Question 1

Changes in ownership through transfer of shares of stock have no effect on the life of a corporation.

Accepted Answer

A) True 
 B)False

Question 2

The return on equity for a company that has sales of $43,000, net income of $13,000, and average Stockholders' Equity of $88,000 would be 48.86%.

Accepted Answer

A) True 
 B)False

Question 3

Treasury stock is a contra-equity account and carries a debit balance.

Accepted Answer

A) True 
 B)False

Question 4

Retained Earnings represent internally generated capital.

Accepted Answer

A) True 
 B)False

Question 5

Caesar's Coffee Co. declared its annual cash dividend on its 3% preferred stock (total par value $90,000)and a $0.25 per share cash dividend on its common stock (50,000 shares outstanding). The journal entry for the declaration date is:

Accepted Answer

A) no entry required on the declaration date. 
B) debit Retained Earnings $12,500, credit Dividends Payable $12,500 
C) debit Retained Earnings $6,450, credit Dividends Payable - Preferred $2,700, credit Dividends Payable - Common $3,750 
D) debit Retained Earnings $15,200, credit Dividends Payable - Preferred $2,700, credit Dividends Payable - Common $12,500 
A) no entry required on the declaration date. 
B) debit Retained Earnings $12,500, credit Dividends Payable $12,500 
C) debit Retained Earnings $6,450, credit Dividends Payable - Preferred $2,700, credit Dividends Payable - Common $3,750 
D) debit Retained Earnings $15,200, credit Dividends Payable - Preferred $2,700, credit Dividends Payable - Common $12,500

Question 6

Limited liability means that the stockholders of a corporation share a personal liability for all debts of the corporation.

Accepted Answer

A) True 
 B)False

Question 7

If a corporation has both common and preferred stock, the preferred stockholders will receive their dividends first, if the money is available.

Accepted Answer

A) True 
 B)False

Question 8

Stated value is assigned:

Accepted Answer

A) when the corporate charter is filed. 
B) when the company decides to issue the stock. 
C) after the stock has been issued. 
D) at the first meeting of the organizers of the corporation. 
A) when the corporate charter is filed. 
B) when the company decides to issue the stock. 
C) after the stock has been issued. 
D) at the first meeting of the organizers of the corporation.

Question 9

For the current year, Company A had sales of $450,000, net income of $290,000 and average common Stockholders' Equity of $940,000. During the same year, Company B had sales of $200,000, net income of $160,000 and average common Stockholders' Equity of $410,000. Which of the following statements is TRUE regarding this situation?

Accepted Answer

A) Company A has a better return on equity, $290,000 compared to Company B's $160,000. 
B) Company B has a better return on equity, 39.02% compared to Company A's 30.85%. 
C) Company A has a better return on equity, $450,000 compared to Company B's $200,000 
D) Company B has a better return on equity, 80.00% compared to Company A's 64.44%. 
A) Company A has a better return on equity, $290,000 compared to Company B's $160,000. 
B) Company B has a better return on equity, 39.02% compared to Company A's 30.85%. 
C) Company A has a better return on equity, $450,000 compared to Company B's $200,000 
D) Company B has a better return on equity, 80.00% compared to Company A's 64.44%.

Question 10

Stockholders' Equity consists of contributed capital and paid-in capital.

Accepted Answer

A) True 
 B)False

Question 11

Preferred stock is considered a voting "class" of stock.

Accepted Answer

A) True 
 B)False

Question 12

The return on equity for a company that has sales of $50,000, net income of $25,000 and average Stockholders' Equity of $125,000 is 20%.

Accepted Answer

A) True 
 B)False

Question 13

The Wellington Winery's Stockholders' Equity section includes the following information:  
What was the total selling price of the preferred stock?

Accepted Answer

A) $15,000 
B) $20,000 
C) $22,000 
D) $24,000 
A) $15,000 
B) $20,000 
C) $22,000 
D) $24,000

Question 14

When stock is sold, the total paid-in capital should equal the amount of cash received.

Accepted Answer

A) True 
 B)False

Question 15

Ironworks, Inc. has declared a $21,000 cash dividend to shareholders. The company has 5,000 shares of $15-par, 7% preferred stock and 11,000 shares of $20-par common stock. The preferred stock is non-cumulative. How much will be distributed to the preferred and common stockholders on the date of payment?

Accepted Answer

A) $0 preferred, $21,000 common 
B) $5,250 preferred, $15,750 common 
C) $21,000 preferred, $0 common 
D) $15,750 preferred, $5,250 common 
A) $0 preferred, $21,000 common 
B) $5,250 preferred, $15,750 common 
C) $21,000 preferred, $0 common 
D) $15,750 preferred, $5,250 common

Question 16

A corporation may issue stock for assets other than cash, requiring the recording of the assets at fair market value.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following business types dominates by the amount of business transacted?

