Question 1

When a property dividend is declared, the reduction in retained earnings is for:

Accepted Answer

A)  The book value of the property on the date of declaration. 
B)  The book value of the property on the date of distribution. 
C)  The fair value of the property on the date of distribution. 
D)  The fair value of the property on the date of declaration. 
A)  The book value of the property on the date of declaration. 
B)  The book value of the property on the date of distribution. 
C)  The fair value of the property on the date of distribution. 
D)  The fair value of the property on the date of declaration. D

Question 2

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Reverse stock split

Accepted Answer

A) May be increased when net income increases. 
B) A feature of preferred stock. 
C) May be reduced when shares are retired. 
D) Designed to increase the market value of stock. 
E) Reduces the net proceeds from selling shares. 
A) May be increased when net income increases. 
B) A feature of preferred stock. 
C) May be reduced when shares are retired. 
D) Designed to increase the market value of stock. 
E) Reduces the net proceeds from selling shares. D

Question 3

Details of each class of stock must be reported:

Accepted Answer

A)  On the face of the balance sheet only. 
B)  In disclosure notes only. 
C)  On the face of the balance sheet or in disclosure notes. 
D)  On the face of the balance sheet and in disclosure notes. 
A)  On the face of the balance sheet only. 
B)  In disclosure notes only. 
C)  On the face of the balance sheet or in disclosure notes. 
D)  On the face of the balance sheet and in disclosure notes. C

Question 4

On January 1, 2018, Fascom had the following account balances in its shareholders' equity accounts.   During 2018, Fascom Inc. had several transactions relating to common stock.   Required:
Without preparing journal entries, prepare the shareholders' equity section of Fascom's balance sheet as of December 31, 2018. Assume net income is $500,000 for 2018.

Accepted Answer

Fascom Shareholders' Equity @#IMG-DLM& 1 (250,000

Question 5

Treasury stock transactions might cause:

Accepted Answer

A)  A decrease in the balance of retained earnings. 
B)  An increase in the balance of retained earnings. 
C)  An increase or a decrease in the par amount per share. 
D)  An increase or a decrease in the amount of net income. 
A)  A decrease in the balance of retained earnings. 
B)  An increase in the balance of retained earnings. 
C)  An increase or a decrease in the par amount per share. 
D)  An increase or a decrease in the amount of net income.

Question 6

The balance sheet of FIFA Cup Company included the following shareholders' equity section at December 31, 2018:   On January 5, 2019, FIFA purchased and retired 2 million shares for $9 million. Immediately after retirement of the shares, the balances in the paid-in capital-excess of par and retained earnings accounts are:

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 7

Treasury stock transactions never increase retained earnings or net income.

Accepted Answer

A) True 
 B)False

Question 8

Treasury shares are most often reported as:

Accepted Answer

A)  A reduction of total shareholders' equity. 
B)  A reduction of total paid-in capital. 
C)  A reduction of retained earnings. 
D)  An expense in the income statement. 
A)  A reduction of total shareholders' equity. 
B)  A reduction of total paid-in capital. 
C)  A reduction of retained earnings. 
D)  An expense in the income statement.

Question 9

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

Accepted Answer

The answer of Use I = Increase, D = Decrease,...

Question 10

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

Accepted Answer

A)  The right to vote on policy issues. 
B)  The right to share in profits when dividends are declared (in proportion to the percentage of shares owned by the shareholder). 
C)  The right to dividends equal to a stated rate time par (if dividends are paid). 
D)  The right to share in the distribution of any assets remaining at liquidation after other claims are satisfied. 
A)  The right to vote on policy issues. 
B)  The right to share in profits when dividends are declared (in proportion to the percentage of shares owned by the shareholder). 
C)  The right to dividends equal to a stated rate time par (if dividends are paid). 
D)  The right to share in the distribution of any assets remaining at liquidation after other claims are satisfied.

Question 11

The following information comes from the 2018 Annual Report to stockholders of Composition Inc. (in thousands):
From the Statement of Changes in Shareholders' Equity:   From the Statement of Cash Flows:
Cash flows from financing activities:   Assuming that Composition had Dividends Payable of $17,450 thousand at December 31, 2016, compute the balance in that account at December 31, 2018.

