Question 1

Which of the following items will not be disclosed on a statement of stockholders' equity?

Accepted Answer

A) Conversion of preferred stock into common stock 
B) Results of discontinued operations 
C) Purchase of treasury stock 
D) Declaration of a stock dividend 
A) Conversion of preferred stock into common stock 
B) Results of discontinued operations 
C) Purchase of treasury stock 
D) Declaration of a stock dividend

Question 2

Book value per share refers to the

Accepted Answer

A) net assets represented by one share of a company's stock. 
B) highest price that investors will pay for a share of stock. 
C) issue price of the stock,less any market decline since issuance. 
D) par or stated value of a share of stock. 
A) net assets represented by one share of a company's stock. 
B) highest price that investors will pay for a share of stock. 
C) issue price of the stock,less any market decline since issuance. 
D) par or stated value of a share of stock.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A corporation has all of the following except

Accepted Answer

A) government regulations. 
B) a limited existence. 
C) separation of ownership and control. 
D) its own tax liability. 
A) government regulations. 
B) a limited existence. 
C) separation of ownership and control. 
D) its own tax liability.

Question 5

The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5.
-The proper entry to be recorded on July 15,20x5 is,

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 6

Use this information to answer the following question. Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.The following transactions occurred during the year:
Mar. 17 Declared a 10 percent stock dividend to stockholders of record on March 20. Market value of the stock was $22 on March 17.
Mar. 30 Distributed the stock dividend.
-The entry to record the transaction of March 17 is:

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 7

Treasury shares are shares that are authorized but unissued.

Accepted Answer

A) True 
 B)False

Question 8

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

Accepted Answer

A) Decrease and no effect 
B) No effect and no effect 
C) Decrease and decrease 
D) No effect and decrease 
A) Decrease and no effect 
B) No effect and no effect 
C) Decrease and decrease 
D) No effect and decrease

Question 9

Willow Corporation has retained earnings of $320,000.It has 5,000 shares of 6 percent,$100 par value preferred stock outstanding that is callable at 102.The preferred stock is cumulative,and one year of dividends is in arrears.It also has 10,000 shares of $50 par value common stock outstanding.Assume all stock is issued at par.
-The book value of each share of common stock is

Accepted Answer

A) $78.00. 
B) $110.40. 
C) $81.60. 
D) $80.00. 
A) $78.00. 
B) $110.40. 
C) $81.60. 
D) $80.00.

Question 10

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 3,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5.
What amount of gain due to these treasury stock transactions should be reported on the income statement for the year ended December 31,20x5 ?

Accepted Answer

A) $0 
B) $21,700 
C) $3,100 
D) $2,170 
A) $0 
B) $21,700 
C) $3,100 
D) $2,170

Question 11

When common stock is issued by a corporation for a cash price above par value,the excess of the cash proceeds over the par value should be reported in the financial statements as a component of

Accepted Answer

A) retained earnings on the balance sheet. 
B) total liabilities on the balance sheet. 
C) operating income on the income statement. 
D) total contributed capital on the balance sheet. 
A) retained earnings on the balance sheet. 
B) total liabilities on the balance sheet. 
C) operating income on the income statement. 
D) total contributed capital on the balance sheet.

Question 12

Use the following information to answer the question below. When Langston Corporation was formed on January 1,20x5,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

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 13

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 1,000 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5.
The entry to record the sale of the treasury shares on March 2,20x5 is

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 14

Adobe Corporation had net income of $120,000 in 20x4 and $164,000 in 20x5.Total stockholders' equity at the end of 20x4 was $760,000 and total stockholders' equity at the end of 20x5 was $820,000.Adobe's total assets at the end of 20x4 were $1,320,000 and its total assets at the end of 20x5 were $1,410,000.Based on this information,what is Adobe's return on equity for 20x5?

Accepted Answer

A) 20.76% 
B) 17.97% 
C) 20.00% 
D) 12.01% 
A) 20.76% 
B) 17.97% 
C) 20.00% 
D) 12.01%

Question 15

When no-par common stock without a stated value is issued for cash,the Common Stock account is credited for an amount equal to the cash proceeds.

Accepted Answer

A) True 
 B)False

Question 16

Use the following information to answer the question below. When Langston Corporation was formed on January 1,20x5,the corporate charter provided for 100,000 shares of $10 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 400 shares of stock to its lawyer in full payment of the $10,000 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 16,000 shares of stock at a price of $50 per share.
3)The company issued 14,000 shares of stock in exchange for equipment that had a fair market value of $320,000.
-The entry to record transaction 3 is:

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 17

Match between columns
                        Premises: Dividends in arrears on preferred stock
Purchase of treasury stock for $16 per share
Sale of treasury stock (purchased at $16 per share)for $19 per share
Entry to close net income for the period to the Retained Earnings account
Declaration of current cash dividends on preferred stock
Declaration and distribution of stock dividends on common stock
Payment of a previously declared and recorded cash dividend on common stock
Sale of newly issued shares of common stock at $23 per share
Purchase of a truck with cash

Accepted Answer

The Answer of increase and decrease and no effect is...

Question 18

Dividends in arrears pertain only to cumulative preferred stock.

Accepted Answer

A) True 
 B)False

Question 19

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

Accepted Answer

A) True 
 B)False

Question 20

When treasury stock is sold at a price below its cost,the entry to record the sale has the effect of reducing total stockholders' equity.

Accepted Answer

A) True 
 B)False

Which of the following items will not be disclosed on a statement of stockholders' equity?

Book value per share refers to the

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

A corporation has all of the following except

The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5. -The proper entry to be recorded on July 15,20x5 is,

Treasury shares are shares that are authorized but unissued.

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

When common stock is issued by a corporation for a cash price above par value,the excess of the cash proceeds over the par value should be reported in the financial statements as a component of

When no-par common stock without a stated value is issued for cash,the Common Stock account is credited for an amount equal to the cash proceeds.

Dividends in arrears pertain only to cumulative preferred stock.

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

When treasury stock is sold at a price below its cost,the entry to record the sale has the effect of reducing total stockholders' equity.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

Filters

Exam 12: Stockholders Equity

Which of the following items will not be disclosed on a statement of stockholders' equity?

Book value per share refers to the

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

A corporation has all of the following except

The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5. -The proper entry to be recorded on July 15,20x5 is,

Treasury shares are shares that are authorized but unissued.

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

When common stock is issued by a corporation for a cash price above par value,the excess of the cash proceeds over the par value should be reported in the financial statements as a component of

When no-par common stock without a stated value is issued for cash,the Common Stock account is credited for an amount equal to the cash proceeds.

Dividends in arrears pertain only to cumulative preferred stock.

A corporation cannot declare a dividend that would cause stockholders' equity to fall below the legal capital.

When treasury stock is sold at a price below its cost,the entry to record the sale has the effect of reducing total stockholders' equity.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

Filters