Exam 12: Stockholders Equity

How is book value per share interpreted for an investor who owns one share of a company's stock? Is book value equal to the amount this stockholder would receive if the company were sold or liquidated? Why or why not?

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

A large stock dividend should be recorded on the basis of

Dividends in arrears are disclosed as liabilities of a corporation.

Cielo Corporation had net income of $740,000 in 20x4 and $830,000 in 20x5.Total stockholders' equity at the end of 20x4 was $1,250,000 and total stockholders' equity at the end of 20x5 was $1,500,000.Cielo's total assets at the end of 20x4 were $2,210,000 and its total assets at the end of 20x5 were $2,860,000.Based on this information,what is Cielo's return on equity for 20x5?

The following amounts were reported by Paloma Corporation on December 31,20x4 : On January 3,20x5 ,5,000 shares of treasury stock were sold.After the sale of the treasury shares,total stockholders' equity amounted to $277,500.No stockholders' equity transactions other than the sale of the treasury stock occurred between December 31,20x4 ,and January 3,20x5.From the information given,compute the selling price per share of the treasury stock.

The par value of the common stock represents the

The par value of stock is an arbitrary amount assigned to each share of stock.

The declaration of a cash dividend causes an increase in a corporation's liabilities at the date of declaration.

Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

The price/earnings (P/E)ratio is a measure of investors' confidence in a company's future.

The purchase of treasury stock will result in

Return on equity equals net income divided by average stockholders' equity.

A stock dividend will cause a decrease in the total number of shares issued and outstanding.

The number of shares of issued stock equals

The sale of treasury stock at an amount less than cost results in a loss to be reported on the income statement.

The board of directors of Meadow Corporation declared a cash dividend on January 18,20x5,to be paid on February 18,20x5,to shareholders holding the stock on February 2,20x5.Given these facts,the date February 2,20x5,is referred to as the

Which of the following phrases is not descriptive of the corporate form of business?

Which of the following could be described as both an advantage and a disadvantage of incorporation?