Question 1

The journal entry to record a large stock dividend includes a debit to Retained earnings and a credit to:

Accepted Answer

A)  Retained Earnings. 
B)  Common Stock. 
C)  Cash. 
D)  Additional Paid-in Capital. 
A)  Retained Earnings. 
B)  Common Stock. 
C)  Cash. 
D)  Additional Paid-in Capital.

Question 2

Jay-Cee Corporation had 20,000 shares of $4 par value common stock outstanding on January 1.On January 20,the company purchased 2,000 of its stock for $16 per share.On July 3,the company reissued 1,000 of the shares at $20 per share.Jay-Cee uses the cost method to account for its treasury stock.Assume the company paid a dividend of $5 per share on August 3.What is the total amount of the dividends that would be paid to the common stockholders?

Accepted Answer

A)  $95,000 
B)  $100,000 
C)  $90,000 
D)  $76,000 
A)  $95,000 
B)  $100,000 
C)  $90,000 
D)  $76,000

Question 3

On January 1,2014,Bank & Rupp,Inc.issued 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6%,cumulative preferred stock.No dividends were declared in 2014.In 2015,Bank & Rupp declared and paid a $1 dividend to its common stockholders.Assuming all shares originally issued are outstanding,the total dividend paid to the preferred stockholders equals:

Accepted Answer

A)  $2,000. 
B)  $6,000. 
C)  $3,000. 
D)  $1,000. 
A)  $2,000. 
B)  $6,000. 
C)  $3,000. 
D)  $1,000.

Question 4

If a company's earnings per share and return on equity both increase:

Accepted Answer

A)  it could mean that net income is rising or it could mean that the number of outstanding shares is falling. The first is sustainable; the second cannot be continued indefinitely. 
B)  it means that the company is becoming more profitable and stockholders will see greater returns. 
C)  it means that the company's tax liability will rise in the future and cause a decline in profitability. 
D)  it could mean that net income is rising or it could mean that the number of outstanding shares is falling. In either case, stockholders can expect greater future returns indefinitely. 
A)  it could mean that net income is rising or it could mean that the number of outstanding shares is falling. The first is sustainable; the second cannot be continued indefinitely. 
B)  it means that the company is becoming more profitable and stockholders will see greater returns. 
C)  it means that the company's tax liability will rise in the future and cause a decline in profitability. 
D)  it could mean that net income is rising or it could mean that the number of outstanding shares is falling. In either case, stockholders can expect greater future returns indefinitely.

Question 5

Which of the following reasons best explains why earnings per share (EPS)is such a popular measure to evaluate a company?

Accepted Answer

A)  EPS is an excellent measure of how efficiently long-lived assets are being utilized. 
B)  EPS provides specific information about the ability of a company to repay its long-term debts. 
C)  EPS makes it easy to compare one company with another. 
D)  EPS provides information that investors can factor into their expectations about future dividends and stock prices. 
A)  EPS is an excellent measure of how efficiently long-lived assets are being utilized. 
B)  EPS provides specific information about the ability of a company to repay its long-term debts. 
C)  EPS makes it easy to compare one company with another. 
D)  EPS provides information that investors can factor into their expectations about future dividends and stock prices.

Question 6

Which number is potentially the largest?

Accepted Answer

A)  The number of shares authorized. 
B)  The number of shares issued. 
C)  The number of shares outstanding. 
D)  The number of shares certified. 
A)  The number of shares authorized. 
B)  The number of shares issued. 
C)  The number of shares outstanding. 
D)  The number of shares certified.

Question 7

Oxford Corporation has 120,000 shares of preferred stock,8% cumulative,$100 par value
It also has 1,400,000 shares of common stock,$0.01 par value.(The share information represents the numbers of shares issued and outstanding for both types of stock.)Dividends in arrears at the beginning of the year totaled $480,000.If Oxford's board of directors declares a total dividend of $1,650,000 to be distributed to preferred and common stockholders,how much will be paid to the common stockholders?

Accepted Answer

A)  $1,440,000 
B)  $210,000 
C)  $1,170,000 
D)  $690,000 
A)  $1,440,000 
B)  $210,000 
C)  $1,170,000 
D)  $690,000

Question 8

A corporation had 10,000 shares of $10 par value common stock outstanding.The board of directors declared and issued a 10% stock dividend.The market value of the stock was $20 per share.What is the journal entry to record this stock dividend?

