Question 1

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Accepted Answer

A) The issuance of stock decreases several important financial ratios. 
B) Issuing bonds dilutes the voting power of the stockholders. 
C) Corporations are not required to return the investment to the stockholders. 
D) Investors expect to earn a higher rate of return on stocks than bonds. 
A) The issuance of stock decreases several important financial ratios. 
B) Issuing bonds dilutes the voting power of the stockholders. 
C) Corporations are not required to return the investment to the stockholders. 
D) Investors expect to earn a higher rate of return on stocks than bonds.

Question 2

Assume that the Stockholders’ Equity section of Cherokee Company’s balance sheet on December 31, 2017, appears as follows:
$$\begin{array} { l r } 
\text { Common stock, } \$ 10 \text { par value, } 1,500 \text { shares issued and outstanding } & \$ 15,000 \
\text { Additional paid-in capital-common } & 17,000 \
\text { Retained eamings } &  \underline{11,000} \
\text { Total stockholders' equity } & \underline{ \$ 43,000} \
\end{array}$$
1.If on February 1,2018,Cherokee buys 120 of its shares as treasury stock at $30 per share,determine the impact of this transaction on the accounting equation.
2.How will the Stockholders' Equity section of Cherokee's balance sheet appear on February 1,2018,after the purchase of the treasury stock?

Accepted Answer

1.?
 Feb. 1
To record the pturchase of 1

Question 3

Which accounts are used by a sole proprietorship that are not used by a corporation?

Accepted Answer

A sole proprietorship uses a Capital acc

Question 4

What is substance over form,and how does this concept relate to the presentation of preferred stock?

Accepted Answer

Substance over form means that a company

Question 5

Use the comparative financial statements of Penny Company for the year ended December 31,2017 to answer the following question(s).
Penny Company
Statement of Stockholders' Equity
For the Year Ended December 31,2017?
   Required
Prepare a statement of retained earnings for the year ended December 31,2017.
?

Accepted Answer

Penny Company
Statement of Retained Earn

Question 6

The FASB's concept of comprehensive income

Accepted Answer

A) excludes transactions that involve the payment of dividends. 
B) requires that all transactions must be shown on the income statement. 
C) has a primary drawback because it allows management to manipulate the income figure to a certain extent. 
D) allows items that are not necessarily under management's control,such as natural disasters,to be shown as an adjustment of retained earnings. 
A) excludes transactions that involve the payment of dividends. 
B) requires that all transactions must be shown on the income statement. 
C) has a primary drawback because it allows management to manipulate the income figure to a certain extent. 
D) allows items that are not necessarily under management's control,such as natural disasters,to be shown as an adjustment of retained earnings.

Question 7

On May 1,2017,Xiu Inc.had common stock of $345,000,additional paid-in capital of $1,298,000,and retained earnings of $3,013,000.Xiu did not purchase or sell any common stock during the year.The company reported net income of $556,000 and declared dividends in the amount of $78,000 during the year ended April 30,2018.
Required
Prepare a financial statement that explains the differences between the beginning and ending balances for the accounts in the Stockholders' Equity category of the balance sheet.
​

Accepted Answer

The answer of On May 1,2017,Xiu Inc.had common stock of...

Question 8

Select the best answer from the list below to complete statements  that follow.
 $$\begin{array} { l l l } 
\text { Authorized shares } & \text { treasury stock } & \text { book value per share } \
\text { issued shares } & \text { stock dividend } & \text { par value per share } \
\text { outstanding shares } & \text { additional paid-in-capital } & \text { market value per share } \
\text { stock split } & \text { dividend payout ratio } & \text { retained earnings }
\end{array}$$  
-The annual dividend amount divided by the annual net income is the __________.

Accepted Answer

dividend p

Question 9

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

Accepted Answer

A) Building and Preferred Stock increase $780,000. 
B) Building and Preferred Stock increase $500,000. 
C) Building increases $780,000;Preferred Stock increases $500,000;and Additional Paid-In Capital-Preferred increases $280,000. 
D) Building increases $750,000;Preferred Stock increases $500,000;and Additional Paid-In Capital-Preferred increases $250,000. 
A) Building and Preferred Stock increase $780,000. 
B) Building and Preferred Stock increase $500,000. 
C) Building increases $780,000;Preferred Stock increases $500,000;and Additional Paid-In Capital-Preferred increases $280,000. 
D) Building increases $750,000;Preferred Stock increases $500,000;and Additional Paid-In Capital-Preferred increases $250,000.

Question 10

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new,there is no established market price for its stock.How would the company record the transaction?

Accepted Answer

A) In terms of the par value of the stock issued 
B) At the fair market value of the machine 
C) At the cost recorded by the previous owner of the machine 
D) Recording the transaction would be postponed until a market price for the stock could be determined. 
A) In terms of the par value of the stock issued 
B) At the fair market value of the machine 
C) At the cost recorded by the previous owner of the machine 
D) Recording the transaction would be postponed until a market price for the stock could be determined.

Question 11

When the board of director's declares a cash or stock dividend,this action decreases Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 12

When a company purchases treasury stock,which of the following statements is true?

Accepted Answer

A) Treasury stock is considered to be an asset because cash is paid for the stock. 
B) The cost of the treasury stock reduces stockholders' equity. 
C) Dividends continue to be paid on the treasury stock because it is still issued. 
D) Since treasury stock is held by the original issuer,it is no longer considered to be issued. 
A) Treasury stock is considered to be an asset because cash is paid for the stock. 
B) The cost of the treasury stock reduces stockholders' equity. 
C) Dividends continue to be paid on the treasury stock because it is still issued. 
D) Since treasury stock is held by the original issuer,it is no longer considered to be issued.