Accepted Answer

A) Partnerships 
B) Proprietorships 
C) Corporations 
D) Government entities 
A) Partnerships 
B) Proprietorships 
C) Corporations 
D) Government entities

Question 18

What is the return on equity if sales are $290,000, net income is $49,000 and average common Stockholders' Equity is $188,000? (Round your final answer to one decimal place, X.X%.)

Accepted Answer

A) 16.9% 
B) 64.8% 
C) 26.1% 
D) 47.9% 
A) 16.9% 
B) 64.8% 
C) 26.1% 
D) 47.9%

Question 19

HiTech Industries has a $13,000 credit balance in Paid-In Capital-Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $59/share, for $56/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par-Treasury account?

Accepted Answer

A) $10,000 credit 
B) $3,000 debit 
C) $16,000 credit 
D) $13,000 credit 
A) $10,000 credit 
B) $3,000 debit 
C) $16,000 credit 
D) $13,000 credit

Question 20

A 2-for-1 stock split will:

Accepted Answer

A) double the number of shares of stock and double the par value per share. 
B) double the number of shares of stock and halve the par value per share. 
C) halve the number of shares of stock and halve the par value per share. 
D) halve the number of shares of stock and double the par value per share. 
A) double the number of shares of stock and double the par value per share. 
B) double the number of shares of stock and halve the par value per share. 
C) halve the number of shares of stock and halve the par value per share. 
D) halve the number of shares of stock and double the par value per share.

Changes in ownership through transfer of shares of stock have no effect on the life of a corporation.

The return on equity for a company that has sales of $43,000, net income of $13,000, and average Stockholders' Equity of $88,000 would be 48.86%.

Treasury stock is a contra-equity account and carries a debit balance.

Retained Earnings represent internally generated capital.

Caesar's Coffee Co. declared its annual cash dividend on its 3% preferred stock (total par value $90,000)and a $0.25 per share cash dividend on its common stock (50,000 shares outstanding). The journal entry for the declaration date is:

Limited liability means that the stockholders of a corporation share a personal liability for all debts of the corporation.

If a corporation has both common and preferred stock, the preferred stockholders will receive their dividends first, if the money is available.

Stated value is assigned:

Stockholders' Equity consists of contributed capital and paid-in capital.

Preferred stock is considered a voting "class" of stock.

The return on equity for a company that has sales of $50,000, net income of $25,000 and average Stockholders' Equity of $125,000 is 20%.

The Wellington Winery's Stockholders' Equity section includes the following information: What was the total selling price of the preferred stock?

When stock is sold, the total paid-in capital should equal the amount of cash received.

A corporation may issue stock for assets other than cash, requiring the recording of the assets at fair market value.

Which of the following business types dominates by the amount of business transacted?

What is the return on equity if sales are $290,000, net income is $49,000 and average common Stockholders' Equity is $188,000? (Round your final answer to one decimal place, X.X%.)

HiTech Industries has a $13,000 credit balance in Paid-In Capital-Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $59/share, for $56/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par-Treasury account?

A 2-for-1 stock split will:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

The Statement of Cash Flows

Financial Statement Analysis

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Exam 10: Corporations: Paid-In Capital and Retained Earnings

Changes in ownership through transfer of shares of stock have no effect on the life of a corporation.

The return on equity for a company that has sales of $43,000, net income of $13,000, and average Stockholders' Equity of $88,000 would be 48.86%.

Treasury stock is a contra-equity account and carries a debit balance.

Retained Earnings represent internally generated capital.

Caesar's Coffee Co. declared its annual cash dividend on its 3% preferred stock (total par value $90,000)and a $0.25 per share cash dividend on its common stock (50,000 shares outstanding). The journal entry for the declaration date is:

Limited liability means that the stockholders of a corporation share a personal liability for all debts of the corporation.

If a corporation has both common and preferred stock, the preferred stockholders will receive their dividends first, if the money is available.

Stated value is assigned:

Stockholders' Equity consists of contributed capital and paid-in capital.

Preferred stock is considered a voting "class" of stock.

The return on equity for a company that has sales of $50,000, net income of $25,000 and average Stockholders' Equity of $125,000 is 20%.

The Wellington Winery's Stockholders' Equity section includes the following information: What was the total selling price of the preferred stock?

When stock is sold, the total paid-in capital should equal the amount of cash received.

A corporation may issue stock for assets other than cash, requiring the recording of the assets at fair market value.

Which of the following business types dominates by the amount of business transacted?

What is the return on equity if sales are $290,000, net income is $49,000 and average common Stockholders' Equity is $188,000? (Round your final answer to one decimal place, X.X%.)

HiTech Industries has a $13,000 credit balance in Paid-In Capital-Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $59/share, for $56/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par-Treasury account?

A 2-for-1 stock split will:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

The Statement of Cash Flows

Financial Statement Analysis

Filters