Question 1

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

No entry is required on the date of record for a cash dividend.

Accepted Answer

A) True 
 B)False

Question 3

Corporate earnings are subject to double taxation.

Accepted Answer

A) True 
 B)False

Question 4

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year:
Apr) 1 Purchased 2,000 shares of its own preferred stock for $20, the current market price. This is the first transaction involving its own stock engaged in by the company.
May 3 Sold 400 of the shares purchased on April 1 for $25 per share.
June 5 Retired 600 of the shares purchased on April 1. The original issue price was $10. The par value of the stock is $5.
The entry to record the June 5 transaction is

Accepted Answer

The answer of Use the following information to answer the...

Question 5

People's Electric Company omitted all its preferred stock dividends indefinitely in an effort to improve liquidity. All of the company's cumulative preferred stock was affected. According to the Wall Street Journal, "Some interpreted the drastic action as a requisite for the cash-strapped utility to secure a new credit agreement. . . . If the credit agreement falls through, the omission of preferred-stock dividends would suggest People's Electric is perilously close to filing for bankruptcy." What is cumulative preferred stock? Why is the omission of dividends on those shares a drastic action? If new bank financing is not obtained, why would the company have to consider declaring bankruptcy?

Accepted Answer

Cumulative preferred stock is capital st

Question 6

Use the following information to answer the question below.
When Calvert Corporation was formed on January 1, 2010, the corporate charter provided for 50,000 shares of $20 par value common stock. The following transactions were among those engaged in by the corporation during its first month of operation:
1. The corporation issued 200 shares of stock to its lawyer in full payment of the $5,000 bill for assisting the company in drawing up its articles of incorporation and filing the proper papers with the state agency.
2. The company issued 8,000 shares of stock at a price of $25 per share.
3. The company issued 8,000 shares of stock in exchange for equipment that had a fair market value of $160,000.
The entry to record transaction 3 is:

Accepted Answer

The entry to record transaction 3, where

Question 7

Use the following information to answer the question below. The following accounts appear in the ledger of Sayre Corporation on December 31, 2010
  A balance sheet prepared on December 31, 2010 , would report total stockholders' equity of

Accepted Answer

A)  $82,000. 
B)  $89,000. 
C)  $107,000. 
D)  $147,000. 
A)  $82,000. 
B)  $89,000. 
C)  $107,000. 
D)  $147,000.

Question 8

Preferred stock is least likely to have which of the following characteristics?

Accepted Answer

A)  Preference as to dividends 
B)  The right of the holder to vote at stockholders' meetings 
C)  Preference as to assets upon liquidation of the corporation 
D)  The right of the holder to convert to common stock 
A)  Preference as to dividends 
B)  The right of the holder to vote at stockholders' meetings 
C)  Preference as to assets upon liquidation of the corporation 
D)  The right of the holder to convert to common stock

Question 9

A disadvantage of the corporate form of business is

Accepted Answer

A)  lack of mutual agency. 
B)  professional management. 
C)  ease of transfer of ownership. 
D)  tax treatment. 
A)  lack of mutual agency. 
B)  professional management. 
C)  ease of transfer of ownership. 
D)  tax treatment.

Question 10

When stock is issued for noncash assets or services, how does one place a valuation (dollar amount) on the transaction?

Accepted Answer

The transaction should be valu

Question 11

To form a corporation, most states require persons called incorporators to sign and file it with proper state official. This application contains the articles of incorporation. .

Accepted Answer

A) True 
 B)False

Question 12

The number of shares of issued stock equals

Accepted Answer

A)  unissued shares minus authorized shares. 
B)  outstanding shares plus treasury shares. 
C)  subscribed shares plus outstanding shares. 
D)  authorized shares minus treasury shares. 
A)  unissued shares minus authorized shares. 
B)  outstanding shares plus treasury shares. 
C)  subscribed shares plus outstanding shares. 
D)  authorized shares minus treasury shares.

