Question 1

Treasury stock is classified as:

Accepted Answer

A)  An asset account. 
B)  A contra asset account. 
C)  A revenue account. 
D)  A contra equity account. 
E)  A liability account. 
A)  An asset account. 
B)  A contra asset account. 
C)  A revenue account. 
D)  A contra equity account. 
E)  A liability account.

Question 2

The term restricted retained earnings refers to statutory but not contractual restrictions.

Accepted Answer

A) True 
 B)False

Question 3

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

Accepted Answer

A)  Cumulative preferred stock. 
B)  Callable preferred stock. 
C)  Participating preferred stock. 
D)  Convertible preferred stock. 
E)  Preferential preferred stock. 
A)  Cumulative preferred stock. 
B)  Callable preferred stock. 
C)  Participating preferred stock. 
D)  Convertible preferred stock. 
E)  Preferential preferred stock.

Question 4

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Accepted Answer

A) True 
 B)False

Question 5

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Accepted Answer

A) True 
 B)False

Question 6

Common Stock Dividend Distributable is a liability account.

Accepted Answer

A) True 
 B)False

Question 7

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Accepted Answer

A)  Noncumulative preferred stock. 
B)  Participating preferred stock. 
C)  Callable preferred stock. 
D)  Cumulative preferred stock. 
E)  Convertible preferred stock. 
A)  Noncumulative preferred stock. 
B)  Participating preferred stock. 
C)  Callable preferred stock. 
D)  Cumulative preferred stock. 
E)  Convertible preferred stock.

Question 8

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array}{l}
&\text { Dividend Declared }\ 
\text { Year } 1 & \$  0 \
\text { Year } 2 & \$  6,000 \
\text { Year } 3 & \$  32,000
\end{array}$$
The amount of dividends paid to preferred and common shareholders in Year 2 is:

Accepted Answer

A)  $3,500 preferred; $2,500 common. 
B)  $3,000 preferred; $3,000 common. 
C)  $0 preferred; $6,000 common. 
D)  $4,200 preferred; $1,800 common. 
E)  $6,000 preferred; $0 common. 
A)  $3,500 preferred; $2,500 common. 
B)  $3,000 preferred; $3,000 common. 
C)  $0 preferred; $6,000 common. 
D)  $4,200 preferred; $1,800 common. 
E)  $6,000 preferred; $0 common.

Question 9

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Accepted Answer

A) True 
 B)False

Question 10

Corporations may buy back their own stock for any of the following reasons except to:

Accepted Answer

A)  Avoid a hostile take-over. 
B)  Have shares available for a merger or acquisition. 
C)  Have shares available for employee compensation. 
D)  Maintain market value for the company stock. 
E)  Allow management to assume the voting rights. 
A)  Avoid a hostile take-over. 
B)  Have shares available for a merger or acquisition. 
C)  Have shares available for employee compensation. 
D)  Maintain market value for the company stock. 
E)  Allow management to assume the voting rights.

Question 11

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

Accepted Answer

A)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. 
B)  Debit Retained Earnings $135,000; credit Cash $135,000. 
C)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000. 
D)  Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. 
E)  No entry is made until the stock is issued. 
A)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. 
B)  Debit Retained Earnings $135,000; credit Cash $135,000. 
C)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000. 
D)  Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. 
E)  No entry is made until the stock is issued.

Question 12

What are the rights generally granted to common stockholders?

Accepted Answer

Common stockholders generally have the r

Question 13

The board of directors of a corporation:

Accepted Answer

A)  Are elected by the corporate registrar. 
B)  Are responsible for day-to-day operations of the business. 
C)  Do not have the power to bind the corporation to contracts, due to lack of mutual agency. 
D)  May not also be executive officers of the corporation, due to the separate entity principle. 
E)  Are responsible for and have final authority for managing corporate activities. 
A)  Are elected by the corporate registrar. 
B)  Are responsible for day-to-day operations of the business. 
C)  Do not have the power to bind the corporation to contracts, due to lack of mutual agency. 
D)  May not also be executive officers of the corporation, due to the separate entity principle. 
E)  Are responsible for and have final authority for managing corporate activities.