Accepted Answer

A)  Debit Retained Earnings and credit Common Stock for $20,000 
B)  Debit Retained Earnings and credit Common Stock for $10,000 
C)  Debit Retained Earnings for $20,000, credit Common Stock for $10,000, and credit Additional Paid-in Capital for $10,000 
D)  No entry is made to record the stock dividend. 
A)  Debit Retained Earnings and credit Common Stock for $20,000 
B)  Debit Retained Earnings and credit Common Stock for $10,000 
C)  Debit Retained Earnings for $20,000, credit Common Stock for $10,000, and credit Additional Paid-in Capital for $10,000 
D)  No entry is made to record the stock dividend.

Question 9

Use the information above to answer the following question.During the following year,Ferris Company earned net income of $75,000,issued 5,000 shares of $1 par common stock at an average market price of $44 per share,and declared dividends of $20,500.What amount was the total stockholder's equity reported on the balance sheet at the end of that year?

Accepted Answer

A)  $512,000 
B)  $406,000 
C)  $297,000 
D)  $532,500 
A)  $512,000 
B)  $406,000 
C)  $297,000 
D)  $532,500

Question 10

Preferred stock differs from common stock in that:

Accepted Answer

A)  preferred stock has more voting power and, as such, greater control over the management of the company. 
B)  preferred stockholders are paid dividends before common stockholders. 
C)  preferred stock pays tax-free dividends. 
D)  preferred stock has no preemptive rights or residual claims. 
A)  preferred stock has more voting power and, as such, greater control over the management of the company. 
B)  preferred stockholders are paid dividends before common stockholders. 
C)  preferred stock pays tax-free dividends. 
D)  preferred stock has no preemptive rights or residual claims.

Question 11

Fronthouse Corp.issues 10,000 shares of no-par value preferred stock for cash at $60 per share.The journal entry to record the transaction will consist of a debit to Cash for $600,000 and a credit (or credits)to:

Accepted Answer

A)  Preferred Stock for $600,000. 
B)  Preferred Stock for $20,000 and Additional Paid-in Capital for $580,000. 
C)  Preferred Stock for $20,000 and Retained Earnings for $580,000. 
D)  Retained Earnings for $600,000. 
A)  Preferred Stock for $600,000. 
B)  Preferred Stock for $20,000 and Additional Paid-in Capital for $580,000. 
C)  Preferred Stock for $20,000 and Retained Earnings for $580,000. 
D)  Retained Earnings for $600,000.

Question 12

The creation and oversight of all corporations are regulated by:

Accepted Answer

A)  city councils. 
B)  state laws. 
C)  stockholders. 
D)  corporate officers. 
A)  city councils. 
B)  state laws. 
C)  stockholders. 
D)  corporate officers.

Question 13

The Enterprise Co.has the following information available from its accounting records:
 
The company has no preferred stock.What is the earnings per share?

Accepted Answer

A)  $0.40 
B)  $4.00 
C)  $4.67 
D)  $5.60 
A)  $0.40 
B)  $4.00 
C)  $4.67 
D)  $5.60

Question 14

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

Accepted Answer

A)  $0.71. 
B)  $1.40. 
C)  $5.00. 
D)  $0.40. 
A)  $0.71. 
B)  $1.40. 
C)  $5.00. 
D)  $0.40.

Question 15

A company issues 500,000 shares of preferred stock for $30 a share.The stock has a fixed annual dividend rate of 5% and a par value of $9 per share.The current price of the preferred stock is $32 a share.If sufficient dividends are declared,preferred stockholders can anticipate receiving annual dividends of:

Accepted Answer

A)  $0.45 per share. 
B)  $1.50 per share. 
C)  $1.60 per share. 
D)  $1.05 per share. 
A)  $0.45 per share. 
B)  $1.50 per share. 
C)  $1.60 per share. 
D)  $1.05 per share.

