Question 1

Stockholders elect the board of directors who then appoint the officers of a corporation.

Accepted Answer

A) True 
 B)False

Question 2

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Accepted Answer

A) True 
 B)False

Question 3

Treasury stock is reported as an asset on the balance sheet because treasury shares may be sold later.

Accepted Answer

A) True 
 B)False

Question 4

Shares of treasury stock are

Accepted Answer

A) issued shares that have been bought back by the corporation and are being held by the corporation. 
B) shares held by the U.S.Treasury Department. 
C) part of the total outstanding shares but not part of the total issued shares of a corporation. 
D) unissued shares that are held by the treasurer of the corporation. 
A) issued shares that have been bought back by the corporation and are being held by the corporation. 
B) shares held by the U.S.Treasury Department. 
C) part of the total outstanding shares but not part of the total issued shares of a corporation. 
D) unissued shares that are held by the treasurer of the corporation.

Question 5

Mariposa Corporation had a Retained Earnings balance on January 1,20x4,of $936,000;declared cash dividends during 20x4 in the amount of $159,900,of which $39,000 were not paid until 20x5;and reported an ending balance of Retained Earnings of $1,326,000.Based on these facts alone,net income for 20x4 for Mariposa Corporation must have been

Accepted Answer

A) $211,900. 
B) $419,900. 
C) $510,900. 
D) $549,900. 
A) $211,900. 
B) $419,900. 
C) $510,900. 
D) $549,900.

Question 6

Retained earnings are a component of contributed capital.

Accepted Answer

A) True 
 B)False

Question 7

A corporation often uses an underwriter to guarantee the sale of stock in an initial public offering (IPO).

Accepted Answer

A) True 
 B)False

Question 8

The book value of one share of callable preferred stock is equal to the call value of the preferred share minus any dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 9

If a corporation has issued common stock at various prices that exceed par value,legal capital will be made up of the

Accepted Answer

A) par value of the shares issued. 
B) total stockholders' equity plus total liabilities. 
C) total amount of contributed capital. 
D) total amount of contributed capital plus retained earnings. 
A) par value of the shares issued. 
B) total stockholders' equity plus total liabilities. 
C) total amount of contributed capital. 
D) total amount of contributed capital plus retained earnings.

Question 10

Which of the following would not affect the balance of the Retained Earnings account?

Accepted Answer

A) Stock split 
B) Net loss 
C) Cash dividend declared 
D) Stock dividend declared 
A) Stock split 
B) Net loss 
C) Cash dividend declared 
D) Stock dividend declared

Question 11

A corporation's residual equity is its

Accepted Answer

A) preferred stock. 
B) retained earnings. 
C) common stock. 
D) cash. 
A) preferred stock. 
B) retained earnings. 
C) common stock. 
D) cash.

Question 12

On which of the following dates involving stock dividends does a liability arise?

Accepted Answer

A) Date of distribution 
B) Date of declaration 
C) Date of record 
D) On no date 
A) Date of distribution 
B) Date of declaration 
C) Date of record 
D) On no date

Question 13

The purpose of a statement of stockholders' equity is to

Accepted Answer

A) disclose the computation of book value per share of stock. 
B) budget the transactions expected to occur during the forthcoming period. 
C) replace the statement of retained earnings. 
D) summarize the changes in the components of stockholders' equity for a period of time. 
A) disclose the computation of book value per share of stock. 
B) budget the transactions expected to occur during the forthcoming period. 
C) replace the statement of retained earnings. 
D) summarize the changes in the components of stockholders' equity for a period of time.

Question 14

Book value per share of stock represents the amount the shareholder will receive per share if the company is sold or liquidated.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following transactions affects total retained earnings?

Accepted Answer

A) Purchase of treasury stock 
B) Payment of previously declared cash dividend 
C) Declaration of a stock dividend 
D) Declaration of a stock split 
A) Purchase of treasury stock 
B) Payment of previously declared cash dividend 
C) Declaration of a stock dividend 
D) Declaration of a stock split

Question 16

The sale of treasury stock cannot result in

Accepted Answer

A) an increase in Retained Earnings. 
B) the crediting of Paid-in Capital,Treasury Stock. 
C) the debiting of Paid-in Capital,Treasury Stock. 
D) an increase in total stockholders' equity. 
A) an increase in Retained Earnings. 
B) the crediting of Paid-in Capital,Treasury Stock. 
C) the debiting of Paid-in Capital,Treasury Stock. 
D) an increase in total stockholders' equity.

Question 17

One advantage of a corporation is the lack of mutual agency.

Accepted Answer

A) True 
 B)False

Question 18

Outstanding shares of stock are

Accepted Answer

A) authorized shares that have not yet been issued. 
B) also called treasury shares. 
C) issued shares that have not yet been authorized. 
D) issued shares that are still in circulation. 
A) authorized shares that have not yet been issued. 
B) also called treasury shares. 
C) issued shares that have not yet been authorized. 
D) issued shares that are still in circulation.

Question 19

Describe at least three reasons why a corporation would want to buy back its own stock.

Accepted Answer

A company may want to buy back its own s

Question 20

The value at which one share of stock can be bought or sold is called

Accepted Answer

A) book value. 
B) call value. 
C) par or stated value. 
D) market value. 
A) book value. 
B) call value. 
C) par or stated value. 
D) market value.

Exam 12: Stockholders Equity

Stockholders elect the board of directors who then appoint the officers of a corporation.

A stock dividend exceeding 20 to 25 percent is properly treated as a stock split.

Treasury stock is reported as an asset on the balance sheet because treasury shares may be sold later.

Shares of treasury stock are

Retained earnings are a component of contributed capital.

A corporation often uses an underwriter to guarantee the sale of stock in an initial public offering (IPO).

The book value of one share of callable preferred stock is equal to the call value of the preferred share minus any dividends in arrears.

If a corporation has issued common stock at various prices that exceed par value,legal capital will be made up of the

Which of the following would not affect the balance of the Retained Earnings account?

A corporation's residual equity is its

On which of the following dates involving stock dividends does a liability arise?

The purpose of a statement of stockholders' equity is to

Book value per share of stock represents the amount the shareholder will receive per share if the company is sold or liquidated.

Which of the following transactions affects total retained earnings?

The sale of treasury stock cannot result in

One advantage of a corporation is the lack of mutual agency.

Outstanding shares of stock are

Describe at least three reasons why a corporation would want to buy back its own stock.

The value at which one share of stock can be bought or sold is called

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

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