Question 1

When a company issues stock at an amount greater than the par value,a gain is recorded for the difference between the issue price and the par value.

Accepted Answer

A) True 
 B)False

Question 2

On June 30,2017,Roger,Inc.showed the following data on the equity section of their balance sheet:
 
On July 1,2017,the company declared and distributed a 8% stock dividend.The market value of the stock at that time was $13 per share.Following this transaction,what is the balance of Common Stock?

Accepted Answer

A) $160,920 
B) $37,720 
C) $271,400 
D) $335,720 
A) $160,920 
B) $37,720 
C) $271,400 
D) $335,720

Question 3

Orleans,Inc.was incorporated on January 1,2014.Orleans issued 10,000 shares of common stock and 800 shares of preferred stock on that date.The preferred stock is cumulative,$100 par,with an 13% dividend rate.Orleans has not paid any dividends yet.In 2017,Orleans had its first profitable year,and on November 1,2017,Orleans declared a total dividend of $50,000.What is the total amount that will be paid to preferred shareholders?

Accepted Answer

A) $10,400 
B) $41,600 
C) $9,100 
D) $50,000 
A) $10,400 
B) $41,600 
C) $9,100 
D) $50,000

Question 4

The statement of stockholders' equity reports the number of shares and any changes during the year in preferred,common,and treasury stock.

Accepted Answer

A) True 
 B)False

Question 5

The retained earnings of a corporation is ________.

Accepted Answer

A) internally generated equity that is earned by profitable operations that is not distributed to stockholders 
B) externally generated equity that is contributed by shareholders 
C) externally generated equity that is acquired from banks and other creditors 
D) internally generated equity that is received from employee stock purchases 
A) internally generated equity that is earned by profitable operations that is not distributed to stockholders 
B) externally generated equity that is contributed by shareholders 
C) externally generated equity that is acquired from banks and other creditors 
D) internally generated equity that is received from employee stock purchases

Question 6

A corporation originally issued $7 par value common stock for $15 per share.Which of the following is included in the entry to record the purchase of 300 shares of treasury stock for $12 per share?

Accepted Answer

A) Treasury Stock-Common is debited for $3,600. 
B) Treasury Stock-Common is credited for $45. 
C) Retained Earnings is debited for $1,800. 
D) Treasury Stock-Common is debited for $1,800. 
A) Treasury Stock-Common is debited for $3,600. 
B) Treasury Stock-Common is credited for $45. 
C) Retained Earnings is debited for $1,800. 
D) Treasury Stock-Common is debited for $1,800.

Question 7

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $19.00 per share.
 
What would be the total stockholders' equity after a 13% common stock dividend?

Accepted Answer

A) $858,900 
B) $504,000 
C) $806,000 
D) $483,600 
A) $858,900 
B) $504,000 
C) $806,000 
D) $483,600

Question 8

Saturn Corporation has 19,000 shares of 10%,$76 par noncumulative preferred stock outstanding and 24,000 shares of no-par common stock outstanding.At the end of the current year,the corporation declares a dividend of $184,000.How is the dividend allocated between preferred and common stockholders?

Accepted Answer

A) The dividend is allocated $6,230 to preferred stockholders and $102,698 to common stockholders. 
B) The dividend is allocated $144,400 to preferred stockholders and $39,600 to common stockholders. 
C) The dividend is allocated $81,302 to preferred stockholders and $102,698 to common stockholders. 
D) The dividend is allocated $182,400 to preferred stockholders and $1,600 to common stockholders. 
A) The dividend is allocated $6,230 to preferred stockholders and $102,698 to common stockholders. 
B) The dividend is allocated $144,400 to preferred stockholders and $39,600 to common stockholders. 
C) The dividend is allocated $81,302 to preferred stockholders and $102,698 to common stockholders. 
D) The dividend is allocated $182,400 to preferred stockholders and $1,600 to common stockholders.

Question 9

A stock split can involve issuing more shares of stock than authorized in the corporate charter.

Accepted Answer

A) True 
 B)False

Question 10

A corporation issues 14,000 shares of its $4 stated value common shares.The issue price is $7 per share.The credit to the Common Stock account is $98,000.

Accepted Answer

A) True 
 B)False

Question 11

Cash dividends cause a decrease in both assets and stockholders' equity of the corporation.