Question 13

A __________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Accepted Answer

The answer of A __________ allows the firm to eliminate...

Question 14

Stock dividends reduce the par value of the stock.

Accepted Answer

A) True 
 B)False

Question 15

Overton Supply reported the following information at December 31,2017:$$\begin{array} { l r } 
\text { Common stock, } \$ 1 \text { par, } 100,000 \text { shares authorized } & \$ 80,000 \
\text { Additional paid-in capital-common } & 60,000 \
\text { Retained earnings } &  \underline{40,000 }\
\text { Total contributed capital and retained earnings } & \$ 180,000 \
\text { Less: Treasury stock (2,000 common shares at cost) } &  \underline{ ( 20,000 )} \
\text { Total stockholders' equity } & \underline{ \$ 160,000}
\end{array}$$ 
Answer the following questions for Overton Supply.
 1) Assuming that all shares were sold at the same price, for how much did each share of common stock originally sell?

2) What is the total amount of contributed capital at December 31,2017 ?

3) What is the amount of the book value per share at December 31,2017 ?

4) Would the book value per share increase, decrease, or remain the same, if the company declared a 2-for-1 stock split on December 31,2017? Explain.

Accepted Answer

?
 1) @#LAT-DLM& assuming all shares wer

Question 16

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an account in stockholders' equity?

Accepted Answer

A) Dividends Payable 
B) Loss on Sale of Equipment 
C) Retained Earnings 
D) Net Income 
A) Dividends Payable 
B) Loss on Sale of Equipment 
C) Retained Earnings 
D) Net Income

Question 18

Contrast the two parts of stockholders' equity.

Accepted Answer

Stockholders' equity consists of two par

Question 19

Stockholders may prefer to invest in preferred stock because

Accepted Answer

A) preferred stock confers preferred voting rights. 
B) preferred stock can always be converted to common stock if the owner desires. 
C) the dividends are generally increased each year. 
D) the dividends are paid on preferred stock before they are paid on common stock. 
A) preferred stock confers preferred voting rights. 
B) preferred stock can always be converted to common stock if the owner desires. 
C) the dividends are generally increased each year. 
D) the dividends are paid on preferred stock before they are paid on common stock.

Question 20

In the space provided,indicate the effect of the dividend transactions on each account listed by writing the amount and whether the account would be increased or decreased.The company has 10,000 shares of $1 par value common stock authorized and 8,000 shares issued.In instances where there is no effect on that account,place an X in the box.
 \[\begin{array} { | l | l | l | l | l | } 
\hline { \text { Item } } & \begin{array} { l } 
\text { Common } \
\text { Common } \
\text { Stock }
\end{array} & \begin{array} { l } 
\text { Stock } \
\text { Dividend } \
\text { Distributable }
\end{array} & \begin{array} { l } 
\text { Paid-In } \
\text { Capital- } \
\text { Common }
\end{array} & \begin{array} { l } 
\text { Retained } \
\text { Earnings }
\end{array} \
\hline \text { a. } \quad \begin{array} { l } 
\text { May 1, declared cash dividend } \
\text { totaling } \$ 2,000 .
\end{array} & & & & \
\hline \text { b. } \quad \begin{array} { l } 
\text { May 15, paid the cash dividend } \
\text { declared on May } 1 .
\end{array} & & & & \
\hline \text { c. } \quad \begin{array} { l } 
\text { May 25, declared a 10\% stock } \
\text { dividend when the market price } \
\text { of the stock was } \$ 8 .
\end{array} & & & & \
\hline \text { d. } \begin{array} { l } 
\text { May 30, distributed the stock } \
\text { dividend. }
\end{array} & & & & \
\hline \text { e. } \quad \begin{array} { l } 
\text { June } 15 , \text { declared a 2-for-1 stock } \
\text { split. }
\end{array} & & & & \
\hline
\end{array}\]

Accepted Answer

?
?
 \[\begin{array} { | l | l | l | l |

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Which accounts are used by a sole proprietorship that are not used by a corporation?

What is substance over form,and how does this concept relate to the presentation of preferred stock?

The FASB's concept of comprehensive income

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new,there is no established market price for its stock.How would the company record the transaction?

When the board of director's declares a cash or stock dividend,this action decreases Retained Earnings.

When a company purchases treasury stock,which of the following statements is true?

A __________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Stock dividends reduce the par value of the stock.

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Which of the following is an account in stockholders' equity?

Contrast the two parts of stockholders' equity.

Stockholders may prefer to invest in preferred stock because

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 11: Stockholders Equity

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Which accounts are used by a sole proprietorship that are not used by a corporation?

What is substance over form,and how does this concept relate to the presentation of preferred stock?

The FASB's concept of comprehensive income

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price.Similar buildings have recently cost $780,000.What are the effects of this transaction on the accounting equation for Museum?

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new,there is no established market price for its stock.How would the company record the transaction?

When the board of director's declares a cash or stock dividend,this action decreases Retained Earnings.

When a company purchases treasury stock,which of the following statements is true?

A __________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Stock dividends reduce the par value of the stock.

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Which of the following is an account in stockholders' equity?

Contrast the two parts of stockholders' equity.

Stockholders may prefer to invest in preferred stock because

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters