Question 1

Which of the following statements is true of treasury stock?

Accepted Answer

A)  It is classified as an asset on the balance sheet. 
B)  It allows management to vote for members of the board of directors. 
C)  It is considered outstanding stock. 
D)  It usually has a debit balance. 
A)  It is classified as an asset on the balance sheet. 
B)  It allows management to vote for members of the board of directors. 
C)  It is considered outstanding stock. 
D)  It usually has a debit balance.

Question 2

On February 15, 2012, Portage Company declared a dividend of $115,000. Portage Company decided that the dividend would be paid on May 31, 2012, to all shareholders of record on April 20, 2012.
Prepare the appropriate journal entries to record the transactions on the following dates:

Accepted Answer

The answer of On February 15, 2012, Portage Company declared...

Question 3

Provide the necessary journal entries to record the following:

Accepted Answer

The answer of Provide the necessary journal entries to record...

Question 4

The declaration of dividends by a company

Accepted Answer

A)  Always decreases the balance in Retained Earnings 
B)  Always reduces the Cash balance 
C)  Always increases the balance in Retained Earnings 
D)  Always increases the balance in Common Stock 
A)  Always decreases the balance in Retained Earnings 
B)  Always reduces the Cash balance 
C)  Always increases the balance in Retained Earnings 
D)  Always increases the balance in Common Stock

Question 5

Which of the following types of business organization is NOT a separate legal entity from its owner or owners?

Accepted Answer

A)  Proprietorship 
B)  Partnership 
C)  Corporation 
D)  Only proprietorship and partnership 
A)  Proprietorship 
B)  Partnership 
C)  Corporation 
D)  Only proprietorship and partnership

Question 6

Moony Corporation had 20,000 shares of $4 par-value common stock outstanding on January 1, 2012. On January 10, 2012, the firm purchased 2,000 of its outstanding shares for $18 per share. On July 22, 2012, it reissued 1,000 shares at $22 per share. Given this information, the entry to record the reissuance of the stock on July 22 would include a credit to

Accepted Answer

A)  Treasury Stock of $4,000 
B)  Common Stock of $4,000 
C)  Paid-In Capital, $18,000 
D)  Paid-In Capital, Treasury Stock of $4,000 
A)  Treasury Stock of $4,000 
B)  Common Stock of $4,000 
C)  Paid-In Capital, $18,000 
D)  Paid-In Capital, Treasury Stock of $4,000

Question 7

Identify the three types of organizations and list the characteristics of each one.

Accepted Answer

Proprietor

Question 8

A corporation's contributed capital is

Accepted Answer

A)  The total par value of the common and preferred stock, along with the associated amounts of paid-in capital in excess of par 
B)  The total par value of the common and preferred stock 
C)  The total par value of the common stock and the associated amounts of paid-in capital in excess of par 
D)  The total par value of the preferred stock and the associated amounts of paid-in capital in excess of par 
A)  The total par value of the common and preferred stock, along with the associated amounts of paid-in capital in excess of par 
B)  The total par value of the common and preferred stock 
C)  The total par value of the common stock and the associated amounts of paid-in capital in excess of par 
D)  The total par value of the preferred stock and the associated amounts of paid-in capital in excess of par

Question 9

The following information is given for Wellington Company, Torrey Company, and Sunset Company.
  
Compute the dividend payout ratio for each company.

Accepted Answer

Compute the dividend

Question 10

Pelletier Corporation has the following stock outstanding:
 
- Refer to Exhibit 11-1. Given the information above, if Pelletier pays a $64,000 dividend, and if the preferred stock is cumulative and two years' dividends are in arrears, common stockholders will receive

Accepted Answer

A)  $32,000 
B)  $52,000 
C)  $58,000 
D)  $46,000 
A)  $32,000 
B)  $52,000 
C)  $58,000 
D)  $46,000

Question 11

Which of the following organizations has a Retained Earnings account?

Accepted Answer

A)  Partnership 
B)  Proprietorship 
C)  Corporation 
D)  A Retained Earnings account is used in all three types of businesses 
A)  Partnership 
B)  Proprietorship 
C)  Corporation 
D)  A Retained Earnings account is used in all three types of businesses

Question 12

Pelletier Corporation has the following stock outstanding:
  
-Refer to Exhibit 11-1. Given the information above, if Pelletier pays a $64,000 dividend, and if the preferred stock is noncumulative and the two previous years' dividends have not been paid, common stockholders will receive

Accepted Answer

A)  $32,000 
B)  $52,000 
C)  $58,000 
D)  $46,000 
A)  $32,000 
B)  $52,000 
C)  $58,000 
D)  $46,000

Question 13

If treasury stock is sold for less than its cost, and there were no previous treasury stock sales, the difference between the sales price and cost is debited to

Accepted Answer

A)  Paid-In Capital, Treasury Stock 
B)  Common Stock 
C)  Retained Earnings 
D)  Paid-In Capital in Excess of Par 
A)  Paid-In Capital, Treasury Stock 
B)  Common Stock 
C)  Retained Earnings 
D)  Paid-In Capital in Excess of Par

Question 14

Which of the basic stockholder rights do preferred stockholders normally give up?