Question 16

An Additional Paid-in Capital account could be used with all of the following transactions except:

Accepted Answer

A)  The issuance of par value stock at a price greater than the par value. 
B)  The reissuance of treasury stock at a price less than the price paid when the stock was reacquired. 
C)  The reissuance of treasury stock at a price greater than the price paid when the stock was reacquired. 
D)  The issuance of no-par stock. 
A)  The issuance of par value stock at a price greater than the par value. 
B)  The reissuance of treasury stock at a price less than the price paid when the stock was reacquired. 
C)  The reissuance of treasury stock at a price greater than the price paid when the stock was reacquired. 
D)  The issuance of no-par stock.

Question 17

Ownership structure can vary from one company to another,but the most basic form of corporation offers:

Accepted Answer

A)  preferred stock. 
B)  net income. 
C)  treasury stock. 
D)  common stock. 
A)  preferred stock. 
B)  net income. 
C)  treasury stock. 
D)  common stock.

Question 18

At the end of its first year of operations,Mendes Inc.had 75,000 shares of preferred stock,5% cumulative,$100 par value.It also has 500,000 shares of common stock $0.01 par value.(The share information represents the numbers of shares issued and outstanding for both types of stock.)If sufficient dividends are declared,what is the per share dividend that will be paid on the preferred stock?

Accepted Answer

A)  $3,750 
B)  $380,000 
C)  $375,000 
D)  $5,000 
A)  $3,750 
B)  $380,000 
C)  $375,000 
D)  $5,000

Question 19

When a company issues stock to the public for the first time,the issuance is called a(n):

Accepted Answer

A)  initial public offering (IPO). 
B)  first time issue (FTI). 
C)  seasoned new issue (SNI). 
D)  initial stock offering (ISO). 
A)  initial public offering (IPO). 
B)  first time issue (FTI). 
C)  seasoned new issue (SNI). 
D)  initial stock offering (ISO).

Question 20

Generally,a relatively high P/E ratio indicates:

Accepted Answer

A)  improvements in future profitability. 
B)  diminished future profitability. 
C)  a high level of debt financing. 
D)  a high current return for shareholders of a company. 
A)  improvements in future profitability. 
B)  diminished future profitability. 
C)  a high level of debt financing. 
D)  a high current return for shareholders of a company.

The journal entry to record a large stock dividend includes a debit to Retained earnings and a credit to:

If a company's earnings per share and return on equity both increase:

Which of the following reasons best explains why earnings per share (EPS)is such a popular measure to evaluate a company?

Which number is potentially the largest?

A corporation had 10,000 shares of $10 par value common stock outstanding.The board of directors declared and issued a 10% stock dividend.The market value of the stock was $20 per share.What is the journal entry to record this stock dividend?

Preferred stock differs from common stock in that:

Fronthouse Corp.issues 10,000 shares of no-par value preferred stock for cash at $60 per share.The journal entry to record the transaction will consist of a debit to Cash for $600,000 and a credit (or credits)to:

The creation and oversight of all corporations are regulated by:

The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the earnings per share?

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

An Additional Paid-in Capital account could be used with all of the following transactions except:

Ownership structure can vary from one company to another,but the most basic form of corporation offers:

When a company issues stock to the public for the first time,the issuance is called a(n):

Generally,a relatively high P/E ratio indicates:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 11: Reporting and Interpreting Stockholders Equity

The journal entry to record a large stock dividend includes a debit to Retained earnings and a credit to:

If a company's earnings per share and return on equity both increase:

Which of the following reasons best explains why earnings per share (EPS)is such a popular measure to evaluate a company?

Which number is potentially the largest?

A corporation had 10,000 shares of $10 par value common stock outstanding.The board of directors declared and issued a 10% stock dividend.The market value of the stock was $20 per share.What is the journal entry to record this stock dividend?

Preferred stock differs from common stock in that:

Fronthouse Corp.issues 10,000 shares of no-par value preferred stock for cash at $60 per share.The journal entry to record the transaction will consist of a debit to Cash for $600,000 and a credit (or credits)to:

The creation and oversight of all corporations are regulated by:

The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the earnings per share?

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

An Additional Paid-in Capital account could be used with all of the following transactions except:

Ownership structure can vary from one company to another,but the most basic form of corporation offers:

When a company issues stock to the public for the first time,the issuance is called a(n):

Generally,a relatively high P/E ratio indicates:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters