Question 1

Seville Co.issued 1,680 shares of $50 par value stock for $126,000.What is the total amount of contributed capital?

Accepted Answer

A) $84,000 
B) $42,000 
C) $126,000 
D) $50 
A) $84,000 
B) $42,000 
C) $126,000 
D) $50

Question 2

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.

Question 3

Which of the following statements about the declaration and payment of cash dividends is correct?

Accepted Answer

A) Declaration and payment of cash dividends will reduce the amount of net income. 
B) Declaration and payment of cash dividends will not reduce the Retained Earnings balance. 
C) Declaration and payment of cash dividends will reduce the amount of cash available to invest in assets. 
D) Declaration and payment of cash dividends is calculated on the amount of shares of stock issued,not the amount of shares outstanding. 
A) Declaration and payment of cash dividends will reduce the amount of net income. 
B) Declaration and payment of cash dividends will not reduce the Retained Earnings balance. 
C) Declaration and payment of cash dividends will reduce the amount of cash available to invest in assets. 
D) Declaration and payment of cash dividends is calculated on the amount of shares of stock issued,not the amount of shares outstanding.

Question 4

Which of the following statements about equity and debt financing is correct?

Accepted Answer

A) Equity financing is always better than debt financing. 
B) Equity financing requires dividends to be paid. 
C) Dividends are tax deductible. 
D) Equity financing can change stockholder control. 
A) Equity financing is always better than debt financing. 
B) Equity financing requires dividends to be paid. 
C) Dividends are tax deductible. 
D) Equity financing can change stockholder control.

Question 5

The return on equity ratio is calculated as:

Accepted Answer

A) dividends paid divided by the average book value of stockholders' equity. 
B) net income divided by the average number of outstanding common shares. 
C) dividends divided by the average number of total shares. 
D) (net income less preferred dividends)divided by average common stockholders' equity. 
A) dividends paid divided by the average book value of stockholders' equity. 
B) net income divided by the average number of outstanding common shares. 
C) dividends divided by the average number of total shares. 
D) (net income less preferred dividends)divided by average common stockholders' equity.

Question 6

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 7

Corbett 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) $0.80 
B) $8.00 
C) $9.33 
D) $11.20 
A) $0.80 
B) $8.00 
C) $9.33 
D) $11.20

Question 8

If a company's P/E ratio suddenly decreases:

Accepted Answer

A) you should sell the stock as soon as possible. 
B) you should buy more of the stock to increase your average gain. 
C) the company probably announced higher earnings forecasts. 
D) the market must have reacted to some bad news that is expected to affect the company in the future. 
A) you should sell the stock as soon as possible. 
B) you should buy more of the stock to increase your average gain. 
C) the company probably announced higher earnings forecasts. 
D) the market must have reacted to some bad news that is expected to affect the company in the future.

Question 9

The return on equity ratio measures the:

Accepted Answer

A) return stockholders receive in dividends for each dollar of their investment. 
B) return stockholders receive in dividends and stock price growth for each dollar of their investment. 
C) amount of income earned for each dollar of common stockholders' equity. 
D) amount earned by the company on each dollar obtained from equity and debt financing. 
A) return stockholders receive in dividends for each dollar of their investment. 
B) return stockholders receive in dividends and stock price growth for each dollar of their investment. 
C) amount of income earned for each dollar of common stockholders' equity. 
D) amount earned by the company on each dollar obtained from equity and debt financing.

Question 10

King Corp.has one million shares outstanding with a par value of $5.On August 24 of this year,it issued a 10% stock dividend when its stock price was $25.As a result of this stock dividend,retained earnings:

Accepted Answer

A) increased by $500,000. 
B) increased by $2,500,000. 
C) decreased by $500,000. 
D) decreased by $2,500,000. 
A) increased by $500,000. 
B) increased by $2,500,000. 
C) decreased by $500,000. 
D) decreased by $2,500,000.

Question 11

Laurelhurst Co.has 240,000 shares of preferred stock,8% cumulative,$100 par value.It also has 2,800,000 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 $960,000.If Laurelhurst's board of directors declares a total dividend of $3,300,000 to be distributed to preferred and common stockholders,how much will be paid to the common stockholders?

