Question 1

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

Accepted Answer

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

Question 2

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

Accepted Answer

A) 0.0002. 
B) 24.22. 
C) 31.25. 
D) 0.0001. 
A) 0.0002. 
B) 24.22. 
C) 31.25. 
D) 0.0001.

Question 3

When does a corporation record an increase in Dividends Payable?

Accepted Answer

A) On the date of record. 
B) On the date of payment. 
C) On the declaration date. 
D) On the date of issuance. 
A) On the date of record. 
B) On the date of payment. 
C) On the declaration date. 
D) On the date of issuance.

Question 4

Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

Accepted Answer

A) $52 million and a credit to Preferred Stock for $52 million. 
B) $4 million and a credit to Preferred Stock for $4 million. 
C) $52 million,a credit to Additional Paid-in Capital for $4 million,and a credit to Preferred Stock for $48 million. 
D) $52 million,a credit to Preferred Stock for $4 million,and a credit to Additional Paid-in Capital for $48 million. 
A) $52 million and a credit to Preferred Stock for $52 million. 
B) $4 million and a credit to Preferred Stock for $4 million. 
C) $52 million,a credit to Additional Paid-in Capital for $4 million,and a credit to Preferred Stock for $48 million. 
D) $52 million,a credit to Preferred Stock for $4 million,and a credit to Additional Paid-in Capital for $48 million.

Question 5

A stock dividend is considered a large stock dividend if it is ________ than 25% of the outstanding shares,and it is recorded at the ________ value of the additional shares.

Accepted Answer

A) more;par 
B) less;par 
C) more;market 
D) less;market 
A) more;par 
B) less;par 
C) more;market 
D) less;market

Question 6

A company that pays no dividends is always a poor investment.

Accepted Answer

A) True 
 B)False

Question 7

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Accepted Answer

A) increase total liabilities and decrease stockholders' equity. 
B) increase total expenses and decrease assets. 
C) increase total assets and increase stockholders' equity. 
D) decrease total assets and decrease stockholders' equity. 
A) increase total liabilities and decrease stockholders' equity. 
B) increase total expenses and decrease assets. 
C) increase total assets and increase stockholders' equity. 
D) decrease total assets and decrease stockholders' equity.

Question 8

Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Accepted Answer

A) Net Income 
B) Stock Issuances 
C) Additional Paid-in Capital 
D) Treasury Stock 
A) Net Income 
B) Stock Issuances 
C) Additional Paid-in Capital 
D) Treasury Stock

Question 9

Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Accepted Answer

A) debit Cash and credit Additional Paid-in Capital for $10. 
B) debit Cash and credit Common Stock for $10. 
C) debit Common Stock and credit Additional Paid-in Capital for $10. 
D) not debit or credit any of its accounts. 
A) debit Cash and credit Additional Paid-in Capital for $10. 
B) debit Cash and credit Common Stock for $10. 
C) debit Common Stock and credit Additional Paid-in Capital for $10. 
D) not debit or credit any of its accounts.

Question 10

Common stock's par value is:

Accepted Answer

A) the same as a bond's par value. 
B) the same as the common stock's market price. 
C) the common stock's average price. 
D) an insignificant amount specified in the corporate charter. 
A) the same as a bond's par value. 
B) the same as the common stock's market price. 
C) the common stock's average price. 
D) an insignificant amount specified in the corporate charter.

Question 11

Equity and debt financing both have their advantages and disadvantages.Which of the following pairs of phrases below accurately reflect the advantages of both types of financing?       $\begin{array}{|l|l|l|}
\hline & \text { Debt Financing } & \text { Equity Financing } \
\hline \text { D) } & \text { Dividends are optional } & \text { Interest is tax deductible }\\hline 
\end{array}$

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 12

A dividend date of record is the date on which the corporation:

Accepted Answer

A) makes no entry. 
B) records an increase in Dividends Payable. 
C) records a decrease in Dividends Payable. 
D) records an increase in Dividends. 
A) makes no entry. 
B) records an increase in Dividends Payable. 
C) records a decrease in Dividends Payable. 
D) records an increase in Dividends.

Question 13

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

Accepted Answer

A) the stock is overpriced and should be sold. 
B) the stock has great growth capacity and should be bought. 
C) other financial results and news should be examined to determine the cause of the P/E ratio change. 
D) the stock is underpriced and should be bought. 
A) the stock is overpriced and should be sold. 
B) the stock has great growth capacity and should be bought. 
C) other financial results and news should be examined to determine the cause of the P/E ratio change. 
D) the stock is underpriced and should be bought.

