equity. 
A)  Retained earnings in the amount of $400,000 is transferred to the contributed capital accounts. 
B)  Cash decreases $400,000. 
C)  Additional Paid-in Capital increases $400,000. 
D)  A stock split has no effect on total stockholders' equity.

Question 8

The statement of stockholders' equity is useful in evaluating a company's liquidity.

Accepted Answer

A) True 
 B)False

Question 9

Select the letter of the term each statement best describes.
-Allows preferred stock to be returned to the corporation in exchange for common stock.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share 
A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 10

In 2015, Dickens Company had a beginning balance in its Cash Dividend Payable account of $5,000 and an ending balance of $4,000. During 2015, the only dividends Dickens declared were $46,000 in cash to the common stockholders. How much cash was paid to the common stockholders?

Accepted Answer

A)  $45,000 
B)  $47,000 
C)  $46,000 
D)  $ 1,000 
A)  $45,000 
B)  $47,000 
C)  $46,000 
D)  $ 1,000

Question 11

When an individual wishes to form a sole proprietorship, he or she does so by

Accepted Answer

A)  filing a petition with the IRS. 
B)  purchasing stock in the proprietorship. 
C)  filing corporate paperwork with the state. 
D)  contributing cash or other assets. 
A)  filing a petition with the IRS. 
B)  purchasing stock in the proprietorship. 
C)  filing corporate paperwork with the state. 
D)  contributing cash or other assets.

Question 12

When a company declares a 2-for-1 stock split,

Accepted Answer

A)  stockholders' equity is doubled. 
B)  there is no effect on total stockholders' equity. 
C)  a shareholder who previously held 100 shares will have 300 shares after the split. 
D)  the price of each share will be one third of what it was before the stock split. 
A)  stockholders' equity is doubled. 
B)  there is no effect on total stockholders' equity. 
C)  a shareholder who previously held 100 shares will have 300 shares after the split. 
D)  the price of each share will be one third of what it was before the stock split.

Question 13

The balance of the $0.50 par value Common Stock account for Murdock Company was $60,000 before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the stock split. What occurred as a result of the stock split?

Accepted Answer

A)  The balance in the Retained Earnings account decreased. 
B)  The balance in the Common Stock account declined to $20,000. 
C)  The market price of the stock was not affected. 
D)  The market price of the stock dropped to approximately $10 per share. 
A)  The balance in the Retained Earnings account decreased. 
B)  The balance in the Common Stock account declined to $20,000. 
C)  The market price of the stock was not affected. 
D)  The market price of the stock dropped to approximately $10 per share.

Question 14

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 15

Select the letter of the term each statement best describes.
-The maximum number of shares a corporation may issue as indicated in the corporate charter.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share 
A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 16

With regard to preferred stock,

Accepted Answer

A)  its issuance provides no flexibility to the issuing company because its terms always require mandatory dividend payments. 
B)  no dividends are expected by the stockholders. 
C)  its stockholders may have the right to participate, along with common stockholders, if an extra dividend is declared. 
D)  there is a legal requirement for a corporation to declare a dividend on preferred stock. 
A)  its issuance provides no flexibility to the issuing company because its terms always require mandatory dividend payments. 
B)  no dividends are expected by the stockholders. 
C)  its stockholders may have the right to participate, along with common stockholders, if an extra dividend is declared. 
D)  there is a legal requirement for a corporation to declare a dividend on preferred stock.

Question 17

Vegan Company reported the following: Common stock, $5 par, 200,000 shares authorized, 50,000 shares issued and outstanding
What is the effect of issuing 2,000 shares of common stock in exchange for land with valued by a realtor at $36,000 if the common stock sells for $12 per share and is regularly traded?

Accepted Answer

A)  The Land account increases by $24,000. 
B)  Retained Earnings decreases by $10,000. 
C)  Common Stock increases by $36,000. 
D)  Additional Paid-in Capital - Common increases by $24,000. 
A)  The Land account increases by $24,000. 
B)  Retained Earnings decreases by $10,000. 
C)  Common Stock increases by $36,000. 
D)  Additional Paid-in Capital - Common increases by $24,000.

Question 18

The Stockholders' Equity section of Taco Reef, Inc.'s balance sheet on January 1, 2015, appeared as follows:   On March 1, 2015, Taco Reef reacquired 4,000 shares of common stock at $50 per share. All common shares were originally sold for $42 each. How much should be reported in the treasury stock account on the March 31, 2015 balance sheet?

Accepted Answer

A)  $128,000 
B)  $168,000 
C)  $200,000 
D)  $32,000 
A)  $128,000 
B)  $168,000 
C)  $200,000 
D)  $32,000

Question 19

Use the comparative financial statements of Penny Company for the year ended December 31, 2015 to answer the following question.
Penny Company
Statement of Stockholder's Equity
for the Year Ended December 31, 2015
   REQUIRED:
Prepare a statement of retained earnings for the year ended December 31, 2015.

Accepted Answer

Penny Company
Statem

Question 20

Preferred stock receives first preference on voting rights.

Accepted Answer

A) True 
 B)False

Select the best answer from the list below to complete statements 1-11 that follow. -A drawing account is sometimes referred to as a ______________________.

FASB's concept of comprehensive income

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Match the terms to the definitions by selecting the letter of the term. Each term may be used more than once or not at all. -Shares of stock that are repurchased and then discontinued by removing them from the accounting records.

Manson World reported the following: Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

The statement of stockholders' equity is useful in evaluating a company's liquidity.

Select the letter of the term each statement best describes. -Allows preferred stock to be returned to the corporation in exchange for common stock.

In 2015, Dickens Company had a beginning balance in its Cash Dividend Payable account of $5,000 and an ending balance of $4,000. During 2015, the only dividends Dickens declared were $46,000 in cash to the common stockholders. How much cash was paid to the common stockholders?

When an individual wishes to form a sole proprietorship, he or she does so by

When a company declares a 2-for-1 stock split,

The balance of the $0.50 par value Common Stock account for Murdock Company was $60,000 before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the stock split. What occurred as a result of the stock split?

Dividends in Arrears

Select the letter of the term each statement best describes. -The maximum number of shares a corporation may issue as indicated in the corporate charter.

With regard to preferred stock,

Preferred stock receives first preference on voting rights.

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

Select the best answer from the list below to complete statements 1-11 that follow. -A drawing account is sometimes referred to as a ______________________.

FASB's concept of comprehensive income

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Match the terms to the definitions by selecting the letter of the term. Each term may be used more than once or not at all. -Shares of stock that are repurchased and then discontinued by removing them from the accounting records.

Manson World reported the following: Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

The statement of stockholders' equity is useful in evaluating a company's liquidity.

Select the letter of the term each statement best describes. -Allows preferred stock to be returned to the corporation in exchange for common stock.

In 2015, Dickens Company had a beginning balance in its Cash Dividend Payable account of $5,000 and an ending balance of $4,000. During 2015, the only dividends Dickens declared were $46,000 in cash to the common stockholders. How much cash was paid to the common stockholders?

When an individual wishes to form a sole proprietorship, he or she does so by

When a company declares a 2-for-1 stock split,

The balance of the $0.50 par value Common Stock account for Murdock Company was $60,000 before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the stock split. What occurred as a result of the stock split?

Dividends in Arrears

Select the letter of the term each statement best describes. -The maximum number of shares a corporation may issue as indicated in the corporate charter.

With regard to preferred stock,

Preferred stock receives first preference on voting rights.

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