Question 1

No journal entry is made on the dividend declaration date.

Accepted Answer

A) True 
 B)False

Question 2

With a stock dividend,the total number of shares issued and outstanding increases,and the percentage of total ownership of individual stockholders also increases.

Accepted Answer

A) True 
 B)False

Question 3

A corporation has 10,000 shares of 20%,$60 par cumulative preferred stock outstanding and 32,000 shares of no-par common stock outstanding.Preferred dividends of $22,000 are in arrears.At the end of the current year,the corporation declares a dividend of $236,000.What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent.)

Accepted Answer

A)  The dividend per share is $6.00 for preferred stock and $13.57 per share for common stock. 
B)  The dividend per share is $23.60 for preferred stock and $0 per share for common stock. 
C)  The dividend per share is $14.20 for preferred stock and $2.94 per share for common stock. 
D)  The dividend per share is $23.60 for preferred stock and $2.94 per share for common stock. 
A)  The dividend per share is $6.00 for preferred stock and $13.57 per share for common stock. 
B)  The dividend per share is $23.60 for preferred stock and $0 per share for common stock. 
C)  The dividend per share is $14.20 for preferred stock and $2.94 per share for common stock. 
D)  The dividend per share is $23.60 for preferred stock and $2.94 per share for common stock.

Question 4

Regarding the statement of stockholders' equity,which of the following statements is incorrect?

Accepted Answer

A)  The statement of stockholders' equity has more information than the statement of retained earnings because it reports the changes in all stockholders' equity accounts. 
B)  The statement of stockholders' equity does not show the changes to the Retained Earnings account because that information is provided in the statement of retained earnings. 
C)  The statement of stockholders' equity is an option for reporting the changes in stockholders' equity of a corporation. 
D)  The statement of stockholders' equity reports the number of shares and any changes during the year in preferred, common, and treasury stock. 
A)  The statement of stockholders' equity has more information than the statement of retained earnings because it reports the changes in all stockholders' equity accounts. 
B)  The statement of stockholders' equity does not show the changes to the Retained Earnings account because that information is provided in the statement of retained earnings. 
C)  The statement of stockholders' equity is an option for reporting the changes in stockholders' equity of a corporation. 
D)  The statement of stockholders' equity reports the number of shares and any changes during the year in preferred, common, and treasury stock.

Question 5

Which of the following is a TRUE statement regarding the effect of a stock split and stock dividend on total assets or liabilities?

Accepted Answer

A)  Both a stock split and a stock dividend will decrease total assets. 
B)  Both a stock split and a stock dividend will increase total liabilities. 
C)  A stock split will increase total assets, but a stock dividend will not. 
D)  Neither a stock split nor a stock dividend will affect total assets or total liabilities. 
A)  Both a stock split and a stock dividend will decrease total assets. 
B)  Both a stock split and a stock dividend will increase total liabilities. 
C)  A stock split will increase total assets, but a stock dividend will not. 
D)  Neither a stock split nor a stock dividend will affect total assets or total liabilities.

Question 6

Jarrell,Inc.purchases 8,500 shares of the company's own $6 par common stock for $8 per share.Journalize the transaction.Omit explanation.

Accepted Answer

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

Question 7

Superstar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share. $$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Common Stock, } \$ 10 \text { Par, } 103,000 \text { shares authorized, } 58,000 \text { shares issued } \
\text { and outstanding }
\end{array} & \$ 580,000 \
\hline \text { Paid-in Capital in Excess of Par-Common } & 125,000 \
\hline \text { Retained Earnings } & 302,000 \
\hline \text { Total Stockholders' Equity } & \$ 1,007,000 \
\hline
\end{array}$$ What would be the total stockholders' equity after a 15% common stock dividend?

Accepted Answer

A)  $1,073,700 
B)  $705,000 
C)  $1,007,000 
D)  $604,200 
A)  $1,073,700 
B)  $705,000 
C)  $1,007,000 
D)  $604,200

Question 8

Which of the following statements,regarding no-par stock,is incorrect?

Accepted Answer

A)  Regardless of the stock's issue price, Cash is debited and Common Stock is credited for the cash received. 
B)  There can be no Paid-In Capital in Excess of Par. 
C)  There is no par to be in excess of. 
D)  All of the statements are correct. 
A)  Regardless of the stock's issue price, Cash is debited and Common Stock is credited for the cash received. 
B)  There can be no Paid-In Capital in Excess of Par. 
C)  There is no par to be in excess of. 
D)  All of the statements are correct.

Question 9

Newcastle Enterprises had net income for 2018 of $103,000.Newcastle had 39,000 shares of common stock outstanding at the beginning of the year and 43,000 shares of common stock outstanding at the end of the year.There were 6000 shares of preferred stock outstanding all year.During 2018,Newcastle declared and paid preferred dividends of $29,000.What is Newcastle's earnings per share? (Round the answer to two decimal places.)