Question 14

All of the following are a part of contributed capital except:

Accepted Answer

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

Question 15

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

Accepted Answer

A) decreased by $1,500,000. 
B) decreased by $200,000. 
C) increased by $1,500,000. 
D) increased by $100,000. 
A) decreased by $1,500,000. 
B) decreased by $200,000. 
C) increased by $1,500,000. 
D) increased by $100,000.

Question 16

As of November 29,it appears that Notel will report earnings per share (EPS)of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

Accepted Answer

A) The company pays a supplier for inventory bought on account. 
B) The company declares,but does not pay,a cash dividend. 
C) The company purchases 10 shares of common stock in another company. 
D) The company reissues the treasury stock it holds. 
A) The company pays a supplier for inventory bought on account. 
B) The company declares,but does not pay,a cash dividend. 
C) The company purchases 10 shares of common stock in another company. 
D) The company reissues the treasury stock it holds.

Question 17

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

Accepted Answer

A) Stock shares that pay a fixed dividend rate but have no voting rights. 
B) The shares of stock held by stockholders. 
C) Stock that allows owners to be listed among creditors. 
D) This payment raises stockholders' equity. 
E) This payment decreases stockholders' equity.
F)The shares of stock held by the issuing company.
G)Earnings per share that reflects treasury and preferred stock.
H)(Net income less preferred dividends)divided by average stockholders' equity.
I)This dividend does not reduce stockholders' equity.
J)Stockholders' entitlement to remaining assets after creditors are repaid.
K)The additional shares of stock a company can issue beyond what are already issued.
L)(Net income less preferred dividends)divided by the average number of outstanding common shares.
M)When a company first starts selling stock to the public. 
A) Stock shares that pay a fixed dividend rate but have no voting rights. 
B) The shares of stock held by stockholders. 
C) Stock that allows owners to be listed among creditors. 
D) This payment raises stockholders' equity. 
E) This payment decreases stockholders' equity.
F)The shares of stock held by the issuing company.
G)Earnings per share that reflects treasury and preferred stock.
H)(Net income less preferred dividends)divided by average stockholders' equity.
I)This dividend does not reduce stockholders' equity.
J)Stockholders' entitlement to remaining assets after creditors are repaid.
K)The additional shares of stock a company can issue beyond what are already issued.
L)(Net income less preferred dividends)divided by the average number of outstanding common shares.
M)When a company first starts selling stock to the public.

Question 18

One of the advantages of a partnership is:

Accepted Answer

A) limited liability. 
B) the salaries of the partners can be written off as an expense. 
C) ease of formation. 
D) income tax is paid by the business. 
A) limited liability. 
B) the salaries of the partners can be written off as an expense. 
C) ease of formation. 
D) income tax is paid by the business.

Question 19

What does the par value of a stock represent?

Accepted Answer

A) The average market value of a stock for the year to date. 
B) It is a legal concept not related to the market value of a stock. 
C) The amount that would be paid if a stock was purchased by the issuing company. 
D) The current market value of a stock. 
A) The average market value of a stock for the year to date. 
B) It is a legal concept not related to the market value of a stock. 
C) The amount that would be paid if a stock was purchased by the issuing company. 
D) The current market value of a stock.

Question 20

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Accepted Answer

A) True 
 B)False

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

When does a corporation record an increase in Dividends Payable?

Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

A stock dividend is considered a large stock dividend if it is than 25% of the outstanding shares,and it is recorded at the value of the additional shares.

A company that pays no dividends is always a poor investment.

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Common stock's par value is:

A dividend date of record is the date on which the corporation:

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

All of the following are a part of contributed capital except:

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

As of November 29,it appears that Notel will report earnings per share (EPS)of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

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

One of the advantages of a partnership is:

What does the par value of a stock represent?

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

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

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

When does a corporation record an increase in Dividends Payable?

Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

A stock dividend is considered a large stock dividend if it is ________ than 25% of the outstanding shares,and it is recorded at the ________ value of the additional shares.

A company that pays no dividends is always a poor investment.

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Common stock's par value is:

Equity and debt financing both have their advantages and disadvantages.Which of the following pairs of phrases below accurately reflect the advantages of both types of financing? Debt Financing Equity Financing D) Dividends are optional Interest is tax deductible

A dividend date of record is the date on which the corporation:

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

All of the following are a part of contributed capital except:

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

As of November 29,it appears that Notel will report earnings per share (EPS)of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

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

One of the advantages of a partnership is:

What does the par value of a stock represent?

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

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

A stock dividend is considered a large stock dividend if it is than 25% of the outstanding shares,and it is recorded at the value of the additional shares.