Question 13

Mercer Corporation has 200,000 shares of $10 stated value no-par common stock authorized, and 160,000 shares were outstanding during 2009. The following transactions relate to cash dividends of Mercer Corporation for the year ended December 31, 2009. Prepare entries in journal form without explanations to record the following transactions:

Accepted Answer

The answer of Mercer Corporation has 200,000 shares of $10...

Question 14

Return on equity is measured in terms of

Accepted Answer

A)  days. 
B)  times. 
C)  a percentage. 
D)  dollars. 
A)  days. 
B)  times. 
C)  a percentage. 
D)  dollars.

Question 15

Most preferred stocks are callable preferred stocks, which means that the callable feature may be exercised by

Accepted Answer

A)  the state that issued the corporation's charter. 
B)  a preferred stockholder. 
C)  the issuing corporation. 
D)  either the issuing corporation or a preferred stockholder. 
A)  the state that issued the corporation's charter. 
B)  a preferred stockholder. 
C)  the issuing corporation. 
D)  either the issuing corporation or a preferred stockholder.

Question 16

Beckham Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000 shares of $10 par value common stock outstanding during its first five years of operation. Beckham Corporation paid cash dividends as follows: 2006, $30,000; 2007, $0; 2008, $65,000; 2009, $30,000; 2010, $15,000. The amount of dividends received by the common stockholders during 2009 was

Accepted Answer

A)  $11,000. 
B)  $13,000. 
C)  $9,000. 
D)  $15,000. 
A)  $11,000. 
B)  $13,000. 
C)  $9,000. 
D)  $15,000.

Question 17

Which of the following statements is not descriptive of common stock?

Accepted Answer

A)  Stockholders are considered owners, not creditors, of a corporation. 
B)  The payment of dividends is never required. 
C)  Dividends paid are an expense for the issuing corporation. 
D)  Issuing stock is less risky than issuing bonds. 
A)  Stockholders are considered owners, not creditors, of a corporation. 
B)  The payment of dividends is never required. 
C)  Dividends paid are an expense for the issuing corporation. 
D)  Issuing stock is less risky than issuing bonds.

Question 18

Compensation expense related to employee stock options is recorded on a corporation's books only when the option price exceeds the current market price at the date the options are granted.

Accepted Answer

A) True 
 B)False

Question 19

The par value of the common stock represents the

Accepted Answer

A)  amount entered into the corporation's Common Stock account when a share is issued. 
B)  liquidation value of the stock. 
C)  market value of a share of stock. 
D)  amount the corporation received when the stock was issued. 
A)  amount entered into the corporation's Common Stock account when a share is issued. 
B)  liquidation value of the stock. 
C)  market value of a share of stock. 
D)  amount the corporation received when the stock was issued.

Question 20

The par value of stock constitutes the legal capital of a corporation.

Accepted Answer

A) True 
 B)False

Exam 12: Contributed Capital

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

No entry is required on the date of record for a cash dividend.

Corporate earnings are subject to double taxation.

Use the following information to answer the question below. The following accounts appear in the ledger of Sayre Corporation on December 31, 2010 A balance sheet prepared on December 31, 2010 , would report total stockholders' equity of

Preferred stock is least likely to have which of the following characteristics?

A disadvantage of the corporate form of business is

When stock is issued for noncash assets or services, how does one place a valuation (dollar amount) on the transaction?

To form a corporation, most states require persons called incorporators to sign and file it with proper state official. This application contains the articles of incorporation. .

The number of shares of issued stock equals

Return on equity is measured in terms of

Most preferred stocks are callable preferred stocks, which means that the callable feature may be exercised by

Which of the following statements is not descriptive of common stock?

Compensation expense related to employee stock options is recorded on a corporation's books only when the option price exceeds the current market price at the date the options are granted.

The par value of the common stock represents the

The par value of stock constitutes the legal capital of a corporation.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Filters