Question 1

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 2

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity.
-Which item is recorded as Additional Paid-In Capital - Preferred Stock?

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 3

Venture Enterprises' accountant determined the following: $\text { Common stock, } \$ 0.01 \text { par value } \quad \$ 50,000$ Where would this item be reported on Venture's financial statements?

Accepted Answer

A)  In the Stockholders' Equity section of the balance sheet 
B)  In the Treasury Stock section of the balance sheet 
C)  On the statement of retained earnings 
D)  On both the balance sheet and statement of retained earnings 
A)  In the Stockholders' Equity section of the balance sheet 
B)  In the Treasury Stock section of the balance sheet 
C)  On the statement of retained earnings 
D)  On both the balance sheet and statement of retained earnings

Question 4

If a company has both common and preferred shares outstanding and wishes to calculate book value per share,

Accepted Answer

A)  net assets must be divided by the total number of both classes of stock. 
B)  net assets, less the redemption value of the preferred stock, must be divided by the number of shares of common stock outstanding. 
C)  stockholders' equity must be divided by the total number of both classes of stock. 
D)  stockholders' equity, less the cost of treasury shares held, must be divided by the number of common shares outstanding. 
A)  net assets must be divided by the total number of both classes of stock. 
B)  net assets, less the redemption value of the preferred stock, must be divided by the number of shares of common stock outstanding. 
C)  stockholders' equity must be divided by the total number of both classes of stock. 
D)  stockholders' equity, less the cost of treasury shares held, must be divided by the number of common shares outstanding.

Question 5

From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N).
-Distribution of stock dividend

Accepted Answer

A) Operating-O 
B) Investing-I 
C) Financing-F 
D) Not separately reported- $ \mathrm{N} $ 
A) Operating-O 
B) Investing-I 
C) Financing-F 
D) Not separately reported- $ \mathrm{N} $

Question 6

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 7

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 Paid-in 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 Paid-in 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 8

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

Accepted Answer

A)  Building and Preferred Stock increase $780,000. 
B)  Building and Preferred Stock increase $500,000. 
C)  Building increases $780,000; Preferred Stock increases $500,000; Additional Paid-in Capital-Preferred increases $280,000. 
D)  Building increases $750,000; Preferred Stock increases $500,000; Additional Paid-in Capital-Preferred increases $250,000. 
A)  Building and Preferred Stock increase $780,000. 
B)  Building and Preferred Stock increase $500,000. 
C)  Building increases $780,000; Preferred Stock increases $500,000; Additional Paid-in Capital-Preferred increases $280,000. 
D)  Building increases $750,000; Preferred Stock increases $500,000; Additional Paid-in Capital-Preferred increases $250,000.

Question 9

When a company declares a cash dividend, which of the following is true?

Accepted Answer

A)  Stockholders' equity is increased. 
B)  Liabilities are increased. 
C)  Assets are increased. 
D)  Assets are decreased. 
A)  Stockholders' equity is increased. 
B)  Liabilities are increased. 
C)  Assets are increased. 
D)  Assets are decreased.

Question 10

Anole Company was incorporated as a new business on January 1, 2016.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, 2016, 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, 2016, was $375,000.
​
-Refer to the information about Anole Company. ​
The number of Anole's unissued shares of common stock at December 31, 2016, is

Accepted Answer

A)  6,000. 
B)  8,000. 
C)  10,000. 
D)  12,000. 
A)  6,000. 
B)  8,000. 
C)  10,000. 
D)  12,000.

Question 11

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.

Question 12

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 13

The stockholders' equity section of the balance sheet for Scuba Gear Corporation appeared as follows before its recent stock dividend: $\begin{array}{lr}
\text { Common stock, } \$ 5 \text { par, } 100,000 \text { shares issued and outstanding } & \$ 500,000 \
\text { Additional paid-in capital } & 100,000 \
\text { Retained earnings } & 725,000 \
\quad \text { Total stockholders' equity } & \$ 1,325,000 \
\hline
\end{array}$

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:
$\begin{array}{ccc}
\text { Common Stock } & \text { Add'l. Paid-in Capital } & \text { Retained Earnings } \
\text { a. } \$ 580,000 & \$ 100,000 & \$ 645,000 \
\text { b. } \$ 550,000 & \$ 100,000 & \$ 675,000 \
\text { c. } \$ 550,000 & \$ 130,000 & \$ 645,000\
\text {d. There would be no change in the components of stockholders' equity.}\
\end{array}$

Accepted Answer

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

Question 14

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 15

How is treasury stock shown on the balance sheet?