Accepted Answer

A)  The right to vote 
B)  The preemptive right 
C)  The right to receive dividends when they are declared 
D)  The right to excess assets after creditor claims are satisfied 
A)  The right to vote 
B)  The preemptive right 
C)  The right to receive dividends when they are declared 
D)  The right to excess assets after creditor claims are satisfied

Question 15

Goshen Co. has 24,000 shares of no-par common stock with a $20 stated value and 10,000 shares of $30 par, 5 percent noncumulative preferred stock outstanding. If the company declares cash dividends of $68,000, the total amount of the dividend paid to preferred stockholders is

Accepted Answer

A)  $5,000 
B)  $17,000 
C)  $15,000 
D)  $8,500 
A)  $5,000 
B)  $17,000 
C)  $15,000 
D)  $8,500

Question 16

A Paid-In Capital account can be credited with all of the following transactions EXCEPT

Accepted Answer

A)  The issuance of par stock issued at a price greater than par value 
B)  The issuance of no-par stock with a stated value 
C)  The reissuance of treasury stock 
D)  The purchase of treasury stock 
A)  The issuance of par stock issued at a price greater than par value 
B)  The issuance of no-par stock with a stated value 
C)  The reissuance of treasury stock 
D)  The purchase of treasury stock

Question 17

The stockholders' equity section of the balance sheet for Beryl Corporation as of December 31, 2012, is as follows:

Accepted Answer

The answer of The stockholders' equity section of the balance...

Question 18

Treasury stock is classified on the balance sheet as what type of account?

Accepted Answer

A)  Current asset 
B)  Long-term investment 
C)  Contributed capital 
D)  Contra-stockholders' equity 
A)  Current asset 
B)  Long-term investment 
C)  Contributed capital 
D)  Contra-stockholders' equity

Question 19

Which of the following is NOT one of the common reasons for a firm to buy back its own stock?

Accepted Answer

A)  Management feels that the stock is selling for an unusually low price and is a good buy 
B)  Management wants to remove some shares from the market in order to promote a hostile takeover 
C)  Management wants to stimulate trading in the company's stock 
D)  Management wants to increase earnings per share by reducing the number of shares of stock outstanding 
A)  Management feels that the stock is selling for an unusually low price and is a good buy 
B)  Management wants to remove some shares from the market in order to promote a hostile takeover 
C)  Management wants to stimulate trading in the company's stock 
D)  Management wants to increase earnings per share by reducing the number of shares of stock outstanding

Question 20

When common stock is issued in exchange for a noncash asset and the market value of the stock is determinable, the acquired asset should usually be recorded at an amount equal to

Accepted Answer

A)  The book value of the noncash asset 
B)  The par value of the stock 
C)  The market value of the stock 
D)  The market value of the noncash asset 
A)  The book value of the noncash asset 
B)  The par value of the stock 
C)  The market value of the stock 
D)  The market value of the noncash asset

Exam 11: Financing: Equity

Which of the following statements is true of treasury stock?

On February 15, 2012, Portage Company declared a dividend of $115,000. Portage Company decided that the dividend would be paid on May 31, 2012, to all shareholders of record on April 20, 2012. Prepare the appropriate journal entries to record the transactions on the following dates:

Provide the necessary journal entries to record the following:

The declaration of dividends by a company

Which of the following types of business organization is NOT a separate legal entity from its owner or owners?

Identify the three types of organizations and list the characteristics of each one.

A corporation's contributed capital is

The following information is given for Wellington Company, Torrey Company, and Sunset Company. Compute the dividend payout ratio for each company.

Pelletier Corporation has the following stock outstanding: - Refer to Exhibit 11-1. Given the information above, if Pelletier pays a $64,000 dividend, and if the preferred stock is cumulative and two years' dividends are in arrears, common stockholders will receive

Which of the following organizations has a Retained Earnings account?

Pelletier Corporation has the following stock outstanding: -Refer to Exhibit 11-1. Given the information above, if Pelletier pays a $64,000 dividend, and if the preferred stock is noncumulative and the two previous years' dividends have not been paid, common stockholders will receive

If treasury stock is sold for less than its cost, and there were no previous treasury stock sales, the difference between the sales price and cost is debited to

Which of the basic stockholder rights do preferred stockholders normally give up?

Goshen Co. has 24,000 shares of no-par common stock with a $20 stated value and 10,000 shares of $30 par, 5 percent noncumulative preferred stock outstanding. If the company declares cash dividends of $68,000, the total amount of the dividend paid to preferred stockholders is

A Paid-In Capital account can be credited with all of the following transactions EXCEPT

The stockholders' equity section of the balance sheet for Beryl Corporation as of December 31, 2012, is as follows:

Treasury stock is classified on the balance sheet as what type of account?

Which of the following is NOT one of the common reasons for a firm to buy back its own stock?

When common stock is issued in exchange for a noncash asset and the market value of the stock is determinable, the acquired asset should usually be recorded at an amount equal to

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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