Accepted Answer

A)  $2.51 
B)  $2.40 
C)  $1.80 
D)  $1.72 
A)  $2.51 
B)  $2.40 
C)  $1.80 
D)  $1.72

Question 10

Which of the following is an advantage of the corporate form of business?

Accepted Answer

A)  less degree of government regulation 
B)  limited liability of stockholders 
C)  separation of ownership and management 
D)  low start-up costs 
A)  less degree of government regulation 
B)  limited liability of stockholders 
C)  separation of ownership and management 
D)  low start-up costs

Question 11

When a corporation issues no-par stock,it debits the asset received and credits the stock account.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 20,000 outstanding shares of $25 par common stock?

Accepted Answer

A)  The par value of the stock remains the same. 
B)  The par value of the stock increases to $50 per share. 
C)  The number of outstanding shares remains at 20,000. 
D)  The number of outstanding shares increases to 60,000. 
A)  The par value of the stock remains the same. 
B)  The par value of the stock increases to $50 per share. 
C)  The number of outstanding shares remains at 20,000. 
D)  The number of outstanding shares increases to 60,000.

Question 13

The disposal of a business segment is reported as discontinued operations.

Accepted Answer

A) True 
 B)False

Question 14

Holland Corporation's annual report is as follows. $$\begin{array} { | l | r | r | } 
\hline & \text { March 31,2017 } & \text { March 31, } 2018 \
\hline \text { Net Income } & \$ 350,000 & \$ 441,500 \
\hline \text { Preferred Dividends } & 0 & 0 \
\hline \text { Total Stockholders' Equity } & \$ 4,380,000 & \$ 5,092,000 \
\hline \text { Stockholders' Equity attributable to Preferred } &  \
\text { Stock } &0 & 0\
\hline \text { Number of Common Shares Outstanding } &  284,000 & 195,000  \
\hline
\end{array}$$  Based on the information provided,find the rate of return on common stockholders' equity on March 31,2018.(Round your final answer two decimal places.)

Accepted Answer

A)  8.36% 
B)  9.32% 
C)  8.67% 
D)  7.99% 
A)  8.36% 
B)  9.32% 
C)  8.67% 
D)  7.99%

Question 15

Special items and earnings per share are reported on the income statement after income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a basic right of stockholders?

Accepted Answer

A)  Stockholders may sell their stock back to the company if they wish. 
B)  Stockholders may authorize a business contract on behalf of the corporation. 
C)  Stockholders may receive dividends from corporate earnings. 
D)  Stockholders may determine the issue price of common stock. 
A)  Stockholders may sell their stock back to the company if they wish. 
B)  Stockholders may authorize a business contract on behalf of the corporation. 
C)  Stockholders may receive dividends from corporate earnings. 
D)  Stockholders may determine the issue price of common stock.

Question 17

Define the following terms:
 $$\begin{array} { | l | l | } 
\hline \text { Term } & \text { Definition } \
\hline \text { Putstanding stock } & \
\hline \text { Paid-in capital } & \
\hline \text { Par value } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 18

Earnings per share is a liquidity measure that is used to compare companies of different sizes.

Accepted Answer

A) True 
 B)False

Question 19

On the ________,cash dividends become a liability of a corporation.

Accepted Answer

A)  declaration date 
B)  date of record 
C)  last day of the fiscal year 
D)  payment date 
A)  declaration date 
B)  date of record 
C)  last day of the fiscal year 
D)  payment date

Question 20

Following is a list of advantages and disadvantages of the corporate form of business.Identify each characteristic as either an advantage (A)or a disadvantage (D).
 $$\begin{array} { | l | l | } 
\hline \text { Corporate Characteristic } & \begin{array} { l } 
\text { Advantage (A) or } \
\text { Disadvantage (D) }
\end{array} \
\hline \text { Entity has continuous life. } & \
\hline \text { Exposure to double taxation is evident. } & \
\hline \text { Government regulation is expensive. } & \
\hline \text { Transfer of ownership is easy. } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Exam 13: Corporations

No journal entry is made on the dividend declaration date.

With a stock dividend,the total number of shares issued and outstanding increases,and the percentage of total ownership of individual stockholders also increases.

Regarding the statement of stockholders' equity,which of the following statements is incorrect?

Which of the following is a TRUE statement regarding the effect of a stock split and stock dividend on total assets or liabilities?

Jarrell,Inc.purchases 8,500 shares of the company's own $6 par common stock for $8 per share.Journalize the transaction.Omit explanation.

Which of the following statements,regarding no-par stock,is incorrect?

Which of the following is an advantage of the corporate form of business?

When a corporation issues no-par stock,it debits the asset received and credits the stock account.

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 20,000 outstanding shares of $25 par common stock?

The disposal of a business segment is reported as discontinued operations.

Special items and earnings per share are reported on the income statement after income from continuing operations.

Which of the following is a basic right of stockholders?

Define the following terms: Term Definition Putstanding stock Paid-in capital Par value

Earnings per share is a liquidity measure that is used to compare companies of different sizes.

On the ________,cash dividends become a liability of a corporation.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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