Accepted Answer

A)  treasury stock is not shown on the balance sheet 
B)  an increase in stockholders' equity 
C)  a decrease in stockholders' equity 
D)  an asset 
A)  treasury stock is not shown on the balance sheet 
B)  an increase in stockholders' equity 
C)  a decrease in stockholders' equity 
D)  an asset

Question 16

The statement of stockholders' equity for Jutras Corporation shows an increase in the Common Stock account of $8,000, an increase in Additional Paid-in Capital--Common in the amount of $22,000, and an increase in Retained Earnings of $50,000.If the stock has a par value of $3 and dividends of $10,000 were declared and paid during the year, what is the amount of net income for the year?

Accepted Answer

A)  $40,000 
B)  $50,000 
C)  $60,000 
D)  $90,000 
A)  $40,000 
B)  $50,000 
C)  $60,000 
D)  $90,000

Question 17

As a result of a stock split,

Accepted Answer

A)  an entry must be made showing the effect on stockholders' equity. 
B)  the market price of the outstanding stock will increase because a split is evidence of a profitable company. 
C)  the par value of the stock is changed in the reverse proportion as the stock split. 
D)  the stockholders have a higher proportionate ownership of the company. 
A)  an entry must be made showing the effect on stockholders' equity. 
B)  the market price of the outstanding stock will increase because a split is evidence of a profitable company. 
C)  the par value of the stock is changed in the reverse proportion as the stock split. 
D)  the stockholders have a higher proportionate ownership of the company.

Question 18

Walton Corporation shows the following in the stockholders' equity section of its balance sheet: The stated value of its common stock is $0.50 and the total balance in the common stock account is $37,500.Also noted is that 5,000 shares are currently designated as treasury stock.The number of shares outstanding is

Accepted Answer

A)  80,000. 
B)  75,000. 
C)  72,500. 
D)  70,000. 
A)  80,000. 
B)  75,000. 
C)  72,500. 
D)  70,000.

Question 19

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? ​ $\begin{array}{ll}
&\text { Retained Earnings}&\text {Common Stock }\
a.&\text { increase } & \text { increase } \
b.&\text { increase } & \text { decrease } \
c.&\text { decrease } & \text { increase } \
d.&\text { decrease } & \text { decrease }
\end{array}$

Accepted Answer

The answer of Basic Solutions Company reported net earnings of...

Question 20

Which of the following statements with regard to large stock dividends is true?

Accepted Answer

A)  As a result of the stock dividend, retained earnings is reduced by the par value of the stock issued. 
B)  Retained earnings is reduced by the market value of the stock issued in the stock dividend. 
C)  If the market price of the stock before a 50% stock dividend is $30, after the stock dividend it will be $45. 
D)  As the result of a 50% stock dividend, a stockholder who had previously held 20 shares will then hold 40 shares. 
A)  As a result of the stock dividend, retained earnings is reduced by the par value of the stock issued. 
B)  Retained earnings is reduced by the market value of the stock issued in the stock dividend. 
C)  If the market price of the stock before a 50% stock dividend is $30, after the stock dividend it will be $45. 
D)  As the result of a 50% stock dividend, a stockholder who had previously held 20 shares will then hold 40 shares.

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

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. -Which item is recorded as Additional Paid-In Capital - Preferred Stock?

Venture Enterprises' accountant determined the following: $\text { Common stock, } \$ 0.01 \text { par value } \quad \$ 50,000$ Where would this item be reported on Venture's financial statements?

If a company has both common and preferred shares outstanding and wishes to calculate book value per share,

From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N). -Distribution of stock dividend

Cash dividends become a liability to a corporation on the date of record.

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?

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

When a company declares a cash dividend, which of the following is true?

Stockholders prefer to invest in preferred stock because

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

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.

How is treasury stock shown on the balance sheet?

As a result of a stock split,

Which of the following statements with regard to large stock dividends is true?

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 True Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Exam 11: Stockholders Equity

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

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. -Which item is recorded as Additional Paid-In Capital - Preferred Stock?

Venture Enterprises' accountant determined the following: Common stock, $0.01 par value $50,000\text { Common stock, } \$ 0.01 \text { par value } \quad \$ 50,000 Common stock, $0.01 par value $50,000 Where would this item be reported on Venture's financial statements?

If a company has both common and preferred shares outstanding and wishes to calculate book value per share,

From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N). -Distribution of stock dividend

Cash dividends become a liability to a corporation on the date of record.

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?

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

When a company declares a cash dividend, which of the following is true?

Stockholders prefer to invest in preferred stock because

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

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.

How is treasury stock shown on the balance sheet?

As a result of a stock split,

Which of the following statements with regard to large stock dividends is true?

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 True Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Venture Enterprises' accountant determined the following: $\text { Common stock, } \$ 0.01 \text { par value } \quad \$ 50,000$ Where would this item be reported on Venture's financial statements?