Accepted Answer

A) $2,880,000 
B) $420,000 
C) $2,340,000 
D) $1,380,000 
A) $2,880,000 
B) $420,000 
C) $2,340,000 
D) $1,380,000

Question 12

Match each term with the appropriate definition.Not all definitions will be used.
-Sole Proprietorship

Accepted Answer

A) A company that is like a partnership in nature except that it has limited liability. 
B) A company that has a separate legal identity from its owners. 
C) A company that issues stock on one of the major stock exchanges. 
D) When companies are obligated to pay preferred stockholders past dividends not yet distributed before paying dividends to owners of common stock. 
E) The nominal value per share of stock set by the company's charter.
F)The current stock price.
G)A stock that is currently selling for its original issue price.
H)Stock of companies that tend to pay relatively high dividends compared to the stock price.
I)Stock of companies that tend to reinvest earnings to provide for greater future sales and profits.
J)When stockholders prefer to receive dividends at the end of the year rather than each quarter.
K)An unincorporated business that is owned by a single individual.
L)When preferred stockholders are paid dividends before other stockholders.
M)An unincorporated business owned by two or more individuals. 
A) A company that is like a partnership in nature except that it has limited liability. 
B) A company that has a separate legal identity from its owners. 
C) A company that issues stock on one of the major stock exchanges. 
D) When companies are obligated to pay preferred stockholders past dividends not yet distributed before paying dividends to owners of common stock. 
E) The nominal value per share of stock set by the company's charter.
F)The current stock price.
G)A stock that is currently selling for its original issue price.
H)Stock of companies that tend to pay relatively high dividends compared to the stock price.
I)Stock of companies that tend to reinvest earnings to provide for greater future sales and profits.
J)When stockholders prefer to receive dividends at the end of the year rather than each quarter.
K)An unincorporated business that is owned by a single individual.
L)When preferred stockholders are paid dividends before other stockholders.
M)An unincorporated business owned by two or more individuals.

Question 13

Which of the following statements is correct?

Accepted Answer

A) Stock splits and stock dividends both reduce the market price of a share,but only stock splits reduce the par value of a share. 
B) Stock splits and stock dividends both reduce the market price of a share and the par value of a share. 
C) Stock splits and stock dividends both reduce the market price of a share,but only stock dividends reduce the par value of a share. 
D) Stock splits and stock dividends both reduce the market price of a share and reduce Retained Earnings. 
A) Stock splits and stock dividends both reduce the market price of a share,but only stock splits reduce the par value of a share. 
B) Stock splits and stock dividends both reduce the market price of a share and the par value of a share. 
C) Stock splits and stock dividends both reduce the market price of a share,but only stock dividends reduce the par value of a share. 
D) Stock splits and stock dividends both reduce the market price of a share and reduce Retained Earnings.

Question 14

The term "capitalizing retained earnings" refers to:

Accepted Answer

A) transferring from Retained Earnings to Common Stock the amount of a stock dividend. 
B) the recording of all costs to get an asset in place and ready for its intended use. 
C) the issuance of common stock at a price in excess of par value. 
D) stockholders contributing additional capital to a corporation. 
A) transferring from Retained Earnings to Common Stock the amount of a stock dividend. 
B) the recording of all costs to get an asset in place and ready for its intended use. 
C) the issuance of common stock at a price in excess of par value. 
D) stockholders contributing additional capital to a corporation.

Question 15

Contributed capital is found in the ________ section of the ________.

Accepted Answer

A) operating income;income statement 
B) stockholders' equity;balance sheet 
C) retained earnings;balance sheet 
D) retained earnings;income statement 
A) operating income;income statement 
B) stockholders' equity;balance sheet 
C) retained earnings;balance sheet 
D) retained earnings;income statement

Question 16

The market price of a share of common stock at the time of issuance was $19.50,while the market price of a preferred share of stock at the time of issuance was $32.The company paid $12.50 per share for its treasury stock.
Required:
Determine the missing amount in the stockholders' equity section of the balance sheet set forth below.

Accepted Answer

@#IMG-DLM&
Supporting calculations:
(a)	$2.00 Par

Question 17

Creston Enterprises has common stock with a par value of $5.During the current year,it declared and paid dividends of $20,000.It sold at $20 per share an additional 2,000 shares of stock that had not been previously issued.In addition,it had net income of $100,000 for the year.What is the amount of change to its stockholders' equity for the year?

Accepted Answer

A) $140,000 
B) $90,000 
C) $110,000 
D) $120,000 
A) $140,000 
B) $90,000 
C) $110,000 
D) $120,000

Question 18

Which of the following statements about Accumulated Other Comprehensive Income (Loss)is not correct?

Accepted Answer

A) Accumulated Other Comprehensive Income (Loss)reports unrealized gains and losses,which are temporary changes in the value of certain assets and liabilities the company holds. 
B) Accumulated Other Comprehensive Income (Loss)can relate to pensions,foreign currencies,and financial investments. 
C) Accumulated Other Comprehensive Income (Loss)is a component of stockholders' equity. 
D) Accumulated Other Comprehensive Income (Loss)is reported on the income statement. 
A) Accumulated Other Comprehensive Income (Loss)reports unrealized gains and losses,which are temporary changes in the value of certain assets and liabilities the company holds. 
B) Accumulated Other Comprehensive Income (Loss)can relate to pensions,foreign currencies,and financial investments. 
C) Accumulated Other Comprehensive Income (Loss)is a component of stockholders' equity. 
D) Accumulated Other Comprehensive Income (Loss)is reported on the income statement.

Question 19

On the declaration date,the company:

Accepted Answer

A) debits Dividends and credits Dividends Payable for the amount of the dividend. 
B) debits Dividend Expense and credits Cash for the dividend amount. 
C) debits Dividends Payable and credits Cash for the dividend amount. 
D) establishes who will receive the dividend payment. 
A) debits Dividends and credits Dividends Payable for the amount of the dividend. 
B) debits Dividend Expense and credits Cash for the dividend amount. 
C) debits Dividends Payable and credits Cash for the dividend amount. 
D) establishes who will receive the dividend payment.

Question 20

The information below was extracted from the most recent financial statements of Milton Technologies (in millions,except for stock price):   What is the company's return on equity (ROE)for the current year?

Accepted Answer

A) 39.3% 
B) 21.7% 
C) 37.1% 
D) 36.3% 
A) 39.3% 
B) 21.7% 
C) 37.1% 
D) 36.3%

Seville Co.issued 1,680 shares of $50 par value stock for $126,000.What is the total amount of contributed capital?

Generally,a relatively high P/E ratio indicates:

Which of the following statements about the declaration and payment of cash dividends is correct?

Which of the following statements about equity and debt financing is correct?

The return on equity ratio is calculated as:

The creation and oversight of all corporations are regulated by:

Corbett 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 suddenly decreases:

The return on equity ratio measures the:

King Corp.has one million shares outstanding with a par value of $5.On August 24 of this year,it issued a 10% stock dividend when its stock price was $25.As a result of this stock dividend,retained earnings:

Match each term with the appropriate definition.Not all definitions will be used. -Sole Proprietorship

Which of the following statements is correct?

The term "capitalizing retained earnings" refers to:

Contributed capital is found in the section of the .

Which of the following statements about Accumulated Other Comprehensive Income (Loss)is not correct?

On the declaration date,the company:

The information below was extracted from the most recent financial statements of Milton Technologies (in millions,except for stock price): What is the company's return on equity (ROE)for the current year?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 11: Stockholders Equity

Seville Co.issued 1,680 shares of $50 par value stock for $126,000.What is the total amount of contributed capital?

Generally,a relatively high P/E ratio indicates:

Which of the following statements about the declaration and payment of cash dividends is correct?

Which of the following statements about equity and debt financing is correct?

The return on equity ratio is calculated as:

The creation and oversight of all corporations are regulated by:

Corbett 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 suddenly decreases:

The return on equity ratio measures the:

King Corp.has one million shares outstanding with a par value of $5.On August 24 of this year,it issued a 10% stock dividend when its stock price was $25.As a result of this stock dividend,retained earnings:

Match each term with the appropriate definition.Not all definitions will be used. -Sole Proprietorship

Which of the following statements is correct?

The term "capitalizing retained earnings" refers to:

Contributed capital is found in the ________ section of the ________.

Which of the following statements about Accumulated Other Comprehensive Income (Loss)is not correct?

On the declaration date,the company:

The information below was extracted from the most recent financial statements of Milton Technologies (in millions,except for stock price): What is the company's return on equity (ROE)for the current year?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Contributed capital is found in the section of the .