Accepted Answer

A) True 
 B)False

Question 12

New Corporation had net income for 2016 of $79,000.New Corporation had 13,000 shares of common stock outstanding at the beginning of the year and 18,000 shares of common stock outstanding at the end of the year.There were 11,000 shares of preferred stock outstanding all year.During 2016,New Corporation declared and paid preferred dividends of $16,000.What is New Corporation's earnings per share? (Round the answer to two decimal places. )

Accepted Answer

A) $4.39 
B) $4.06 
C) $5.10 
D) $3.50 
A) $4.39 
B) $4.06 
C) $5.10 
D) $3.50

Question 13

When 9,000 shares of $8 stated value common stock is issued at $13 per share,________.

Accepted Answer

A) Common Stock - $8 Stated is credited for $117,000 
B) the account titled Paid-In Capital in Excess of Stated is used to record the issue price of the stock 
C) the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated 
D) the accounting is exactly the same as the accounting for par value stock 
A) Common Stock - $8 Stated is credited for $117,000 
B) the account titled Paid-In Capital in Excess of Stated is used to record the issue price of the stock 
C) the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated 
D) the accounting is exactly the same as the accounting for par value stock

Question 14

Dividends in arrears are ________.

Accepted Answer

A) a liability on the balance sheet 
B) passed dividends on noncumulative preferred stock 
C) passed dividends on cumulative preferred stock 
D) passed dividends on common stock 
A) a liability on the balance sheet 
B) passed dividends on noncumulative preferred stock 
C) passed dividends on cumulative preferred stock 
D) passed dividends on common stock

Question 15

The declaration of a stock dividend creates a liability for the corporation.

Accepted Answer

A) True 
 B)False

Question 16

Raedy Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.25 per share.
 
After a 2-for-1 stock split,what is the number of issued shares?

Accepted Answer

A) 262,000 
B) 296,000 
C) 279,000 
D) 131,000 
A) 262,000 
B) 296,000 
C) 279,000 
D) 131,000

Question 17

Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following best describes the appropriation of retained earnings?

Accepted Answer

A) restricting part of retained earnings for expansion or contingencies 
B) setting cash aside for expansion 
C) designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders 
D) limiting company transactions in order to boost earnings 
A) restricting part of retained earnings for expansion or contingencies 
B) setting cash aside for expansion 
C) designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders 
D) limiting company transactions in order to boost earnings

Question 19

The two basic sources of stockholders' equity are ________.

Accepted Answer

A) common stock and bonds 
B) common stock and preferred stock 
C) paid-in capital and retained earnings 
D) no-par and stated value stock 
A) common stock and bonds 
B) common stock and preferred stock 
C) paid-in capital and retained earnings 
D) no-par and stated value stock

Question 20

The declaration date is the date the corporation records that stockholders will receive dividend checks.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations

When a company issues stock at an amount greater than the par value,a gain is recorded for the difference between the issue price and the par value.

On June 30,2017,Roger,Inc.showed the following data on the equity section of their balance sheet: On July 1,2017,the company declared and distributed a 8% stock dividend.The market value of the stock at that time was $13 per share.Following this transaction,what is the balance of Common Stock?

The statement of stockholders' equity reports the number of shares and any changes during the year in preferred,common,and treasury stock.

The retained earnings of a corporation is ________.

A corporation originally issued $7 par value common stock for $15 per share.Which of the following is included in the entry to record the purchase of 300 shares of treasury stock for $12 per share?

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $19.00 per share. What would be the total stockholders' equity after a 13% common stock dividend?

Saturn Corporation has 19,000 shares of 10%,$76 par noncumulative preferred stock outstanding and 24,000 shares of no-par common stock outstanding.At the end of the current year,the corporation declares a dividend of $184,000.How is the dividend allocated between preferred and common stockholders?

A stock split can involve issuing more shares of stock than authorized in the corporate charter.

A corporation issues 14,000 shares of its $4 stated value common shares.The issue price is $7 per share.The credit to the Common Stock account is $98,000.

Cash dividends cause a decrease in both assets and stockholders' equity of the corporation.

When 9,000 shares of $8 stated value common stock is issued at $13 per share,________.

Dividends in arrears are ________.

The declaration of a stock dividend creates a liability for the corporation.

Raedy Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.25 per share. After a 2-for-1 stock split,what is the number of issued shares?

Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation.

Which of the following best describes the appropriation of retained earnings?

The two basic sources of stockholders' equity are ________.

The declaration date is the date the corporation records that stockholders will receive dividend checks.

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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