Question 1

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.

Accepted Answer

A) True 
 B)False

Question 2

A proxy is:

Accepted Answer

A)  A contractual commitment by an investor to purchase unissued shares of stock. 
B)  An arbitrary amount assigned to no-par stock by the corporation's board of directors. 
C)  A document that delegates a stockholder's voting rights to an agent. 
D)  An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E)  The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation. 
A)  A contractual commitment by an investor to purchase unissued shares of stock. 
B)  An arbitrary amount assigned to no-par stock by the corporation's board of directors. 
C)  A document that delegates a stockholder's voting rights to an agent. 
D)  An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. 
E)  The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.

Question 3

Robin Company had net income of $67,000. The company had 9,000 weighted average common shares outstanding. The basic earnings per share equal $7.44 per share.

Accepted Answer

A) True 
 B)False

Question 4

A company has 50,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $1,470,000, and the par value per common share is $5. The book value per share is:

Accepted Answer

A)  $4.75. 
B)  $47.50. 
C)  $10.00. 
D)  $29.40. 
E)  $14.70. 
A)  $4.75. 
B)  $47.50. 
C)  $10.00. 
D)  $29.40. 
E)  $14.70.

Question 5

Common stock always carries a preference for receiving dividends over preferred stock.

Accepted Answer

A) True 
 B)False

Question 6

A stock ________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

Accepted Answer

The answer of A stock ________ keeps stockholder records and...

Question 7

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:
Mar. 5 Issued 250 shares of preferred stock for $102 cash per share.
July 15 Exchanged 750 shares of common stock for $12,000 in legal services incurred in the organization of the company.
Prepare journal entries to record these transactions.

Accepted Answer

The answer of A corporation received its charter and began...

Question 8

Common Stock Dividend Distributable is a liability account.

Accepted Answer

A) True 
 B)False

Question 9

The following data were reported by a corporation: $\begin{array}{lc}
\text { Authorized shares } & 20,000 \
\text { Issued shares } & 15,000 \
\text { Treasury shares } & 3,000
\end{array}$

The number of outstanding shares is:

Accepted Answer

A)  17,000. 
B)  23,000. 
C)  12,000. 
D)  15,000. 
E)  20,000. 
A)  17,000. 
B)  23,000. 
C)  12,000. 
D)  15,000. 
E)  20,000.

Question 10

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 11

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{lr}
\text { Common stock } \$ 10 \text { par value } 20,000 \text { shares } & \$ 100,000 \
\text { authorized and } 10,000 \text { shares issued, } 9,000 \text { shares outstanding } & \
\text { Paid-in capital in excess of par value, common stock } & 50,000 \
\text { Retained earnings } & 25,000 \
\text { Treasury stock } & 11,500
\end{array}$

-
Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

Accepted Answer

A)  $1.28. 
B)  $10.50. 
C)  $10.00. 
D)  $11.50. 
E)  $1.15. 
A)  $1.28. 
B)  $10.50. 
C)  $10.00. 
D)  $11.50. 
E)  $1.15.

Question 12

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Accepted Answer

A)  12.5. 
B)  17.6. 
C)  15.2. 
D)  9.0. 
E)  16.9. 
A)  12.5. 
B)  17.6. 
C)  15.2. 
D)  9.0. 
E)  16.9.

Question 13

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is:

Accepted Answer

A)  $600. 
B)  $100. 
C)  $6,000. 
D)  $7,000. 
E)  $1,000. 
A)  $600. 
B)  $100. 
C)  $6,000. 
D)  $7,000. 
E)  $1,000.

Question 14

A stock dividend decreases the market price of the company's stock.

Accepted Answer

A) True 
 B)False

Question 15

Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:
Feb. 1 Issued 10,000 shares of common stock for $30 cash per share.
15 Exchanged 2,000 shares of preferred stock for equipment and merchandise inventory with market values of $80,000 and $30,000, respectively.

Accepted Answer

The answer of Rhoads Corporation is authorized to issue 250,000...

Question 16

On January 10, Mood Corporation purchased 15,000 shares of its own common stock at $17.50 per share. On August 4, a total of 2,000 treasury shares were sold at $19.00 per share. These are the only treasury stock transactions ever made by the corporation. Prepare the journal entries required on January 10 and August 4.

Accepted Answer

None

Question 17

A dividend preference for preferred stock means that:

Accepted Answer

A)  Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders. 
B)  Preferred stockholders prefer dividends more than common stockholders. 
C)  Dividends are paid quarterly. 
D)  Preferred shareholders are guaranteed dividends. 
E)  Dividends must be declared on preferred stock. 
A)  Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders. 
B)  Preferred stockholders prefer dividends more than common stockholders. 
C)  Dividends are paid quarterly. 
D)  Preferred shareholders are guaranteed dividends. 
E)  Dividends must be declared on preferred stock.

Question 18

Treasury stock is classified as:

Accepted Answer

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

Question 19

The Paid-in Capital, Treasury Stock account can never have a debit balance.

Accepted Answer

A) True 
 B)False

Question 20

The total number of shares outstanding is the authorized stock.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Corporations

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.

A proxy is:

Robin Company had net income of $67,000. The company had 9,000 weighted average common shares outstanding. The basic earnings per share equal $7.44 per share.

A company has 50,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $1,470,000, and the par value per common share is $5. The book value per share is:

Common stock always carries a preference for receiving dividends over preferred stock.

A stock ________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

Common Stock Dividend Distributable is a liability account.

The following data were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of outstanding shares is:

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.

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is:

A stock dividend decreases the market price of the company's stock.

A dividend preference for preferred stock means that:

Treasury stock is classified as:

The Paid-in Capital, Treasury Stock account can never have a debit balance.

The total number of shares outstanding is the authorized stock.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments

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

Present and Future Values in Accounting

Activity-Based Costing

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