Question 14

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Accepted Answer

A)  Debit Dividend Expense $12,000; credit Cash $12,000. 
B)  Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C)  Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D)  Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E)  Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
A)  Debit Dividend Expense $12,000; credit Cash $12,000. 
B)  Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C)  Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D)  Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E)  Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

Question 15

A stock dividend is recorded with a transfer from:

Accepted Answer

A)  Contributed capital to retained earnings. 
B)  Retained earnings to paid-in capital. 
C)  Retained earnings to assets. 
D)  Contributed capital to assets. 
E)  Assets to contributed capital. 
A)  Contributed capital to retained earnings. 
B)  Retained earnings to paid-in capital. 
C)  Retained earnings to assets. 
D)  Contributed capital to assets. 
E)  Assets to contributed capital.

Question 16

All of the following statements regarding stock dividends are true except:

Accepted Answer

A)  Directors can use stock dividends to keep the market price of the stock affordable. 
B)  Stock dividends provide evidence of management's confidence that the company is doing well. 
C)  Stock dividends do not reduce assets or equity. 
D)  Stock dividends decrease the number of shares outstanding. 
E)  Stock dividends transfer a portion of equity from retained earnings to contributed capital. 
A)  Directors can use stock dividends to keep the market price of the stock affordable. 
B)  Stock dividends provide evidence of management's confidence that the company is doing well. 
C)  Stock dividends do not reduce assets or equity. 
D)  Stock dividends decrease the number of shares outstanding. 
E)  Stock dividends transfer a portion of equity from retained earnings to contributed capital.

Question 17

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Accepted Answer

A) True 
 B)False

Question 18

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Accepted Answer

A)  $15,000 preferred; $15,000 common. 
B)  $6,000 preferred; $24,000 common. 
C)  $30,000 preferred; $0 common. 
D)  $12,000 preferred; $18,000 common. 
E)  $0 preferred; $30,000 common. 
A)  $15,000 preferred; $15,000 common. 
B)  $6,000 preferred; $24,000 common. 
C)  $30,000 preferred; $0 common. 
D)  $12,000 preferred; $18,000 common. 
E)  $0 preferred; $30,000 common.

Question 19

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

Accepted Answer

A)  Debit Cash $50,000; credit Paid-in Capital in Excess of Stated Value, Common Stock $45,000; credit Common Stock $5,000. 
B)  Debit Cash $50,000; credit Common Stock $50,000. 
C)  Debit Common Stock $50,000; credit Cash $50,000. 
D)  Debit Treasury Stock $50,000; credit Cash $50,000. 
E)  Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000. 
A)  Debit Cash $50,000; credit Paid-in Capital in Excess of Stated Value, Common Stock $45,000; credit Common Stock $5,000. 
B)  Debit Cash $50,000; credit Common Stock $50,000. 
C)  Debit Common Stock $50,000; credit Cash $50,000. 
D)  Debit Treasury Stock $50,000; credit Cash $50,000. 
E)  Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.

Question 20

A reverse stock split increases the market value per share and the par value per share of stock.

Accepted Answer

A) True 
 B)False

Treasury stock is classified as:

The term restricted retained earnings refers to statutory but not contractual restrictions.

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Common Stock Dividend Distributable is a liability account.

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Corporations may buy back their own stock for any of the following reasons except to:

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

What are the rights generally granted to common stockholders?

The board of directors of a corporation:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

A stock dividend is recorded with a transfer from:

All of the following statements regarding stock dividends are true except:

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

A reverse stock split increases the market value per share and the par value per share of stock.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 11: Corporate Reporting and Analysis

Treasury stock is classified as:

The term restricted retained earnings refers to statutory but not contractual restrictions.

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Common Stock Dividend Distributable is a liability account.

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Corporations may buy back their own stock for any of the following reasons except to:

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

What are the rights generally granted to common stockholders?

The board of directors of a corporation:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

A stock dividend is recorded with a transfer from:

All of the following statements regarding stock dividends are true except:

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

A reverse stock split increases the market value per share and the par value per share of stock.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters