Question 1

The declaration of cash dividends reduces retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Accepted Answer

A) True 
 B)False

Question 3

Book value per common share is computed by:

Accepted Answer

A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares. 
A) Multiplying the number of common shares outstanding times the market price per common share. 
B) Dividing total assets by the number of shares outstanding. 
C) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding. 
D) Multiplying the number of common shares outstanding by par value per share. 
E) Dividing the number of common shares outstanding by stockholders' equity applicable to common shares.

Question 4

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Accepted Answer

A) True 
 B)False

Question 5

Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

Accepted Answer

Book value per share is calculated by di

Question 6

The only way that a shareholder can affect the management of a corporation is to get elected to the corporation's board of directors.

Accepted Answer

A) True 
 B)False

Question 7

Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows:
   The following selected transactions occurred during the current year:
   Prepare a statement of retained earnings as of December 31 of the current year.

Accepted Answer

The answer of Dawls Corporation reported stockholders' equity on December...

Question 8

The dividend yield is computed by dividing:

Accepted Answer

A) Annual cash dividends per share by earnings per share. 
B) Earnings per share by cash dividends per share. 
C) Annual cash dividends per share by the market value per share. 
D) Market price per share by cash dividends per share. 
E) Cash dividends per share by retained earnings. 
A) Annual cash dividends per share by earnings per share. 
B) Earnings per share by cash dividends per share. 
C) Annual cash dividends per share by the market value per share. 
D) Market price per share by cash dividends per share. 
E) Cash dividends per share by retained earnings.

Question 9

Shamrock Company had net income of $30,000.The weighted-average common shares outstanding were 8,000.The company sold 3,000 shares before the end of the year.There were no other stock transactions.The company's earnings per share is:

Accepted Answer

A) $3.75. 
B) $3.00. 
C) $3.33. 
D) $10.00. 
E) $3.16. 
A) $3.75. 
B) $3.00. 
C) $3.33. 
D) $10.00. 
E) $3.16.

Question 10

Record the following transactions of a company in general journal form:
(a)Reacquired 8,000 of its own $10 par value common stock at $40 cash per share.The stock was originally issued at $15 per share.
(b)Sold 2,000 shares of the stock reacquired under part (a)at $43 cash per share.
(c)Sold 3,000 shares of the stock reacquired under part (a)at $39 cash per share.

Accepted Answer

The answer of Record the following transactions of a company...

Question 11

A company issued 7% preferred stock with a $100 par value.This means that:

Accepted Answer

A) Preferred shareholders have a guaranteed dividend. 
B) The amount of the potential dividend is $7 per year per preferred share. 
C) Preferred shareholders are entitled to 7% of the annual income. 
D) The market price per share will approximate $100 per share. 
E) Only 7% of the total paid-in capital can be preferred stock. 
A) Preferred shareholders have a guaranteed dividend. 
B) The amount of the potential dividend is $7 per year per preferred share. 
C) Preferred shareholders are entitled to 7% of the annual income. 
D) The market price per share will approximate $100 per share. 
E) Only 7% of the total paid-in capital can be preferred stock.

Question 12

A liability for dividends exists:

Accepted Answer

A) When cumulative preferred stock is sold. 
B) On the date of declaration. 
C) On the date of record. 
D) On the date of payment. 
E) For dividends in arrears on cumulative preferred stock. 
A) When cumulative preferred stock is sold. 
B) On the date of declaration. 
C) On the date of record. 
D) On the date of payment. 
E) For dividends in arrears on cumulative preferred stock.

Question 13

A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

Accepted Answer

A) True 
 B)False

Question 14

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Accepted Answer

A) Preemptive right. 
B) Proxy right. 
C) Right to call. 
D) Financial leverage. 
E) Voting right. 
A) Preemptive right. 
B) Proxy right. 
C) Right to call. 
D) Financial leverage. 
E) Voting right.

Question 15

If the purchase price of retired stock exceeds the net amount removed from paid-in capital,the excess is debited to Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 16

A company reported earnings per share of $9.75,paid a $6.00 cash dividend per share to preferred shareholders,and paid a $0.54 cash dividend per share to common shareholders.There were 1,000 shares of preferred stock outstanding and 6,000 shares of common stock outstanding during the year,and the market price per share of common stock was $45.Calculate the company's dividend yield for common stock.

Accepted Answer

Dividend Yield = Cas

Question 17

A company's stock is selling for $35 per share at year-end.This current year it paid shareholders a $2.45 per share cash dividend,reported earnings per share of $12.00,and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.

Accepted Answer

Dividend Yield = Cas

Question 18

Explain stock options and their effect on the company.

Accepted Answer

Stock options are the rights to purchase

Question 19

The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 20

Changes in retained earnings may be reported in the:

Accepted Answer

A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement. 
A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement.

Exam 13: Accounting for Corporations

The declaration of cash dividends reduces retained earnings.

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Book value per common share is computed by:

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

The only way that a shareholder can affect the management of a corporation is to get elected to the corporation's board of directors.

Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year.

The dividend yield is computed by dividing:

Shamrock Company had net income of $30,000.The weighted-average common shares outstanding were 8,000.The company sold 3,000 shares before the end of the year.There were no other stock transactions.The company's earnings per share is:

A company issued 7% preferred stock with a $100 par value.This means that:

A liability for dividends exists:

A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

If the purchase price of retired stock exceeds the net amount removed from paid-in capital,the excess is debited to Retained Earnings.

A company's stock is selling for $35 per share at year-end.This current year it paid shareholders a $2.45 per share cash dividend,reported earnings per share of $12.00,and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.

Explain stock options and their effect on the company.

The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

Changes in retained earnings may be reported in the:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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