Question 1

Which of the following statements is true?

Accepted Answer

A) Both a stock dividend and a stock split increase the balance in the common stock account. 
B) Both a stock dividend and a stock split reduce retained earnings. 
C) Neither a stock dividend nor a stock split will result in net gains or losses. 
D) A stock split increases the par value per share of the stock. 
A) Both a stock dividend and a stock split increase the balance in the common stock account. 
B) Both a stock dividend and a stock split reduce retained earnings. 
C) Neither a stock dividend nor a stock split will result in net gains or losses. 
D) A stock split increases the par value per share of the stock.

Question 2

Treasury stock is ________.

Accepted Answer

A) a contra equity account 
B) a contra asset account 
C) a liability account 
D) an asset account 
A) a contra equity account 
B) a contra asset account 
C) a liability account 
D) an asset account

Question 3

Ropers,Inc.purchases 11,000 shares of its previously issued $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Accepted Answer

A) Debit Common Stock-$2 Par Value $1,760,000,and credit Cash $1,760,000. 
B) Debit Cash $1,738,000,and credit Paid-In Capital in Excess of Par-Common $1,738,000. 
C) Debit Cash $1,738,000,and credit Treasury Stock-Common $1,738,000. 
D) Debit Treasury Stock-Common $1,760,000,and credit Cash $1,760,000. 
A) Debit Common Stock-$2 Par Value $1,760,000,and credit Cash $1,760,000. 
B) Debit Cash $1,738,000,and credit Paid-In Capital in Excess of Par-Common $1,738,000. 
C) Debit Cash $1,738,000,and credit Treasury Stock-Common $1,738,000. 
D) Debit Treasury Stock-Common $1,760,000,and credit Cash $1,760,000.

Question 4

Nice International originally issued 106,000 shares of common stock at a price of $21 per share.A year later,it distributed a 13% stock dividend to shareholders.At the time of the stock dividend,the share price had increased to $24 per share.Which of the following statements is true?

Accepted Answer

A) Nice will record sales revenues of $289,380. 
B) Nice will record a loss of $41,340. 
C) Nice will record a gain of $41,340. 
D) Nice will record neither a gain nor a loss. 
A) Nice will record sales revenues of $289,380. 
B) Nice will record a loss of $41,340. 
C) Nice will record a gain of $41,340. 
D) Nice will record neither a gain nor a loss.

Question 5

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 6

Jenkins Realty,Inc.issued 13,000 shares of $1 stated value common stock for $13 per share.The journal entry to record this transaction includes a credit to ________.

Accepted Answer

A) Common Stock for $169,000 
B) Paid-In Capital in Excess of Stated - Common for $13,000 
C) Common Stock - $1 Stated Value for $156,000 
D) Paid-In Capital in Excess of Stated - Common for $156,000 
A) Common Stock for $169,000 
B) Paid-In Capital in Excess of Stated - Common for $13,000 
C) Common Stock - $1 Stated Value for $156,000 
D) Paid-In Capital in Excess of Stated - Common for $156,000

Question 7

The rate of return on common stockholders' equity shows the relationship between net income available to common stockholders and their average common equity invested in the company.

Accepted Answer

A) True 
 B)False

Question 8

If treasury stock is resold for more than cost,the difference is debited to the account Paid-In Capital from Treasury Stock Transactions.

Accepted Answer

A) True 
 B)False

Question 9

Orange Office Supply Corporation completed the following stock issuance transactions:
   
Prepare the journal entries to record these transactions.Explanations are not required.

Accepted Answer

The answer of Orange Office Supply Corporation completed the following...

Question 10

The issue price is the price the stock initially sells for the first time it is sold.

Accepted Answer

A) True 
 B)False

Question 11

Peterson,Inc.issued 4,000 shares of preferred stock for $240,000.The stock has a par value of $60 per share.Prepare the journal entry for this transaction.

Accepted Answer

The answer of Peterson,Inc.issued 4,000 shares of preferred stock for...

Question 12

Treasury stock ________.

Accepted Answer

A) decreases the number of shares issued 
B) increases the number of shares issued 
C) increases the number of shares outstanding 
D) decreases the number of shares outstanding 
A) decreases the number of shares issued 
B) increases the number of shares issued 
C) increases the number of shares outstanding 
D) decreases the number of shares outstanding

Question 13

The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,100.The corporation resells 750 shares of its treasury stock.These shares were acquired for $11 per share and sold for $9 per share.The entry to record the sale of treasury stock includes a debit to Retained Earnings of $1,500.

Accepted Answer

A) True 
 B)False

Question 14

Legal capital refers to the portion of stockholders' equity that cannot be used for dividends.

Accepted Answer

A) True 
 B)False

Question 15

Lack of mutual agency is best described as which of the following?

Accepted Answer

A) The liabilities of the corporation cannot be extended to the personal assets of the stockholder. 
B) Shares of stock can be readily purchased and sold by investors on an organized stock exchange. 
C) Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. 
D) Corporations pay income tax on corporate earnings,and shareholders pay income tax on corporate dividends. 
A) The liabilities of the corporation cannot be extended to the personal assets of the stockholder. 
B) Shares of stock can be readily purchased and sold by investors on an organized stock exchange. 
C) Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. 
D) Corporations pay income tax on corporate earnings,and shareholders pay income tax on corporate dividends.

Question 16

Small and large stock dividends have no effect on the Common Stock account.

Accepted Answer

A) True 
 B)False

Question 17

When a previously declared dividend is paid,which of the following occurs?

Accepted Answer

A) assets increase 
B) stockholders' equity increases 
C) liabilities decrease 
D) assets remain unchanged 
A) assets increase 
B) stockholders' equity increases 
C) liabilities decrease 
D) assets remain unchanged

Question 18

A company cannot report a gain or loss when buying or selling its own stock.

Accepted Answer

A) True 
 B)False

Question 19

When a corporation sells 9,000 shares of $17 par value common stock for $157,000,Common Stock is credited for $153,000.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 13: Corporations

Which of the following statements is true?

Treasury stock is ________.

Ropers,Inc.purchases 11,000 shares of its previously issued $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Nice International originally issued 106,000 shares of common stock at a price of $21 per share.A year later,it distributed a 13% stock dividend to shareholders.At the time of the stock dividend,the share price had increased to $24 per share.Which of the following statements is true?

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

Jenkins Realty,Inc.issued 13,000 shares of $1 stated value common stock for $13 per share.The journal entry to record this transaction includes a credit to ________.

The rate of return on common stockholders' equity shows the relationship between net income available to common stockholders and their average common equity invested in the company.

If treasury stock is resold for more than cost,the difference is debited to the account Paid-In Capital from Treasury Stock Transactions.

Orange Office Supply Corporation completed the following stock issuance transactions: Prepare the journal entries to record these transactions.Explanations are not required.

The issue price is the price the stock initially sells for the first time it is sold.

Peterson,Inc.issued 4,000 shares of preferred stock for $240,000.The stock has a par value of $60 per share.Prepare the journal entry for this transaction.

Treasury stock ________.

Legal capital refers to the portion of stockholders' equity that cannot be used for dividends.

Lack of mutual agency is best described as which of the following?

Small and large stock dividends have no effect on the Common Stock account.

When a previously declared dividend is paid,which of the following occurs?

A company cannot report a gain or loss when buying or selling its own stock.

When a corporation sells 9,000 shares of $17 par value common stock for $157,000,Common Stock is credited for $153,000.

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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