Accepted Answer

The balance would be

Question 12

The corporate charter sometimes is known as (a):

Accepted Answer

A)  Articles of incorporation. 
B)  Statement of organization. 
C)  By-laws. 
D)  Registration statement. 
A)  Articles of incorporation. 
B)  Statement of organization. 
C)  By-laws. 
D)  Registration statement.

Question 13

When stock traded on an active exchange is issued for a machine:

Accepted Answer

A)  No entry is recorded until restrictions are lifted. 
B)  An asset is recorded for the fair value of the stock. 
C)  An asset is recorded for the appraised value of the machine. 
D)  Paid-in capital is increased by the appraised value of the machine. 
A)  No entry is recorded until restrictions are lifted. 
B)  An asset is recorded for the fair value of the stock. 
C)  An asset is recorded for the appraised value of the machine. 
D)  Paid-in capital is increased by the appraised value of the machine.

Question 14

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Return on shareholders' equity

Accepted Answer

A) Similar to an S corporation, but no limit on number of owners. 
B) Net income as a percentage of average book value. 
C) Paid-in capital and/or retained earnings affected when sold. 
D) Preferred practice is to disclose in the notes to the financial statements. 
E) Used in evaluating stock performance. 
A) Similar to an S corporation, but no limit on number of owners. 
B) Net income as a percentage of average book value. 
C) Paid-in capital and/or retained earnings affected when sold. 
D) Preferred practice is to disclose in the notes to the financial statements. 
E) Used in evaluating stock performance.

Question 15

Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards (IFRS)?

Accepted Answer

A)  Accumulated other comprehensive income. 
B)  Investment revaluation reserve. 
C)  Share premium. 
D)  Preference shares. 
A)  Accumulated other comprehensive income. 
B)  Investment revaluation reserve. 
C)  Share premium. 
D)  Preference shares.

Question 16

Roberto Corporation was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2018, Roberto had the following transactions relating to shareholders' equity: Issued 10,000 shares of common stock at $7 per share.
Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).
What is total shareholders' equity at the end of 2018?

Accepted Answer

A)  $270,000. 
B)  $300,000. 
C)  $250,000. 
D)  $200,000. 
A)  $270,000. 
B)  $300,000. 
C)  $250,000. 
D)  $200,000.

Question 17

The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2018 after paying $20,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?

Accepted Answer

A)  $18,000. 
B)  $26,000. 
C)  $28,000. 
D)  $32,000. 
A)  $18,000. 
B)  $26,000. 
C)  $28,000. 
D)  $32,000.

Question 18

Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share. In recording this transaction, Rick would:

Accepted Answer

A)  Debit retained earnings for $18 million. 
B)  Credit paid-in capital-excess of par for $18 million. 
C)  Credit common stock for $18 million. 
D)  None of these answer choices are correct 
A)  Debit retained earnings for $18 million. 
B)  Credit paid-in capital-excess of par for $18 million. 
C)  Credit common stock for $18 million. 
D)  None of these answer choices are correct

Question 19

Preferred shares that are participating may:

Accepted Answer

A)  Vote for the board of directors. 
B)  Be exchanged for common stock. 
C)  Receive extra cash during corporate liquidation. 
D)  Receive additional dividends beyond the stated amount. 
A)  Vote for the board of directors. 
B)  Be exchanged for common stock. 
C)  Receive extra cash during corporate liquidation. 
D)  Receive additional dividends beyond the stated amount.

Question 20

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

Accepted Answer

The answer of Use I = Increase, D = Decrease,...

When a property dividend is declared, the reduction in retained earnings is for:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Reverse stock split

Details of each class of stock must be reported:

Treasury stock transactions might cause:

Treasury stock transactions never increase retained earnings or net income.

Treasury shares are most often reported as:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

The corporate charter sometimes is known as (a):

When stock traded on an active exchange is issued for a machine:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Return on shareholders' equity

Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards (IFRS)?

Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share. In recording this transaction, Rick would:

Preferred shares that are participating may:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 18: Shareholders Equity

When a property dividend is declared, the reduction in retained earnings is for:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Reverse stock split

Details of each class of stock must be reported:

Treasury stock transactions might cause:

Treasury stock transactions never increase retained earnings or net income.

Treasury shares are most often reported as:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

The corporate charter sometimes is known as (a):

When stock traded on an active exchange is issued for a machine:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Return on shareholders' equity

Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards (IFRS)?

Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share. In recording this transaction, Rick would:

Preferred shares that are participating may:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters