Question 1

The journal entry to record the issuance of a stock dividend is to:

Accepted Answer

A) debit Common Stock Dividend Distributable (number of shares × par value common stock); credit Common Stock (same). 
B) debit Common Stock Dividends Distributable (number of shares × market value common stock); credit Common Stock (same). 
C) debit Retained Earnings (market value × number of shares); credit Common Stock Dividends Distributable (number of shares × par value); credit Paid-in Capital in Excess of Par-Stock Dividend. 
D) debit Common Stock Dividend Distributable (number of shares × par value); credit Cash. 
A) debit Common Stock Dividend Distributable (number of shares × par value common stock); credit Common Stock (same). 
B) debit Common Stock Dividends Distributable (number of shares × market value common stock); credit Common Stock (same). 
C) debit Retained Earnings (market value × number of shares); credit Common Stock Dividends Distributable (number of shares × par value); credit Paid-in Capital in Excess of Par-Stock Dividend. 
D) debit Common Stock Dividend Distributable (number of shares × par value); credit Cash.

Question 2

The Tiger Football Corporation has 7,500 shares of $1.00 par value common stock issued and outstanding. The board of directors declared a 2-for-1 stock split May 10, distributable on June 15, to stockholders of record on June 1. The Retained Earnings account balance is $50,000 on May 10. Prepare the equity section of the balance sheet on May 10 and June 15, before and after the stock split.

Accepted Answer

@#IMG-DLM& Stockhold

Question 3

Retained Earnings is a current liability on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false of treasury stock?

Accepted Answer

A) It has a right to dividends. 
B) It has a right to vote. 
C) It is stock that is outstanding. 
D) All of the statements are false. 
A) It has a right to dividends. 
B) It has a right to vote. 
C) It is stock that is outstanding. 
D) All of the statements are false.

Question 5

Cody's Western Wear has 2,000 shares of $10 par value common stock outstanding. During the current year, the company distributed a 10% stock dividend. The market value of the stock at that time was $16 per share. Cody's total stockholders' equity should increase or decrease by:

Accepted Answer

A) $0. 
B) $1,200. 
C) $2,000. 
D) ($3,200). 
A) $0. 
B) $1,200. 
C) $2,000. 
D) ($3,200).

Question 6

The declaration of a stock dividend was credited to Dividends Payable and debited to Retained Earnings. This error would cause:

Accepted Answer

A) the period end assets to be overstated. 
B) the period end liabilities to be overstated. 
C) the period end stockholders' equity to be overstated. 
D) the period's net income to be overstated. 
A) the period end assets to be overstated. 
B) the period end liabilities to be overstated. 
C) the period end stockholders' equity to be overstated. 
D) the period's net income to be overstated.

Question 7

Appropriations of retained earnings are voted upon by stockholders.

Accepted Answer

A) True 
 B)False

Question 8

A stock split:

Accepted Answer

A) causes decrease in the number of shares outstanding. 
B) increases the par or stated value in proportion. 
C) reduces retained earnings. 
D) None of these answers are correct. 
A) causes decrease in the number of shares outstanding. 
B) increases the par or stated value in proportion. 
C) reduces retained earnings. 
D) None of these answers are correct.

Question 9

Total stockholders' equity consists of retained earnings of $150,000 and paid-in capital of $600,000. There are 30,000 common shares outstanding. What is the book value per share?

Accepted Answer

A) $20.00 per share 
B) $25.00 per share 
C) $15.00 per share 
D) $ 5.00 per share 
A) $20.00 per share 
B) $25.00 per share 
C) $15.00 per share 
D) $ 5.00 per share

Question 10

In the closing process for corporations, Retained Earnings is used rather than Capital.

Accepted Answer

A) True 
 B)False

Question 11

Distribution of earnings to stockholders may be in the form of cash, or additional stock.

Accepted Answer

A) True 
 B)False

Question 12

When the corporation has only common stock, the total of stockholders' equity divided by the number of shares issued equals:

Accepted Answer

A) redemption value. 
B) book value per share. 
C) dividend per share. 
D) market value. 
A) redemption value. 
B) book value per share. 
C) dividend per share. 
D) market value.

Question 13

At the end of the accounting cycle, net income will be closed into:

Accepted Answer

A) Treasury Stock. 
B) Paid-in Capital. 
C) Cash. 
D) Retained Earnings. 
A) Treasury Stock. 
B) Paid-in Capital. 
C) Cash. 
D) Retained Earnings.

Question 14

Before a three-for-one stock split, the shares outstanding were 5,000 shares at $12 par. After the split, what was the par and number of shares?

Accepted Answer

A) 15,000 shares at $12 per share 
B) 20,000 shares at $6 per share 
C) 15,000 shares at $4 per share 
D) 5,000 shares at $48 per share 
A) 15,000 shares at $12 per share 
B) 20,000 shares at $6 per share 
C) 15,000 shares at $4 per share 
D) 5,000 shares at $48 per share

Question 15

From the following, determine the book value per share for preferred and common stocks; no dividends are in arrears on the preferred stock.
   Preferred Stock, 8% cumulative and
   Common Stock, $1 par value, 40,000 shares

Accepted Answer

Book value for prefe

Question 16

Using the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 20xx, from the following:
   Correction of prior year error. Purchase

Accepted Answer

@#IMG-DLM& ___________________

Question 17

A stock split will not affect total stockholders' equity or the number of shares of stock issued.

Accepted Answer

A) True 
 B)False

Question 18

To explain the change in the amount of retained earnings between successive balance sheet dates, it is customary to prepare a(n):

Accepted Answer

A) income statement. 
B) statement of stockholders' equity. 
C) balance sheet. 
D) retained earnings statement. 
A) income statement. 
B) statement of stockholders' equity. 
C) balance sheet. 
D) retained earnings statement.

Question 19

When the corporation has both preferred and common stock, the steps to compute book value for common stock would be:

Accepted Answer

A) compute common shares divided by number of shares outstanding. 
B) compute preferred stock book value first; the remainder is assigned to common stock. 
C) divide total stockholders' equity by total shares outstanding. 
D) None of these answers are correct. 
A) compute common shares divided by number of shares outstanding. 
B) compute preferred stock book value first; the remainder is assigned to common stock. 
C) divide total stockholders' equity by total shares outstanding. 
D) None of these answers are correct.

Question 20

The entry to record the distribution of the stock dividend would include:

Accepted Answer

A) a credit to Common Stock. 
B) a debit to Common Stock Distributable. 
C) both A and B are correct. 
D) None of these answers are correct. 
A) a credit to Common Stock. 
B) a debit to Common Stock Distributable. 
C) both A and B are correct. 
D) None of these answers are correct.

Exam 19: Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

The journal entry to record the issuance of a stock dividend is to:

Retained Earnings is a current liability on the balance sheet.

Which of the following statements is false of treasury stock?

Cody's Western Wear has 2,000 shares of $10 par value common stock outstanding. During the current year, the company distributed a 10% stock dividend. The market value of the stock at that time was $16 per share. Cody's total stockholders' equity should increase or decrease by:

The declaration of a stock dividend was credited to Dividends Payable and debited to Retained Earnings. This error would cause:

Appropriations of retained earnings are voted upon by stockholders.

A stock split:

Total stockholders' equity consists of retained earnings of $150,000 and paid-in capital of $600,000. There are 30,000 common shares outstanding. What is the book value per share?

In the closing process for corporations, Retained Earnings is used rather than Capital.

Distribution of earnings to stockholders may be in the form of cash, or additional stock.

When the corporation has only common stock, the total of stockholders' equity divided by the number of shares issued equals:

At the end of the accounting cycle, net income will be closed into:

Before a three-for-one stock split, the shares outstanding were 5,000 shares at $12 par. After the split, what was the par and number of shares?

From the following, determine the book value per share for preferred and common stocks; no dividends are in arrears on the preferred stock. Preferred Stock, 8% cumulative and Common Stock, $1 par value, 40,000 shares

Using the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 20xx, from the following: Correction of prior year error. Purchase

A stock split will not affect total stockholders' equity or the number of shares of stock issued.

To explain the change in the amount of retained earnings between successive balance sheet dates, it is customary to prepare a(n):

When the corporation has both preferred and common stock, the steps to compute book value for common stock would be:

The entry to record the distribution of the stock dividend would include:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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