Question 1

Retained earnings:

Accepted Answer

A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can only be appropriated by setting aside a cash fund. 
C)  Represent an amount of cash available to pay shareholders. 
D)  Are never adjusted for anything other than net income or dividends. 
E)  Represents the amount shareholders are guaranteed to receive upon company liquidation. 
A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can only be appropriated by setting aside a cash fund. 
C)  Represent an amount of cash available to pay shareholders. 
D)  Are never adjusted for anything other than net income or dividends. 
E)  Represents the amount shareholders are guaranteed to receive upon company liquidation.

Question 2

If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

Accepted Answer

A) True 
 B)False

Question 3

The declaration of cash dividends increases retained earnings.

Accepted Answer

A) True 
 B)False

Question 4

A debit balance in retained earnings is referred to as an accumulated deficit.

Accepted Answer

A) True 
 B)False

Question 5

A company reported net income of $836,000 for the current year.The year-end market price per common share was $12 and there were 475,000 weighted-average shares of common stock outstanding.Calculate the company's price-earnings ratio.

Accepted Answer

Price-Earnings Ratio = Market

Question 6

Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 5,000 shares of common stock with a $10 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array} { c c r } 
& \text { Dividend Declared } \
\text { year 1 } & \$ 2,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000
\end{array}$$

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Accepted Answer

A)  $15,000 preferred; $25,000 common. 
B)  $11,000 preferred; $29,000 common. 
C)  $5,000 preferred; $35,000 common. 
D)  $12,000 preferred; $28,000 common. 
E)  $10,000 preferred; $30,000 common. 
A)  $15,000 preferred; $25,000 common. 
B)  $11,000 preferred; $29,000 common. 
C)  $5,000 preferred; $35,000 common. 
D)  $12,000 preferred; $28,000 common. 
E)  $10,000 preferred; $30,000 common.

Question 7

Organization expenses of a corporation often include legal fees and promoter fees.

Accepted Answer

A) True 
 B)False

Question 8

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

Accepted Answer

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\hl

Question 9

Boron Company is authorized to issue 50,000 shares of $50 par value,8%,cumulative,fully participating preferred stock,and 750,000 shares of $5 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:
 $\begin{array}{|l|l|l}
\hline &\text { Exchanged } 2,200 \text { shares of preferred stock for a building with a market } \
 \text { May }  5 &\text { value of } \$ 135,000 \
\hline \text { July }  20 & \text { Sold } 1,550 \text { shares of preferred stock for } \$ 50 \text { cash per share. } \
\hline \text { Dec. } 20 & \text { Sold } 1,000 \text { shares of preferred stock at } \$ 52 \text { cash per share. }\
\hline 
\end{array}$

Accepted Answer

None

Question 10

A corporation is a legal entity separate from its owners.

Accepted Answer

A) True 
 B)False

Question 11

A company's stock is selling for $35.70 per share at year-end.This current year it paid shareholders a $1.43 per share cash dividend,reported earnings per share of $11.00,and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.

Accepted Answer

Dividend Yield = Cas

Question 12

The Discount on Common Stock account reflects:

Accepted Answer

A)  The difference between the par value of stock and its issue price when it is issued at a price below par value. 
B)  One share's portion of the issued corporation's net assets recorded in its accounts. 
C)  The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value. 
D)  An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E)  The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock. 
A)  The difference between the par value of stock and its issue price when it is issued at a price below par value. 
B)  One share's portion of the issued corporation's net assets recorded in its accounts. 
C)  The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value. 
D)  An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E)  The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock.

Question 13

A company has 2,000,000 common shares authorized,400,000 common shares issued,and 15,000 common shares in treasury stock at the current year-end.It paid $0.96 per share cash dividends during the year.The year-end market price of the stock is $15.Calculate (1)the total dividends paid and (2)the dividend yield.

Accepted Answer

(1)$0.96 * (400,000 shares - 1

Question 14

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Accepted Answer

A) True 
 B)False

Question 15

For each of the following independent transactions a through d,prepare the necessary journal entry:
(a)Declared a $0.40 per share cash dividend on 300,000 shares of preferred stock outstanding.
(b)Declared and distributed an 8% stock dividend on 800,000 shares of $5 par value common stock outstanding.Market price per common share on this date was $25.
(c)Declared and distributed a 2-for-1 stock split on 400,000 shares of $10 par value common stock outstanding.
(d)Declared and distributed a 35% stock dividend on 700,000 common shares of $1 par value common stock outstanding.Market price per common share on this date was $20.

Accepted Answer

The answer of For each of the following independent transactions...

Question 16

A corporation received its charter and began business this year.The company is authorized to issue 500,000 shares of $100 par,6%,noncumulative,nonparticipating preferred stock,and 1,000,000 shares of no-par common stock.The following selected transactions occurred during this year:
 $$\begin{array} { | l | l | } 
\hline \text { Mar. } & \
5 & \text { Issued } 250 \text { shares of preferred stock for } \$ 102 \text { cash per share. } \
\hline  & \text { Exchanged } 750 \text { shares of common stock for } \$ 12,000 \text { in legal } \
{ \text { July } 15 }  & \text { services incurred in the organization of the company. } \
\hline
\end{array}$$ 
Prepare journal entries to record these transactions.

Accepted Answer

\[\begin{array} { | c | r | l | l | } 
\

Question 17

Wiggins Company has 1,000 shares of $10 par preferred stock,which were issued at par.It also has 25,000 shares of common stock outstanding,and its total stockholders' equity equals $500,000.The book value per common share is:

Accepted Answer

A)  $16.00. 
B)  $19.60. 
C)  $19.96. 
D)  $20.00. 
E)  $10.00. 
A)  $16.00. 
B)  $19.60. 
C)  $19.96. 
D)  $20.00. 
E)  $10.00.

Question 18

A corporation may be authorized to issue both common and preferred stock.

Accepted Answer

A) True 
 B)False

Question 19

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Accepted Answer

A)  Stock dividend. 
B)  Stock subscription. 
C)  Premium on stock. 
D)  Discount on stock. 
E)  Treasury stock. 
A)  Stock dividend. 
B)  Stock subscription. 
C)  Premium on stock. 
D)  Discount on stock. 
E)  Treasury stock.

Question 20

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

Retained earnings:

If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

The declaration of cash dividends increases retained earnings.

A debit balance in retained earnings is referred to as an accumulated deficit.

A company reported net income of $836,000 for the current year.The year-end market price per common share was $12 and there were 475,000 weighted-average shares of common stock outstanding.Calculate the company's price-earnings ratio.

Organization expenses of a corporation often include legal fees and promoter fees.

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

A corporation is a legal entity separate from its owners.

A company's stock is selling for $35.70 per share at year-end.This current year it paid shareholders a $1.43 per share cash dividend,reported earnings per share of $11.00,and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.

The Discount on Common Stock account reflects:

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Wiggins Company has 1,000 shares of $10 par preferred stock,which were issued at par.It also has 25,000 shares of common stock outstanding,and its total stockholders' equity equals $500,000.The book value per common share is:

A corporation may be authorized to issue both common and preferred stock.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

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.

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

Retained earnings:

If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

The declaration of cash dividends increases retained earnings.

A debit balance in retained earnings is referred to as an accumulated deficit.

A company reported net income of $836,000 for the current year.The year-end market price per common share was $12 and there were 475,000 weighted-average shares of common stock outstanding.Calculate the company's price-earnings ratio.

Organization expenses of a corporation often include legal fees and promoter fees.

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

A corporation is a legal entity separate from its owners.

A company's stock is selling for $35.70 per share at year-end.This current year it paid shareholders a $1.43 per share cash dividend,reported earnings per share of $11.00,and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.

The Discount on Common Stock account reflects:

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Wiggins Company has 1,000 shares of $10 par preferred stock,which were issued at par.It also has 25,000 shares of common stock outstanding,and its total stockholders' equity equals $500,000.The book value per common share is:

A corporation may be authorized to issue both common and preferred stock.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

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.

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