Question 1

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 2

A disadvantage of the corporate form of business is

Accepted Answer

A) centralized authority and responsibility. 
B) its status as a separate legal entity. 
C) government regulation. 
D) continuous existence. 
A) centralized authority and responsibility. 
B) its status as a separate legal entity. 
C) government regulation. 
D) continuous existence.

Question 3

Legal capital of a corporation is the maximum amount that can be reported as contributed capital.

Accepted Answer

A) True 
 B)False

Question 4

In recent years,Redbird Corporation,a small manufacturer of jet skis for the leisure industry,has followed the practice of issuing a 10 percent stock dividend annually.Although the company's net income has been almost $4 million in each of the past three years,retained earnings have declined from about $10 million to about $6 million.What is the probable motivation for management's decision to issue an annual 10 percent stock dividend? What is the most likely explanation for the decrease in retained earnings? Given your explanation,would stockholders' equity also decrease by a like amount?

Accepted Answer

Redbird's management probably has severa

Question 5

When no-par common stock has a stated value,the stated value of the shares issued normally is considered the legal capital of the corporation.

Accepted Answer

A) True 
 B)False

Question 6

Why might someone prefer to invest in a company by purchasing preferred stock rather than common stock?

Accepted Answer

The primary advantages of owning preferr

Question 7

Start-up and organization costs for a corporation that is to operate a retail store would include the costs of

Accepted Answer

A) promoters' fees and printing stock certificates. 
B) advertising for a grand opening sale. 
C) the initial purchase of inventory. 
D) counters and racks to display merchandise. 
A) promoters' fees and printing stock certificates. 
B) advertising for a grand opening sale. 
C) the initial purchase of inventory. 
D) counters and racks to display merchandise.

Question 8

The following facts pertain to Alameda Corporation for 20x5:   Based on the above facts,net income for 20x5 for Alameda Corporation amounted to

Accepted Answer

A) $207,500. 
B) $182,500. 
C) $232,500. 
D) $257,500. 
A) $207,500. 
B) $182,500. 
C) $232,500. 
D) $257,500.

Question 9

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 10

A company purchases 800 shares of its $50 par value common stock at $55 per share.It then reissues 120 shares at $58 per share.The entry upon reissue of the stock is :

Accepted Answer

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

Question 11

Which of the following classifications represents the largest number of shares?

Accepted Answer

A) Authorized shares. 
B) Outstanding shares. 
C) Treasury shares. 
D) Issued shares. 
A) Authorized shares. 
B) Outstanding shares. 
C) Treasury shares. 
D) Issued shares.

Question 12

The effects on individual contributed capital accounts of a conversion of preferred stock to common stock during the period are disclosed on the statement of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 13

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Accepted Answer

A) True 
 B)False

Question 14

Dividend yield equals

Accepted Answer

A) market price per share divided by dividends per share. 
B) net income divided by dividends per share. 
C) dividends per share divided by net income. 
D) dividends per share divided by market price per share. 
A) market price per share divided by dividends per share. 
B) net income divided by dividends per share. 
C) dividends per share divided by net income. 
D) dividends per share divided by market price per share.

Question 15

A corporation should account for the declaration of a 10 percent stock dividend by

Accepted Answer

A) transferring from retained earnings to contributed capital an amount equal to the legal capital represented by the dividend shares. 
B) transferring from retained earnings to contributed capital an amount equal to the market value of the dividend shares. 
C) transferring from retained earnings to contributed capital whatever amount the board of directors deems appropriate. 
D) making only a memorandum entry in the general journal. 
A) transferring from retained earnings to contributed capital an amount equal to the legal capital represented by the dividend shares. 
B) transferring from retained earnings to contributed capital an amount equal to the market value of the dividend shares. 
C) transferring from retained earnings to contributed capital whatever amount the board of directors deems appropriate. 
D) making only a memorandum entry in the general journal.

Question 16

The following facts pertain to the stockholders' equity section of the balance sheet of Charlotte Corporation:
  During 20x5,Charlotte declared and distributed a stock dividend.Also during 20x5,Charlotte declared and paid cash dividends of $26,000.There were no changes in the number of shares of stock issued and outstanding during the period except for the change caused by the stock dividend.Calculate the amount of net income reported by Charlotte for 20x5.

Accepted Answer

$57,200 [273,000 - (

Question 17

The date on a statement of stockholders' equity is for a specific point in time.

Accepted Answer

A) True 
 B)False

Question 18

When the dividend yield is relatively low,investors must expect some of their return to come from increases in the price of the shares.

Accepted Answer

A) True 
 B)False

Question 19

A company purchases 300 shares of its $100 par value common stock at $110 per share.It then reissues 50 shares at $114 per share.The entry upon reissue of the stock is:

Accepted Answer

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

Question 20

Dividends in arrears on cumulative preferred stock are not paid until after dividends are paid on common stock.

Accepted Answer

A) True 
 B)False

Exam 12: Stockholders Equity

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

A disadvantage of the corporate form of business is

Legal capital of a corporation is the maximum amount that can be reported as contributed capital.

When no-par common stock has a stated value,the stated value of the shares issued normally is considered the legal capital of the corporation.

Why might someone prefer to invest in a company by purchasing preferred stock rather than common stock?

Start-up and organization costs for a corporation that is to operate a retail store would include the costs of

The following facts pertain to Alameda Corporation for 20x5: Based on the above facts,net income for 20x5 for Alameda Corporation amounted to

Return on equity is measured in terms of

A company purchases 800 shares of its $50 par value common stock at $55 per share.It then reissues 120 shares at $58 per share.The entry upon reissue of the stock is :

Which of the following classifications represents the largest number of shares?

The effects on individual contributed capital accounts of a conversion of preferred stock to common stock during the period are disclosed on the statement of stockholders' equity.

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Dividend yield equals

A corporation should account for the declaration of a 10 percent stock dividend by

The date on a statement of stockholders' equity is for a specific point in time.

When the dividend yield is relatively low,investors must expect some of their return to come from increases in the price of the shares.

A company purchases 300 shares of its $100 par value common stock at $110 per share.It then reissues 50 shares at $114 per share.The entry upon reissue of the stock is:

Dividends in arrears on cumulative preferred stock are not paid until after dividends are paid on common stock.

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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